Allies will not rock UPA boat: Kamal Nath

THE KAMAL NATH FACTOR: Three-time Cabinet Minister Kamal Nath in an interview with CNN-IBN.

          

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Welcome to a special series Team Manmohan where we will focus on key ministers in the Cabinet of Dr Manmohan Singh. One of the Cabinet Ministers is a nine-time Congress MP, three-time Cabinet Minister Kamal Nath. In an exclusive interview with CNN-IBN’s Editor-in-Chief Rajdeep Sardesai, Nath talks on many issues including the logjam over the Dravida Munnettra Kazhagam (DMK) refusing to attend the swearing-in ceremony, the agenda of the government and United Progressive Alliance's (UPA) roadmap next five years.

Rajdeep Sardesai: Congratulations at winning again but at the swearing-in you seemed to be a man in a hurry? You forgot to sign the book; you started your swearing in even before President Pratibha Patil could call out your name. Why is Kamal Nath in a hurry?

Kamal Nath: Well sometimes you lose your focus on what you are doing. I think it was just that.

Rajdeep Sardesai: I think it was because you were giving your entire swearing-in speech in Hindi.

Kamal Nath: Well! I know Hindi very well. I come from a Hindi state but then I was, I think, focussing on the very eloquent reading of the oath.

Rajdeep Sardesai: Okay. Oath ceremony apart at that swearing-in there was no DMK. Is that to you only a minor hiccup or is that a sign of the times. With no DMK in the government, it spells trouble for the UPA already.

Kamal Nath: I don't think there is such a lot of divergence. Obviously in any alliance there has to be some times demands. They will demand rightly so. Any alliance partner will demand so much more and we as a majority partner must remember that DMK is 18 and we are 206. That being so they had demands and we said these demands are not reasonable and we said we will talk about it and in the next two-three days it will end.

Rajdeep Sardesai: You and most Congressmen seem to think that there is nothing to worry about. But the public perception is that parties like the DMK can hold the government to ransom, they can decide whatever portfolios they want. That's what happened in Manmohan Singh's first tenure. Virtually every ally was demanding certain portfolios and could get away with it.

Kamal Nath: Well this is not Manmohan Singh's first tenure. I think…

Rajdeep Sardesai: So is there a difference between 2004 and 2009?

Kamal Nath: Of course, of course. We are a party which is now with 206 seats. We have been in government for five years and we have a renewed and stronger mandate of the people. So there is a greater sense of self confidence politically. I think where the DMK is concerned obviously they will demand it. They feel they have been loyal allies and based on that…

Rajdeep Sardesai: But they ended up embarrassing you.

Kamal Nath: No, I don't think so.

Rajdeep Sardesai: It took away some of the sheen from the entire swearing-in. When one of your allies just 24 hours before it almost demands certain portfolios… doesn't it take away the sheen?

Kamal Nath: Well they are meant to demand and allies are meant to demand. They demanded the last time, they demanded this time and even the next time in an alliance they will demand. That is what alliance politics is all about.

Rajdeep Sardesai: Determining whichever portfolios they want? Will the Prime Minister decide who gets what or will the allies decide?

Kamal Nath: Allies consult. They consult the allies. I am sure they consulted Mamata Banerjee. I am sure they consulted Sharad Pawar and it is based on that that you arrive in a solution to this. I am sure that in the next two days there is going to be convergence on this.

Rajdeep Sardesai: Are you ok with TR Baalu and A Raja being your cabinet colleagues. There is a huge question mark over them.

Kamal Nath: Well they have been my Cabinet colleagues and it is upto the DMK to put up their nominees.

Rajdeep Sardesai: You are saying the DMK can decide whom they want as ministers but the Prime Minister can decide what portfolios they get. Is that the broad principle?

Kamal Nath: No. The Prime Minister in consultation with them concludes the portfolios. This is what is happening and that is what is going to happen.

Rajdeep Sardesai: But the question, Mr Kamal Nath, will come when there will be a time when people will say this is a Congress Cabinet now. Would that be fair to say? Out of the 19 that were sworn in on Friday, 17 were Congress leaders and the two who were non-Congress leaders – Mamata Banerjee and Sharad Pawar - have been former Congress leaders. Is this now a Congress government, a Congress-led government, a government where the Congress will run the show?

