Remember 16 May 2009, when we heaved a sigh of relief as the Lok Sabha results were announced? The Indian National Congress returned with 206 seats — 61 more than the previous general election. The CPI(M) and the CPI, which had ruinously hobbled Manmohan Singh’s government from 2004 to 2009, together won only 20 seats, versus 53 in the previous election. The United Progressive Alliance was back with a mandate of 262 seats, making it easy to secure marginal support from ‘outside’ and rule the land with greater focus and purpose. Didn’t we say, “Thank God! At last, reforms and progress will be back on track”?

Two years and a month have passed. Very little, if anything, has happened to justify our faith in this government’s ability to reform. I don’t mean only the reforms that entrepreneurs, managers and the so-called-much-abused elite supposedly looked forward to. The last twenty-five months has seen governance failure across the spectrum of the kind that we haven’t witnessed for a long time. If at all.

Despite difficult conditions, Indian entrepreneurs, farmers and working people have done more than their bit to achieve 8 per cent GDP growth in 2009-10 and 8.5 per cent in 2010-11 — the second highest growth rates among large global economies. Surely, this should have set the stage for reforms to spur further growth? But in the scam-ridden world of the times, little has occurred. Indeed, we are looking at a situation where the leitmotif of most ministers and the bureaucracy is to minimise all risks by either doing nothing or passing the buck.

Thus, two curiously funny sounding creatures have taken centre stage: the GoM and the EGoM, which stand for the Group of Ministers and, if that wasn’t good enough, then the Empowered Group of Ministers, with a capital E to boot! Decisions that should be normally taken by the administrative ministry at the level of the secretary are now passed on to the minister; who invariably passes them to one of many Cabinet Committees; which then escalates it to the GoM, or for matters of Serious Substance to the EGoM. All this forces the over-worked bespectacled hare of Raisina Hill, Mr. Pranab Mukherjee, to hop from one GoM meeting to another EGoM, having long lost count of how many of these silly committees he chairs.

This is “I don’t want to caught on the wrong foot so I’ll push it to the next in command” governance. Take no decisions and you may still retain your gaddi. Be proactive, and you run the risk of being hauled up by God knows whom. So let the country drift. Nothing is worth craning my neck too much.

Let me give you two instances of such drift. We agree that roads and highways are critical to progress. Now consider the progress. As of 30 April 2011, 22 per cent of the 7,300 km North-South, East-West corridor that is incomplete, i.e. work in progress, or contract awarded, or not even awarded; ditto for 69 per cent of 50,405 km under the National Highways Authority of India, an organisation which hasn’t had a full time chairman for a long time. Projects under Phase 3 of the National Highway Development Programme (NHDP) have added only 657 km in 2010-11, at a completion rate of 1.8 km per day; while the NHDP Phase 5 programme has added 327 km at 0.9 km per day. Remember Kamal Nath speaking of 20 km per day?

My second example relates to Cairn India Limited, where I serve as an independent director. The Rajasthan crude oil project at Barmer produces 125,000 barrels of oil per day (bopd), and is capable of producing over 205,000 bopd — if not more — subject to approvals from the Ministry of Petroleum and Natural Gas (MoPNG) and other authorities. It ships the oil through the world’s longest continuously heated and insulated pipeline of 590 km from Barmer right up to Salaya in Gujarat. These assets produce a fifth of India’s domestic crude oil.

On 16 August 2010, Vedanta Resources plc and Cairn Energy plc announced a deal where the Vedanta Group would acquire 51% to 60% of the shares of Cairn India for around US$8.5 billion to US$9.6 billion in cash. The MoPNG stepped in, insisting that its approval was needed. No questions could be entertained. Period. Thereafter, it passed decision-making on to the Cabinet Committee on Economic Affairs, which passed it on to a GoM. At the time of writing this piece, no official letter has yet come from the MoPNG about the deal, while debilitating rumours abound. The time taken: ten months and counting. Without any operating decision being agreed to by the powers that be.

Yes, the national government is led by a man who is more honest than Caesar’s wife. But what of its governance?

 

Published: Business World, July 2011