After a week in which India's government announced a series of controversial reforms, including raising diesel and cooking gas prices, and opening the door to foreign investors in the country's retail, broadcast, aviation and power sectors, Anand Sharma, the minister of commerce and industry, sat down for a brief interview to explain the moves.
Mr. Sharma, who has served as the government's spokesman for the policy changes over the past two days, said that what appeared to be a surprising about-face by a government nearly paralyzed by indecision was actually a considered and patient process of consultation. In an interview from his Udyog Bhavan office, where classical Indian music played in the background and a prominent picture of Prime Minister Manmohan Singh hung on the wall, Mr. Sharma explained in detail why the government decided to allow multi-brand retailers like Wal-Mart into the country.
This week, the United Progressive Alliance government could be forced to come to terms with a vexing political reality, as not only its political rivals but also its allies challenge the most recent decisions. In the starkest terms, there is a chance the alliance may not survive the week. Mamata Banerjee, chief minister of West Bengal and a U.P.A. ally who controls 19 votes in Parliament, has said that she is deeply opposed to the measures announced, and is expected to decide during a meeting with her party on Tuesday whether to stay with the alliance.
What message is the government trying to send by making these rapid moves?
Well, it's very clear that we are a government which is reaffirming its abiding commitment to reforms, and to creating a regime and a climate which encourages investment, manufacturing and also brings in both technologies and experience in modern retailing.
In our view, looking at the complexities of India, its diversities, its socio-economic realities, it's a well-considered decision. We are the second largest producer of fruits and vegetables in the world. And we are the second largest producer of food grains in the world. But our losses are too high. We lose anywhere from 35 to 40 percent of our crops before they get to the consumer.
We need the creation of an infrastructure, an integrated food chain, bringing in the newest technology. It will benefit the rural economy with the farmers, who will get a better price for what they produce. What perishes to a large extent will reach the market or the kitchens.
It will generate gainful employment for hundreds of thousands of our people. Within the first three year, it can create up to 3 million jobs.
Are there specific companies that you expect to come, that you know would be happy doing business under these guidelines?
The government's job it just to make the policy framework. But some of them have already expressed interest, from Tesco to Carrefore to Wal-Mart and Marks and Spencer.
Many of these issues you mentioned that India struggles with have been apparent for some time. Why did you make these decisions now?
We had taken a decision last year [on foreign direct investment.] It had to be suspended, we did not roll it back. Parliament was in session and our opponents did not allow Parliament to function, so we suspended the policies and consulted all stakeholders from farmers' unions, to consumer unions, industrial federations, community organizations and chambers of industry and commerce.
We realized that there was a mixed response. Primarily, farmers and consumers are in favor. So are the small- and medium-sized industries.
Some political parties were opposed then and they remain opposed now. In the case of the left, it is their blinkered ideology. In the case of the B.J.P., it's their partisan agenda. It is not that philosophically they are opposed. When they were in government, they proposed much the same thing. So, they have double standards.
At the same time, there are a large number of states which are in favor, including some very big agrarian states have been strongly pressing for this policy. We have left the implementation to the states. Nine chief ministers responded yesterday welcoming it.
There are some who have reservations, including one of our alliance partners and we respect their right to take their own decisions. At the same time, what I am telling everyone is to please respect the rights of those states who want it, that's all.
The government also wants to send a very clear message, at the same time that we are affirming a clear commitment to reforms and economic growth, that we have an investor-friendly regime â€" a message to lift investors' confidence and sentiment, and to dispel the perception that India was not making decisions.
If you had to name one individual within the party who was pushing the hardest to dispel this perception, who would it be?
Well, we all work under the prime minister, we are one government. The prime minister has been a great reformer, but we are all his team and we are working.
These policy measures have been initiated by my ministry and by the team that has been working here. We are a cabinet form of government. The policy notes are moved by the concerned ministry and then taken to the cabinet.
But you have been a cabinet government under Manmohan Singh for some time now, and this sudden rush to do things -
Let me quickly come in here. It's not a sudden rush. First of all, we came out with a single compendium policy on foreign direct investment in January 2010. Earlier it was communicated through press notes and Reserve Bank of India circulars and fair markets guidelines. There were 178 press notes alone. All were subsumed into a single policy document bringing about clarity.
Second, we raised the limits on investment in one stroke. Earlier, foreign direct investment, under automatic route sectors where it was permitted, was only about $120 million. We doubled it.
But what is more important is that we removed the words “project cost.†Earlier, a project which was costing much less, then only the automatic approval would be there. These were major decisions which were already made.
And last year we ruled out one of the biggest policy initiatives, the national manufacturing policy. That was a cabinet decision of October 24, aimed at raising the share of manufacturing in G.D.P. from 16 to 26 percent and establishing green field townships, which will be self-governing bodies. We've already notified 9 5 of these. These will transform India. These are major decisions, not small decisions.
We are currently implementing one of the biggest infrastructure projects in the world, the Delhi-Mumbai industrial corridor.
So much is happening. I would say, with all respect, that there is a difference between perception and reality. We have been victims of perceptions, some created by our opponents.
So people just had it wrong?
I'm not saying challenges are not there. In any country, governance issues are there. Challenges are there, pressures are there. When multi-party coalitions take decisions, sometimes delays will be there. But that is what democracy is: it is beauty or its challenge. But we have been very transparent and we have been inclusive of our approach.
Some analysts and advisers have said recently that since P. Chidambaram became finance minister this summer, he has helped to focus the cabinet's thinking about the reform that needs to be don e. Would that be fair?
I'm sure that he is also focusing. We work together. We are colleagues.
But these decisions I referred to, these decisions and initiatives were taken last year. So we have always been working as a team. Finance minister has been a finance minister earlier, and he's a much valued and respected colleague, and we're very happy that he's there as a finance minister.
What's next?
I think this is enough for the moment.
O.K., then do you think you will survive the week, politically?
Why not, when you do something good? Yes. Absolutely.