Kamal Nath: Obviously, it is always the party which leads… the Prime Minister is from the Congress party, the majority of the Cabinet is from the Congress party. It is the Congress party and the Congress government with its allies. Now its allies like DMK have got 18 seats.

Rajdeep Sardesai: But you have a situation where an ally the National Conference's leader Farooq Abdullah has gone and watched the IPL instead of coming to the swearing-in because he is miffed. You have got another ally Karunanidhi who has gone off to Chennai. Does it reduce the scope of your government to function? If allies continue to put this type of pressure over the next five years what happens? What happens then to this so-called decisive verdict?

Kamal Nath: Well there is a decisive verdict and we will act on that decisive verdict. Nothing gets diluted by these incidents and these incidents are not such incidents which are going to rock the boat in a any way.

Rajdeep Sardesai: The sense that one gets is that continuity is the mantra. Most ministers are being brought into the portfolios in which they were in the last five years. Is that the sense that you are getting that we will get five years of the same. That's what this UPA Government is going to be about or is it going to be dramatically different in the way it governs?

Kamal Nath: Sometimes it is good and sometimes continuity is not the best thing. Because everybody had a taste of what they are doing and since we are a government that has come in again, the Prime Minister is able to asses where the strengths, weaknesses and priority needs to be changed. So continuity in one way is good. Continuity in another way after the experience need not be adhered to.

Rajdeep Sardesai: I am asking this because there is a feeling that the critical for this government is going to be the economy and you need dramatic change there. You can't afford to have more of the same. It cannot be status quo any more. Do you agree that that is big challenge for the government at the moment?

Kamal Nath: It is because there is a global recession, global economic stress. Economies are integrated. They are not independent but they are inter-connected. We are seeing a fall in exports because of the global economy being in severe stress. So the economic challenge, I think, is the biggest challenge today with a young population in this country looking for jobs, looking for opportunities, looking for better life. That is a very important ingredient today even in electoral politics.

Rajdeep Sardesai: Yet we are getting no indications from the government whether they want to go ahead with the Budget before July 31 or go instead with a vote on account. There is a feeling that the government isn't clear what it wants to do in the first 100 days.

Kamal Nath: I think we are very clear. The Prime Minister has said that in 100 days I am going to announce major steps to address the economic issues.

Rajdeep Sardesai: So it doesn't have to be through a Budget? It could be just a series of reform measures?

Kamal Nath: The Cabinet ahs just been sworn in on Friday. If we are saying what have they done in the last 12 hours, I think we are trying to go overboard.

Rajdeep Sardesai: No, I am saying that what is the 100-day roadmap? Is it a roadmap which is focussed on the area of economic reform primarily?

Kamal Nath: That is what the Prime Minister has announced. He said that I am going to lay out a roadmap in the first 100 days of the steps and policies which we need to take, steps we need to take to ensure that we are on a growth trajectory as before.

Rajdeep Sardesai: The reason why I am asking this is because there is a feeling that India never misses an opportunity to miss an opportunity and really this is an opportunity that you have. For example, The Economist says India will be running out of an alibi this time if it doesn’t deliver on critical areas of infrastructure this time. Do you agree on this?

Kamal Nath: I think this is India’s moment and a great opportunity. I do agree with you.

Rajdeep Sardesai: But your government didn’t deliver on infrastructure last time. Will this be different this time around?

Kamal Nath: Let us remember that there are many things when we talk about infrastructure. We have to put in place the mechanism, platforms, if there is a public private partnership etc. All these platforms have to be build and as this has been done we are at a point where there is going to be a lot of action.

Rajdeep Sardesai: Is it is going to be the action plan of the 100-day plan? Is this is what you have got out of the first cabinet meeting that reviving the economy is the focus of the 100-day plan?

Kamal Nath: Well, this is what the Prime Minister announced and I am sure he meant what he said that I want to be sure that the economic strategy that we have is spelt out, people have a sense of confidence and we are moving forward in this.

Rajdeep Sardesai: Do you want to be more specific than this that what are those key areas. If you had to have the three priority areas in the first 100 days of the Government, where do you think they lie?

