Sonia versus Manmohan

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The Cabinet reshuffle betrays a tussle over economics within the Congress Party at the very top

The most critical changes in the Cabinet reshuffle 12 July were dictated by economic rather than political concerns. They indicate an ongoing tussle between 7 Race Course Road, supported by the Planning Commission’s Montek Singh Ahluwalia, and 10 Janpath, over issues of immediate relevance to the economy. They hint at ego battles between senior ministers on strategies that should be adopted to counter public and judicial criticism on the 2G scam and black money. They also point to the possible contours of future business-related bills.

For some time now, Jairam Ramesh has been in the eye of a ‘development’ storm brewing between Prime Minister Manmohan Singh and Congress President Sonia Gandhi. The latter, along with Jairam, the former Environment Minister, had pushed for India’s growth agenda to be dictated by pro-poor, pro-locals and pro-tribal policies. This was the reason why Jairam, in his previous avatar, initially rejected high-profile but seemingly anti-people projects like those of Posco and Vedanta.

Manmohan and his economic Man Friday Ahluwalia were sceptical of such an approach. They felt it would affect India’s growth prospects, and scare away foreign investors. By some accounts, this meant Jairam’s arms (and possibly legs) had to be twisted to reverse several of his ministry’s decisions. Finally, he okayed the Posco and Vedanta projects, and also climbed down from an earlier publicly stated stance that he would not allow coal mining in India’s ‘no go’ forest areas. On 12 July, he was shunted out of the Environment Ministry. Round One to Manmohan and Montek.

But the portfolio that Jairam bagged was Rural Development. This was to assure Sonia that in another area, which happens to be closer to her heart, she may get her way. Jairam will now spearhead the final drafting of the Land Acquisition Bill, of which three official and unofficial versions are on the table—the original draft, the changes that the Trinamool wants, and the recommendations of Sonia Gandhi’s A-Team, the National Advisory Council (NAC). Jairam has already said that he will accept the NAC’s proposals.  Round Two to Sonia and Jairam.

It is prudent to add here that land acquisition has become a pet theme for Sonia’s son, Rahul, who has been parading across Uttar Pradesh in support of farmers whose land has been acquired by the state government. Going by his current aggression, seen in his recent visit to Bhatta-Parsaul and padayatra in the state, it will be an issue in the forthcoming state polls. UP will also be another political acid test for Rahul; despite the Congress’ wafer-thin victory in Kerala’s recently held state election, many of his handpicked candidates lost.

So, what will happen to the Environment Ministry now? Jayanthi Natarajan, the new minister, is unlikely to change anything. Jairam had already backtracked on most contentious issues, and Jayanthi will merely need to activate existing policies, albeit a bit cautiously so as not to attract controversy. Being a party loyalist, she is unlikely to rock the boat.

But someone who can still create ripples within the UPA-II Government is Veerappa Moily, who has unhappily been shifted from Law and Justice to Corporate Affairs (see also, ‘The Centre Cannot Hold’, page 14). Although the ostensible reason for this has been the manner in which the Government was castigated by the Supreme Court on issues ranging from the 2G scam to black money and the resignation of Solicitor General Gopal Subramaniam, this is not entirely true. Ever since Moily became the Union Law Minister, he and Kapil Sibal, who has retained his Telecom and HRD portfolios, have been at loggerheads with each other.

In recent times, Sibal has tried to prove that on scams, he can defend the Government better than Moily. It was Sibal as telecom minister who declared, by virtue of his own skewed analysis, that the exchequer did not lose a single paisa in the 2G scam, despite the CAG report’s having said that the loss could be as high as Rs 176,000 crore. He also argued against auctions as a way to allocate spectrum, since it could result in telecom firms paying exorbitant sums that would lead them to charge consumers more.

Shunting out Moily was a signal that from now on, Sibal will be involved closely in the Government’s tactics to counter charges levelled against it by the apex court. However, Moily, as the new Corporate Affairs Minister, cannot be written off.

In his new charge, Moily can possibly dig out sensitive information that could weaken the Government’s case in the 2G scam. He now has access to documents that can trace links between the authorities in charge of 2G licences and the companies that acted as fronts for bigger telecom firms to secure these licences.

Now, that could turn this reshuffle on its head. Although Manmohan has said that this Cabinet will continue till the next national election, due in 2014, he may need to do a rethink far earlier.