"Humpty Dumpty sat on the wall, Humpty Dumpty had a great fall"

Can the UPA be put together again ?


Once upon a time, six months ago to be exact, there was a government that was moving full steam ahead. The economy was flourishing, the allies quiescent, and the Opposition dead beat. The ruling party had managed to get its nominee appointed President of the Republic — a sign of its commanding position — the Sensex had breached the 15,000 mark in the space of just half a year, and India’s traditional bugbear, Pakistan, was in the midst of a deep political crisis brought on by the sacking of the Chief Justice of its Supreme Court and the Lal Masjid affair.
Then suddenly the ground started slipping. And in the space of the next six months, Humpty Dumpty was pushed off his perch, ironically by his own friends, and has come apart. Now the proverbial King’s men are exerting mightily to put him together again to fight the next general elections, but somehow the glue does not seem to stick.

War

It is not as though the warning signals were not there. The defeat in the UP assembly elections in May came despite an enormous amount of effort by the crown prince Rahul Gandhi. But the rapidity with which the whole picture changed in August and September was staggering. It began with the revolt of the CPI(M). For two years since the Indo-US nuclear deal had been announced in July 2005, the party had gone along with the government probably in the belief that the deal would not really come through. Then at the end of July it became clear that the impossible had been achieved, that the country had managed to get a generous 123 Agreement with the US. Suddenly the Left attitude changed and CPI(M) General Secretary Prakash Karat launched a major campaign to derail not just the deal, but question the entire foreign policy track of the United Progressive Alliance.
Buoyed by its success till then, the Congress was initially inclined to fight and tell the Left where to get off. In early October, Sonia Gandhi declared that those attacking the deal were “enemies of development”. There was talk of a possible general election. And then came the craven U-turn: Sonia said her reference was specific to Haryana and Manmohan Singh declared that if the deal did not come through it would not be the end of life. The Congress’ enthusiasm to fight the Left came a cropper when close allies like M. Karunanidhi and Lalu Prasad Yadav said that they were not for elections and could even break with the UPA on the issue.
Coincidentally just as the UPA relationship was hitting the nadir, the Sangh Parivar got out of its trough. Confronted with the possibility of general elections, the RSS and BJP sorted out their differences in quick time and formally anointed L.K. Advani as the leader of the party. This came with the important electoral victory of the party in Gujarat, and then Himachal. There has been a great deal of hand-wringing and analysis over the BJP’s success and the Congress’ defeat.

Casualties

But not many have considered asking as to why the average voter in Gujarat and Himachal, even if they were no votaries of Hindutva, would have voted for the Congress. First, the advocates of anti-communal politics had muddled their message by associating with a range of BJP rebels, some who were no less communal than Narendra Modi. Second, the sight of the great anti-communal warriors fighting each other to death on the specious issue of “American imperialism”, would not have been the most reassuring for a voter.
Having humiliated the Congress, the Left could hardly expect it to look tall and fight the BJP in Gujarat. Purely coincidentally, these developments came at the very time that the Left got the worst drubbing of its recent political life on the Nandigram issue where, among others, it confronted the Jamiat-ul-ulema-e-Hind, the powerful organisation of Muslim clerics.
So here we are at the beginning of 2008, surveying the ruins of a once proud alliance and wondering whether it can be put together again. With elections just a year or so away, the Congress and its allies, which includes the Left, must ask the question: Just what have they achieved in the past three years? On what basis should the people vote for them the next time around?
True, the UPA has given us a stable government whose record is not marred by a Gujarat-type pogrom; its competent handling of foreign relations has enhanced India’s standing in the world. But economic growth has come on its own, or at least, without any significant government intervention, and despite the best efforts of the Left to sabotage it. Let’s not tarry on the still cooking nuclear deal. What about the National Rural Employment Guarantee scheme? According to a report by the Comptroller and Auditor General, it is not working. The government has hardly shown itself as an exceptional protector of the country, or a fighter against communal violence.
This is not to say that the condition of the other parties is any better. The coming year will see a bonfire of the vanities of other political formations as well. The BJP may send out its new poster-boy Narendra Modi to sup with Jayalalitha in Tamil Nadu, but it remains to be seen whether he gets the same kind of reception with Chandrababu Naidu or Nitish Kumar. Nandigram has yet to play itself out, not so much in terms of Mamta Banerji’s antics, but the alienation of the Muslim community from the Left.
Both the Congress and the BJP have been out of the Uttar Pradesh playing field and they don’t know how to get back on. The Congress’ chosen method is throwing sops that elude the targets and land up in the pockets of middle-men; as for the BJP, it is whistling in the dark hoping that Sethusamudram will do for them what the Ram Mandir did not. Turning up the communal temperature by using terrorism as the issue remains its most visible option.