Kamal Nath: They lie in the investment and manufacturing sector, reforms in governance, there are many bottlenecks…

Rajdeep Sardesai: When you talk about bottlenecks in governance, you effectively mean corruption at various levels?

Kamal Nath: Corruption is one of them but corruption can be cured systematically. It just cannot be cured by wishing it away. And I think that some of the steps that we took like the Right to Information was a major step taken in our previous government.

Rajdeep Sardesai: The sense one is getting is that the Prime Minister wants to ensure that in the key ministries the best people are there. Is this is how this Government is going to look, the best people will be there in all the critical ministries?

Kamal Nath: The PM obviously wants the best possible team. And he is doing that by keeping the best possible people in the critical areas, especially the ones which are high priority areas and that is the economy.

Rajdeep Sardesai: I am again saying that because the impression after the Cabinet was that it is the old wine in the old bottle. Where are the new faces, where is the imagination, where are the younger and brighter faces?

Kamal Nath: There are, this is the first lot. There is a second lot which is going to come.

Rajdeep Sardesai: But they are not in the critical portfolios. The Cabinet Ministers still remain the generation born before 1947.

Kamal Nath: No, I don’t think that the ministers who are not Cabinet Ministers have no role to play. They have a major role to play, let us not assume that because they are not Cabinet Ministers they have no role to play. They have a role to play in implementation, policy and I guess this is what is going to happen.

Rajdeep Sardesai: The new Government this time is largely free of the pressures of allies and therefore you will expected to push it with reforms. Last time, every time you were asked about reform you said look my hands are tide. Your hands are no longer tide, will it be different this time?

Kamal Nath: Let’s not say that there were no reforms in the last government. There were reforms in the financial sector which we didn’t do but let us recognise this. We should remember that the reforms that were asked by those financial icons of the Western world, the ones which were wound up.

Rajdeep Sardesai: So, are you among those who think that it is good to be cautious about financial sector liberalisation?

Kamal Nath: No, it depends which reforms we are talking about. We are looking at the reforms which are India specific; we can’t be talking about reforms all over the world. Today the most important reform is the reform in the governance. Reform in our Labour Act, the labour laws must be made employment generating.

Rajdeep Sardesai: So, you would support reforms in labour laws which allow companies to hire and fire easily?

Kamal Nath: We must recognise this that for example if a textile company wants to hire some people to complete an order in four months but they can’t take that order because he can’t hire them for four months. So at that point of time, we are losing on that amount of employment.

Rajdeep Sardesai: But will the politicians allow this kind of labour laws reform? The problem is this is where the politics seem to clash with good economics.

Kamal Nath: No, I am all for the reform in labour laws which generate employment, provide employment security. We have to have this because employment generation is our No 1 priority with the young population.

Rajdeep Sardesai: But let’s look at land because there has been controversy over Kamal Nath’s policies as commerce minister when it came to the Economic Zones. You were looked at someone who was liberally granting Special Economic Zones (SEZs), some suggested that it was little more than a land scam. And now you have got Mamata Banerjee who after Nandigram and Singur is going to get tough with any attempts made to liberalise land acquisitions.

Kamal Nath: Let us not talk in the abstract. There are SEZs today on the ground, you can measure easily how much investment is coming to the nearest rupee. We can measure how much employment has been generated, how much export has happened so all that are stories of the past. There are concerns in high density states.

Rajdeep Sardesai: But after Singur and Nandigram, won’t there be pressure to sort of modify your land acquisition policies, your own minister will suggest that.

Kamal Nath: I am all for that and that is what I am suggesting that there was a Cabinet committee, there was a group of ministers selected for that. That has moved the new land acquisition rehabilitation suggestive policy and that parliament had approved that and now this Parliament will take it up.

Rajdeep Sardesai: Just before the elections, you had amended the Foreign Direct Investment (FDI) policy through a press note. Now investments made by a company registered in India in which a foreign company has a less than 50 per cent stake will not be considered as FDI. Some believe this has allowed foreign companies to breach sectoral limits, was this the objective to open up?

Kamal Nath: When we have a global recession, we have to make India a good investment destination. I want to separate ownership and control and this seeks to do that and get more investment.

