India’s PM has earned his glory; Pakistan ex-PM’s reforms are being debated. By Shahid Husain There are uncanny similarities between the two political heads. They were both bankers; one was RBI’s Governor and on IMF’s Board of Governors, and the other started his career at Citibank as an intern and became its Chief Country Officer for Malaysia and, later, Jordan. They were both Finance Ministers (FMs) of their respective countries in the 1990s – one in 1991, and the other in 1999. As FMs, both are globally recognised as the architects of economic reforms in protected economies.
In 2004, both became Prime Ministers (PMs) within a fortnight of the other’s election. But there are some differences between the two too. While Manmohan Singh is India’s current PM, Shaukat Aziz is Pakistan’s former PM. While Singh is scripting a blueprint to catapult India as an economic superpower, Aziz is down in political doldrums and even lost the race to become Citibank’s CEO. While Singh’s place as a reformer is assured, Aziz’s is still being debated.
Aziz was picked up by President Pervez Musharraf as FM in November 1999, and elevated to the post of PM in mid 2004. Since Aziz didn’t have a constituency, he contested from Tharparkar, where Arbab Ghulam Rahim, the former Chief Minister of Sindh still holds sway, and from Attock in North West Frontier Province (NWFP) on Pakistan Muslim League (Q) seats. He won both the seats amidst allegations of massive rigging. One cannot say the same about Singh but he has never won a Lok Sabha seat; he lost the only time he fought from South Delhi. However, there’s no doubt that Singh’s entry into Parliament was through the backdoors – a Rajya Sabha seat from Assam. It seems that neither Singh nor Aziz are mass leaders.
Hence, as Finance Ministers, they could disrupt corrupt economies, battle against bulging bureaucracies, and campaign against corporate lobbies. They were in the right frame of mind to open the economic doors for foreign investment. Aziz claimed that the 1999-2002 period was one of stabilisation. It was an era when inflation was contained, current account deficit controlled, and investment climate improved.
Singh’s 1991 industrial policy transformed the domestic business environment. In one stroke, it cut red tape, virtually abolished the licence-quota raj, and allowed entry for both new domestic and foreign players in most sectors, except for the sensitive ones like Railways and Defence. The policy ended the age of state-owned monopolies in areas like telecom, power and oil & gas. It marked the beginning of a new competitive era. Yet another similarity between the two stints was the manner in which both FMs strived to reduce state subsidies. Pakistan went through decades where its political masters found it impossible to take hard decisions. During Benazir Bhutto’s regime, there was a reluctance to do away with subsidies or curtail public spendings. Bhutto also defied the conditionalities of the IMF and the World Bank.
During Nawaz Sharif’s tenure, there were pressures from the IMF to raise electricity charges and he agreed to comply with it during his visit to Washington. On his return, he decreased the charges amidst rhetoric that his government would not take dictation from multilateral donor agencies. In sharp contrast, Aziz cut expenditure in social sectors.
The same was the case with India. After Nehruvian socialism, Indira Gandhi’s nationalisation and ‘Garibi Hatao’ impetus, and Rajiv Gandhi’s emphasis on pro-poor ‘National Missions’, Singh reduced subsidies, and pushed urban consumers to pay market-linked charges for amenities like power.
As Aziz pushed through ‘painful reforms’, they didn’t achieve the desired objectives. Initially, expenditure cuts affected the provincial regimes. But since there was a Martial Law in Pakistan, the provinces had no voice. It was the time when growth declined, and unemployment rate rose. Moreover, services and infrastructure sectprs suffered.
Singh also faced opposition from several corners. The Bombay Club, formed in Independent India to lobby for domestic and ‘nationalistic’ private investment, was resurrected to protect corporate interests. Consumers realised that power tariffs were likely to shoot up. While economic growth took off during Singh’s tenure (1991-96), many blame his policies for the downturn in 1998.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
In 2004, both became Prime Ministers (PMs) within a fortnight of the other’s election. But there are some differences between the two too. While Manmohan Singh is India’s current PM, Shaukat Aziz is Pakistan’s former PM. While Singh is scripting a blueprint to catapult India as an economic superpower, Aziz is down in political doldrums and even lost the race to become Citibank’s CEO. While Singh’s place as a reformer is assured, Aziz’s is still being debated.
Aziz was picked up by President Pervez Musharraf as FM in November 1999, and elevated to the post of PM in mid 2004. Since Aziz didn’t have a constituency, he contested from Tharparkar, where Arbab Ghulam Rahim, the former Chief Minister of Sindh still holds sway, and from Attock in North West Frontier Province (NWFP) on Pakistan Muslim League (Q) seats. He won both the seats amidst allegations of massive rigging. One cannot say the same about Singh but he has never won a Lok Sabha seat; he lost the only time he fought from South Delhi. However, there’s no doubt that Singh’s entry into Parliament was through the backdoors – a Rajya Sabha seat from Assam. It seems that neither Singh nor Aziz are mass leaders.
Hence, as Finance Ministers, they could disrupt corrupt economies, battle against bulging bureaucracies, and campaign against corporate lobbies. They were in the right frame of mind to open the economic doors for foreign investment. Aziz claimed that the 1999-2002 period was one of stabilisation. It was an era when inflation was contained, current account deficit controlled, and investment climate improved.
Singh’s 1991 industrial policy transformed the domestic business environment. In one stroke, it cut red tape, virtually abolished the licence-quota raj, and allowed entry for both new domestic and foreign players in most sectors, except for the sensitive ones like Railways and Defence. The policy ended the age of state-owned monopolies in areas like telecom, power and oil & gas. It marked the beginning of a new competitive era. Yet another similarity between the two stints was the manner in which both FMs strived to reduce state subsidies. Pakistan went through decades where its political masters found it impossible to take hard decisions. During Benazir Bhutto’s regime, there was a reluctance to do away with subsidies or curtail public spendings. Bhutto also defied the conditionalities of the IMF and the World Bank.
During Nawaz Sharif’s tenure, there were pressures from the IMF to raise electricity charges and he agreed to comply with it during his visit to Washington. On his return, he decreased the charges amidst rhetoric that his government would not take dictation from multilateral donor agencies. In sharp contrast, Aziz cut expenditure in social sectors.
The same was the case with India. After Nehruvian socialism, Indira Gandhi’s nationalisation and ‘Garibi Hatao’ impetus, and Rajiv Gandhi’s emphasis on pro-poor ‘National Missions’, Singh reduced subsidies, and pushed urban consumers to pay market-linked charges for amenities like power.
As Aziz pushed through ‘painful reforms’, they didn’t achieve the desired objectives. Initially, expenditure cuts affected the provincial regimes. But since there was a Martial Law in Pakistan, the provinces had no voice. It was the time when growth declined, and unemployment rate rose. Moreover, services and infrastructure sectprs suffered.
Singh also faced opposition from several corners. The Bombay Club, formed in Independent India to lobby for domestic and ‘nationalistic’ private investment, was resurrected to protect corporate interests. Consumers realised that power tariffs were likely to shoot up. While economic growth took off during Singh’s tenure (1991-96), many blame his policies for the downturn in 1998.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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