Advocate FDI in defence; Land Bill urgent call: Tewari

Manish Tewari, MoS (Independent Charge) information & broadcasting ministry, Congress speaks about the upcoming elections and the government's proactive role in the country’s economic situation. He also pointed out that passing of Land Acquisition Bill is the need of the hour for the economy. He advocated FDI participation in the defence sector.

Here is the edited transcript of his interview with CNBC-TV18 Q: Your government has fought one political battle after the other and that is not all, also one economic battle after the other. We are one year before the elections, and for this government the biggest problems are inflation and instability. Do you think you have lost the election even before it is fought? A: That is not true at all. When people evaluate the performance of a government, they do so on five parameters. The first parameter is political stability. Over the past nine years, the United Progressive Alliance (UPA) has given political stability to this country. The second parameter is social cohesion. We have ensured in the past nine years that 2002 never gets repeated in any part of the country. The third is internal security. If you look at the internal security situation, whether it is in Jammu & Kashmir, the north east, or for that matter even in the Left wing extremist areas, it has improved economic development. This is the only government, which during the 11th Five Year Plan period delivered 8.2 percent growth straddling UPA I, UPA II when the entire world was combating the worst-ever depression that we have seen after the 1930s. The fifth is the international profile of India. Look what has happened with Brazil, Russia, India, China (BRIC), look what has happened with the Indo-US nuclear deal. Therefore, I think when people evaluate the performance of a government, they do not go by hysterical sensational discourse, which only focuses on  negativism. It is corrosive at most times with the national spirit and so therefore I think we stand fairly well poised. Q: Growth at this point in time is at 4.5 percent. It was struggling to stay at even 6 percent, but even more interesting is the fact that you brought up 2002. Is that going to be the political strategy in this election and anti-Modi campaign? A: For us, the chief minister of Gujarat is a non-issue. He may be an issue for the Bharatiya Janata Party (BJP), because the chief minister of Madhya Pradesh turns around and says that whenever people talk about Prime Ministerial ambitions they reduce the BJP to a laughing stock. As I jokingly keep telling my friends you have lurking Prime Ministerial ambitions, sulking Prime Ministerial ambitions, closeted the Prime Ministerial ambition in the Bharatiya Janata Party. Therefore, for us, an individual in the Bharatiya Janata Party is a non-issue. However, the fundamental fault line in this country is secularism qua communism. Those who believe in pluralism, those who believe in the idea of India as it was conceived by the founding father know which side of the divide to weigh in all. Q: In your own party Prime Ministerial ambitions not cloaked, so are you saying that this is going to be a Rahul Gandhi versus Modi battle or you are saying that Modi is not an issue at all. Who is going to be your Prime Ministerial candidate. If it is Rahul Gandhi, is it going to be Rahul Gandhi versus Modi? A: I think you have misread the situation. In so far as the Congress is concerned, what I refer to as “The Holy Trinity”. You have the Congress President who led the Congress Party in the UPA very successfully for 15 years, the UPA for the last nine years. You have a Prime Minister who is globally respected, who has delivered on governance in the past nine years, and then you have Rahul Gandhi who has now taken charge of the party and is rejuvenating and reinvigorating it. So, therefore we have a leadership which blends experience with youth, which is not I, me, myself all the time, which believes in empowerment of people as a whole. So therefore, that is what we are going to go to the people with. Q: So is this trinity going to continue. Are you saying that there will be a third term for Manmohan Singh? A: I am not going to be drawn into that debate for the simple reason that we are still one year from the elections. Since you brought up the 5 percent growth number, yes, it is true we have been caught in the backlash of the great economic depression, which hit the world in 2008 or the global meltdown as it was called. So, therefore we are trying to surmount that. Our eyes are focused on economic consolidation, seeing that projects which have got stalled get underway in critical areas of the economy, whether it is the oil and gas sector, coal or mining, we are able to kick start economic activity and ensure that the broader security situation and social cohesion remains on track. So, that is what our priority is. Q: I understand that the government is trying to get growth back on track, but on the ground you are not seeing that growth. Q4 earnings are expected to be the worst in the last one year. The fact is that investors, despite the Current Account Deficit (CAD) of 6.7 percent and the necessity for them to come, are still seeing political uncertainty as the key obstacle to coming into the country. How do you address that? A: Let me make one thing very clear to you. There is absolutely no political instability. If you see the media speculation and the frenzy that we go into at times, drawing up those charts about how numbers are stacked up, has anybody of any gravitas in the political system ever questioned the stability of the government, and the answer is clearly no. People in politics who run coalitions over the last two decades understand that people of India do not reward those who create instability. So this government is here to stay. We will stay the course till 2014 and on the strength of our achievements we will go to the people. Q: Economic consolidation and growth is going to be the political strategy? A: If you look at the Budget, it was the penultimate or maybe the ultimate Budget.  