Choice

Almost all political formations, barring Mayawati, want elections to take place at their assigned time in the first half of 2009. But that may not be possible. After its political mugging by the Left, the UPA does not look like it has the stamina to carry on for another year. If it does try, it could make the situation worse for itself. So, patchwork solutions are being attempted. In the coming weeks the Congress and the Left will try to pretend that their no-holds-barred battle never happened. Pranab Mukherjee’s declaration that the Congress would itself not like to proceed with a deal minus the Left’s support could be the beginning of an effort to revive the coalition. The effort would be to forget the August-December 2007 period.
There are straws in the wind to suggest that the Congress will again surprise the Left with a draft IAEA safeguards agreement that meets their somewhat extravagant demands. The Left will have the opportunity to reconsider. In the meantime, Mr. Karat may speak of the new Third Front and the Congress may dream of a modified UPA with Mulayam Singh, but time is not on their side.
As they confront the next general election, the future course of our political parties will be shaped by habit and vanities, rather than any deterministic unfolding of events. Choices exercised now could still make a difference, but just about.
This article was published in Mail Today January 16, 2008

Shaking down the money-makers

Today India faces no shortage of money, tax revenues are bouyant, the savings rate high and foreign investment pouring in. The big challenge is to ensure that it is well spent. This is not as much an issue of the private, but of the public sector. To be precise, the government. Failure of delivery systems, essentially the governmental machinery is the biggest problem that our war against poverty faces. Bashing the rich is a lazy response to the challenge, but most favoured by politicians. This article was published in Hindustan Times May 29, 2007




Mohammed Akram Khan’s 86 per cent marks in his Class 12 Board exams may not strike you as being unique. But everything else about him is. First, he is a student of an Urdu-medium school, of a kind that routinely underperforms at the Boards. Second, he is the son of a semi-skilled labourer. Third, he is a Muslim, now accepted as a socially and economically deprived community in the country. But one thing that marks this young man as part of a growing majority in the country is that his role model is steel tycoon L.N. Mittal.

Khan’s aspirations do not have much of a political voice in the country where the wealth creators have just been told by their Prime Minister to curb conspicuous consumption, avoid ostentatious expenditure and display of vulgar wealth, and check executive compensation. In our populist democracy, where Oxbridge-educated socialists-turned-Marxists like Mani Shankar Aiyar determine the discourse, Khan is not ‘aam aadmi’. He is probably a misguided neo-liberal or, worse, a neo-conservative.

Manmohan Singh’s reversion to the sterile rhetoric of the era of faux socialism at the annual summit of the Confederation of Indian Industry last week took the assembled captains of industry by surprise. That wealth creation is at the heart of wealth redistribution is on spectacular display everyday in China, a party ruled by an orthodox Marxist-Leninist party.

The proposition is really quite simple. High economic growth rates mean the generation of more wealth. High growth comes from high savings and investment and is manifested by the magic of compound arithmetic. An annual growth rate of 3.9 per cent, as we had in the 1970s, doubled our per capita income once in 18 years, whereas an average annual growth rate of 8.5 will do the same thing in about nine years. For philosophers, ideologues and the well-off, that difference does not matter. But for the young and the poor like Akram, it does.