Rajdeep Sardesai: In your first tenure, between 2004-09 there was this ghost of Left which was always haunting you. This time it doesn’t even exist, will there be FDI in the multi-sector retailing or do you believe that this might affect the kiranewalla (small grocery shop) and that might be a concern that your fellow Cabinet Ministers will against you?

Kamal Nath: It is not FDI, it is big versus small and if it is big you can have a multi-brand Indian company, you have Reliance, ITC etc.

Rajdeep Sardesai: Will you allow FDI?

Kamal Nath: No, I am not talking about retail. As long as FDI doesn’t displace existing employment it is good but talking about the retail sector it is a very grey area.

Rajdeep Sardesai: You see it as a grey area, I thought at one point of time you believed that it would help Indian agriculture.

Kamal Nath: No, we cannot generalise on retail. Retail is not cement and motor, it is technology. If we can have access to retail technology and in fact we must not be looking at man at the moment, we must be looking for the niece and the son and the daughter. And that is the key thing to look at.

Rajdeep Sardesai: The Commerce Ministry had also been wanting to liberalise high education but the HRD Ministry previously under Arjun Singh was not helpful. He is no more there but the fact is that will it happen now?

Kamal Nath: I can’t say that this will happen, I can only say that we have to ensure that our youngsters have the access to the best education in India. Why are we sending thousands of youngsters abroad, why can’t they stay here and study at a fraction of the cost?

Rajdeep Sardesai: Exports, a critical area again. The export sector has been badly hit by recession. Your (Commerce) ministry had proposed a one year exemption in the payment of the fringe tax to these export oriented companies. Will we see that?

Kamal Nath: Exemption is about competitiveness and cost. Today, if the economy is in recession we can’t plan a package for Europe or the US. We are going to ensure that all levies and taxes are refunded and are not there for export.

Rajdeep Sardesai: But the aam aadmi is the one who is being hit. Do you think the time has come for a comprehensive package for the export sector?

Kamal Nath: There is a need for a comprehensive package to refund taxes, levies on anything that is being exported. Today you go anywhere in the world and you buy something from a shop, you refund immediately. So, you must have all taxes and levies because no taxes and levies are exported.

Rajdeep Sardesai: Last time there was a feeling that the Commerce Ministry and the Finance Ministry were not on the same track. Will it be different this time with Pranab Mukherjee as the Finance Minister?

Kamal Nath: Well, I think the job of the Finance Ministry is to collect the revenue and see that they do resource management so any Finance Ministry would do that. But you need to weigh it off, you may not export and you may be having an economic impact because of that.

Rajdeep Sardesai: Between 2004-09, Kamal Nath came to be identified with the World Trade Organisation (WTO) talks. Do you believe that with this clear mandate you will have a freer hand in the sense negotiating at the WTO you should be the commerce minister. Do you see a quick completion of the Doha round?

Kamal Nath: I think India needs to have a rule based multilateral system, we have a big stake in that. But today I think the Western countries who are bigger proponents of this are the ones getting cold feet and not India.

Rajdeep Sardesai: Yes, exactly that is why the US democratic administration seems protectionist.

Kamal Nath: That is what I am saying, they are getting cold feet not us.

Rajdeep Sardesai: There is a political question I want to ask you, where does Kamal Nath go from here? You are a nine time MP, what do you aspire to become?

Kamal Nath: Anything that give me fulfilment.

Rajdeep Sardesai: Is there a particular area which you think is a challenge for you?

Kamal Nath: The greatest challenge is that it is India’s moment. When the world is in economic stress, we get an act where we go to achieve an economic growth of eight-nine per cent. Our demographics are very young; we must remember that we are an ancient civilisation and a young country and this young human resource need to be steered to strength. An economic solution is necessary for that.

Rajdeep Sardesai: But is there a battle within the Congress between the Congress which is there at the Centre and which believes in handouts, loan waivers – which are politically possible – versus your philosophy which is perhaps less politically successful but could be the economic solution we are waiting for?

Kamal Nath: I don’t think there is any contradiction. We do need those social support, programmes because that has to supplement the employment which the industry is going to create.

Rajdeep Sardesai: One final time I am going to ask you that will Manmohan Singh’s Government live upto its mandate this time given that you are less dependent on your allies? Will we see decision making much faster this term?

Kamal Nath: Well, I think you should have no doubt about that.