At times you present an interim Budget before the general elections. If populism was the way we wanted to go, then the trajectory of this Budget would have been very different. But the finance minister very cautiously chose to exercise prudence, he chose to exercise conservatism over populism and presented a Budget which was clearly focused on ensuring that we return to the high growth trajectory of 8-9 percent. _PAGEBREAK_ Q: Is this something that is going to continue till 2014 and does the finance minister have the party support to go ahead with this reform process? A: Absolutely. If you read the Budget speech, he has laid out a roadmap of economic consolidation which goes up till 2017. So, therefore, we are absolutely focused on seeing that the fisc comes under control. The Corporate Debt Restructuring (CDR), CAD numbers should also come under control because that is really the way forward. Q: One of the key obstacles to FDI coming into the country is the fact that approvals take so long and businesses process in this country are so difficult. That is something that the finance minister is trying to deal with, but it is essentially a larger political question. Is that something that is now going to be a focus area to simplify business procedures, to ensure that the foreign investor finds India an easy place to do business in? A: If I can be indiscreet and I have not taken the finance minister’s permission to do so, but when we met him he talked about how he was in Mumbai and he had a very long and extensive meeting with people of the business community and they are now trying to work out procedures in conjunction with the state governments, whereby business processes and clearances can be simplified. I believe he plans to replicate this process in Chennai, Delhi, in other parts of the country. Therefore you have in Chidambaram a finance minister who has had two decades of experience in government and has held a large number of critical ministries. So, therefore, his ability to work with the states and surmount these problems with the advice of the Prime Minister and the backing of the United Progressive Alliance (UPA) chairperson is something which is an extremely redoubtable combination for this country. Q: There is growing speculation that in Mr Chidambaram you also have a likely Prime Ministerial candidate. Is it actually going to be end up being Chidambaram versus Modi? A: I think Chidambaram has already answered that question, so I have nothing further to add or subtract to it. He is somebody all of us have great respect for, but he has made his position very clear on this particular issue. Q: Insurance and pension bills are the two big reforms that investors are looking forward. The Parliament session will start in about 10 days. Have you reached out to Opposition parties and do you think these two key bills will pass in this session? A: We have been reaching out to the opposition because we believe that pension, insurance, banking and some of those bills which came back from the Standing Committee are key bills for the second stage of reforms. Unfortunately, these bills have been caught in a political spiral. If one can recall that the PM clearly articulated in an interaction with broadcasters two years ago that how political reasons or imperatives were holding or hijacking the whole process.      I hope that the Opposition is able to surmount and see the economic reality, because as we look at the global scenario, not only growth numbers in India have tanked, but Purchasing Managers' Index (PMI) numbers in China, Indonesia, South Korea, all the producing economies, have tanked because the consuming economies are not picking up. Therefore, if you believe that politics is about a public purpose then the Opposition needs to measure up to the plate and go beyond politicking on economic issues. Q: The key point of contention is the 49 percent FDI clause and according to our sources in the finance ministry that they want to stick to that because ultimately companies are only going to come in if FDI is 49 percent. What sense you get from the Opposition on that? A: The finance ministry has a correct read of the situation. I am a lawyer by trade, I did some corporate litigation in this area, so I have a fair idea of how this sector functions. Twenty six percent is barely an investment option, if one wants to invest in a company and then if the company is doing well you need an exit route, so these are investment vehicles that you look at. But, 49 percent or equity beyond 49 percent is a long-term commitment that you make in a project. So, therefore, if we want serious investment coming into insurance, pensions, banking, then we will need to liberalise FDI limits. I do not want to second-guess what Parliament will do and neither step on the toes of the honourable finance minister. _PAGEBREAK_ Q: The Prime Minister has said that liberalisation in various sectors is essential at this point in time, but some of it is again politically contentious, not just from the Opposition, but also from within your own party, for instance defence. The finance ministry would like to see it go up to 49 percent. Do you think you have the bandwidth to build political consensus on an issue like FDI in defence? A: In February 2010, I wrote an article in The Indian Express advocating increase in FDI in defence. In that period I was serving the Consultative Committee of Defence and the Standing Committee on Defence, but this is a contentious issue.    