Economic growth ensures that more resources can be harnessed through direct and indirect taxes by the government for public health, education, employment generation and even outright subsidies to aid the poor. Low-growth rates mean that you have less and are unable to create that critical mass of assets — physical and intellectual — for the poor to break the cycle of poverty. The battle between the concept of wealth creation and redistribution has long been over. The collapse of the self-consciously distributive State, the Soviet Union, coincided with the other much more egalitarian-minded revolutionaries, the Chinese, changing direction almost 180 degrees.

The hero of the war was Deng Xiaoping who confronted the issue of the bankruptcy of Marxist ideas by declaring that “socialism does not mean shared poverty” and that “to get rich is glorious”. China not only stood that Marxist-Leninist dictum on its head, but also threw out the Maoist notion of self-reliance and mastered the dynamics of export-led growth.

What is actually striking is the fact that in the past three years, the UPA has done remarkably well, in policies of wealth creation, resource generation as well as distribution. Tax revenues have been buoyantand figures show that in the last three years, government spending on agriculture has gone up from Rs 3,262 crore to Rs 8,090 crore; educational spending from Rs 7,024 crore to a staggering Rs 28,684 crore; healthcare from Rs 6,000 crore to Rs 14,000 crore; rural development from Rs 11,320 crore to Rs 29,020 crore and grants from Rs 18,269 crore to Rs 38,403 crore. These are large numbers, but look at them carefully and you can see the plot.

When the UPA came to power in 2004, it made a self-conscious effort to push what are called policies of ‘inclusive growth’. This meant not only greater investment in the social sector, but also efforts to push controversial social engineering legislation such as quotas in higher education for the OBCs and Muslims. But even while pressing these policies and expenditures, the PM clearly articulated a belief that economic growth was central to the UPA’s policies and that the economic growth path “if sustained for a decade or so, will enable us to eradicate the ancient scourges of mass poverty, ignorance and disease to a very substantial extent”.

Bashing the rich used to once make electoral sense. That age is — or should be — gone and the Congress has not quite grasped that one of the consequences of rapid growth is that it has created an aspirational surge of people for more, rather than less consumption.

Since it was a celebratory week — that of the UPA’s third year — the government did not face really hard questions about its own record of failures, first among these being the inability to move on reforming agriculture. Sunil Mittal, a businessman and currently CII President, is particularly miffed at the government’s failure to harness industry to the cause of agricultural change. Agriculture remains an insulated area, a votebank of backwardness and poverty that the political class drools over. Yet, the suffering and pain from its stagnation are manifest all over.

Perhaps a bigger failure has been the inability to get the administrative machinery to ensure that the money the government pours into a project will yield results on the ground. The most spectacular failure is that of the Sarva Shiksha Abhiyan, especially in the northern states where the enrolment ratio remains less than 50 per cent. Despite a huge increase in outlay, governments have been unable to deliver. “A child is enrolled but there is no classroom. If there is no teacher and there is no teaching, why do you blame growth?” Finance Minister P. Chidambaram asked.

Chidambaram also provided a perspective on the PM’s statement that corruption was growing like cancer in the road construction sector. Between 2000 and 2006, the government released Rs 22,527 crore for the rural roads programme. The amount that was actually spent,

Rs 21,025 crore (93 per cent), was for 220,956 kms of road, whereas only 120,577 kms (roughly 55 per cent) have been completed. The minister clarified that the difference had not all gone into someone’s pocket. It also represented half-finished roads, unused road-building material and so on. In short, managerial and governmental failure.

India stands at the cusp of history in terms of its own transformation. Losing political nerve in the face of elections and persistent incapacity of the government delivery systems will delay the process of ending those “ancient scourges” of mass poverty, disease and ignorance. They will also be a hindrance to India’s emergence as any kind of a regional or global power. India’s military power, though considerable, plays less of a role here than understood because of the country’s historical inclination against exporting it. It is economic growth that will provide India a central strategic role in Asia and the world.