There are opinions on either side. Something has a critical national security imperative and there is a need to tread cautiously and see if we can build a consensus around because there is opinions within government, there is opinions within the political firmament and then there is larger body of opinion, the hawks and the doves who dominate the edit pages of various newspapers on a daily basis. So this requires a larger, a huger consensus building and I would really leave this issue to the wisdom of the defence minister. Q: The other key economic legislation that you are going to see in this session is the Food Bill. Critics said that this is typical Congress-style politics and it is great politics, but very bad economics. Even developed countries do not have the kind of coverage that the Food Bill is envisioning for this country and the fair fact is that the exchequer at this point in time cannot afford it. On the one hand you talk about fiscal consolidation, on the other hand you have a bill that is going to cost you Rs 1 lakh crore. Do you think it is bad timing given the economic scenario? A: One needs to understand that there are parts of India which live in the 19th century and some parts live in the 22nd century, and as a politician one needs to straddle various worlds and come to a certain conclusion. In the last nine years, the UPA government has built up the most ambitious rights-based entitlement structure which the developing world has seen. Information, rural employment, education, food, shelter and women’s empowerment is on the anvil. People around the developing world like to emulate this model. This is the social safety net which was put in place, because India is not about the 20 percent who are people like us, India is also about the 80 percent whom one needs to bring into the mainstream. So, therefore there is no contradiction between growth and equity. We require growth in order to bring about equity in this country, but we are not going to tax or penalise or be punitive about those people who are contributing to India’s economic growth, but there is a certain sense of responsibility which all of us have to people who are maybe less privileged than we are. Q: Since we do not have an economy that is growing at 8 percent anymore, can the Indian economy pave for a right to food at this point in time? A: Around Rs 1 lakh crore is already provided for the public distribution system. As it stands constituted. Another Rs 24,000 crore is required and the FM has made a provision for that in the Budget. Therefore, funding and financing the Food Security Act will not be an issue and it will not come at the cost of economic consolidation or there is no contradiction. We have made a provision and yet, we are taking the overall economic situation in mind and also focusing on economic consolidation. Q: Do you expect the Land Bill to pass in this session of Parliament? A: I think in everybody’s interest the land acquisition, relief and rehabilitation bill should go through because we are stuck with legislation, which was put in place at the turn of the century. So we do hope that we would be able to generate a consensus on it.   Q: Telecom Regulatory Authority of India (TRAI) is trying to enforce the 12 minute per hour advertising rule, it is an old law, they are trying to enforce it now but at a time when digitization is not complete. Do you think this is the appropriate time and will you take the matter with TRAI? A: Correct. This is a complex issue because Cable Television Networks Regulation Act 1994, contains both programme and advertising code. The programme code and the advertising code are voluntary licensing conditions, which broadcasters undertake when they take a license from the government to operate and the 12 minute rule is a part of the programme code per se. Therefore it is a part of their licensing conditions. TRAI under the Quality Standards System (QSS) mandate, have gone ahead and mandated that 12 minute rule should be followed. This is the legal position. The reality is that there is no revenue model in the broadcasting industry, there is hardly any subscriber revenue, people are advertising dependent, digitization, in fact is a process trying to fix the revenue model in addition to making things transparent. Therefore, we are trying to work with TRAI to see that we can find a modus operandi. The Indian Broadcasting Federation (IBF), the News Broadcasters Association (NBA), met me and I think they have a fair point. I told them to speak to the TRAI chairperson. Once they get back to me then we will take this dialogue further. Therefore, we need to find a balance. We cannot have a situation because the TRAI informed me that their data suggests that some channels were running advertisements to the tune of 40 minutes out of one hour, which is unfair for the consumers. Therefore, one must find the right balance and what is the right balance, how do we put the roadmap in place so that we can come to 12 minutes is the challenge at hand. Q: You mean that you need to revise the 12 minute and build a roadmap so at least in the immediate future you need to revise the 12 minutes upwards? A: I don’t mean one needs to revise 12 minutes because that is the statutory rule. Therefore, nobody is talking about revising the 12 minute. We understand the reality and are sensitive to the reality and let us put a roadmap in place as to how we can be incompliance with a statutory mandate.