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Lessons from the Indian elections

Policy agendas and alliance politics

The majority of people who drive the economy and who determine the outcome of elections come from more modest backgrounds. A meaningful reform agenda therefore needs to be designed which gives this underclass a direct stake in the growth process, whether by ownership of assets or through enhancement of market opportunities, access to credit, quality education, or simply a regular source of employment. Such reforms will be more economically as well as politically sustainable.

Rehman Sobhan
This is the second of the author's two-part series on the Indian polls. The first part was published on June 1,2004.
After much negotiation a new government is now in office in Delhi with Dr. Manmohan Singh as Prime Minister. It is a coalition government built around the Congress-led United Progressive Alliance (UPA), which contested the recent Lok Sabha elections. However a number of collateral allies of the UPA have stayed out of the Cabinet, but will extend voting support in the Parliament. In UP the two principal allies of the alliance, the SP and BSP, are both outside the government. The Left Front, after much soul researching, has also opted to stay out, but has permitted the leader of the CPI-M Parliamentary Party, Somnath Chatterjee, to be nominated for the important post of Speaker of the Lok Sabha. India is therefore going to be exposed to another phase of coalition politics which initially sustained the Janata government's of Deve Gowda and I.K. Gujral from 1996-98, and then the BJP led NDA from 1998 to 2004. It is evident that alliance politics has now become a permanent feature of India's political landscape and the strong one party regime associated with the Congress Party is now a part of history. So how sustainable is the present coalition led by Manmohan Singh?
Apart from the Left Front, none of the current allies of the Congress have strong ideological or policy-oriented concerns. All other members of the alliance are regional parties with state specific agendas and concerns who have at some point been in contestation with the
Congress for State-level power. Whilst none of these regional parties will contend with the Congress on major national policy issues they will have issue-specific concerns, including contests over positions of office and patronage. This has already became apparent in the arguments over the distribution of portfolios amongst the coalition partners. However, the main concern of the regional parties will be over State-Centre relations where acts of omission or commission by the Centre during the tenure of the current regime are likely to generate friction, tensions, and even disruption in the alliance.
To reconcile these heterogenous political interests will demand extraordinary political skill from Prime Minister Manmohan Singh, which could take up his time as well as constrain his authority to move decisively in areas of both domestic and foreign policy. His policy initiatives will therefore have to take into account that adverse reactions from any of his coalition partners could end up in defection. Indeed some of his allies may, at any moment, calculate that they can negotiate a better deal with the BJP. For example, during the 1999 election, the DMK was, in Tamil Nadu, a direct ally of the BJP, whilst the AIDMK sided with the Congress. It is arguable that the RJD, led by Laloo Prasad Yadav, has been quite consistent in its opposition to the BJP due to its exclusive power base among the Dalit or Untouchable classes and the Muslims of Bihar who have great faith in Laloo's non-communal record. But Laloo is a mercurial person whose political loyalties can never be taken for granted. However, Dr. Singh will retain the power to play-off one partner against the other as well as hold out the threat to replace any of them in the coalition by bringing in the Left Front, the SP, or even the BSP. This game of manipulating alliance partners is not likely to be Manmohan Singh's strong suite. He is a straightforward person who is more likely to be interested in governance and policymaking than in deal making.
The only member of the Congress-led alliance whose opposition to the BJP remains implacable,
because it derives from ideological issues, is the Left Front. In the final analysis the only firm guarantee for the Congress to complete its full tenure in office is to ensue that the Left Front remains an integral part of the government by joining the Cabinet led by Manmohan Singh. This may still not assure a complete majority for the Congress if all its other allies were to defect. However, with the secure ballast of the Left Front's support it could ensure that the RJD and NCP and a few smaller allies would assure it a safe majority in the Lok Sabha throughout its 5 year tenure of office.
Whilst a Congress-Left Alliance may provide the only secure basis for stable governance in India to build such an alliance between the Congress and the Left Front will
making state owned enterprises (SOEs) should not be divested. Indeed it was the BJP, under the inspiration of its Minister for Privatization, Arun Shourie, who took the ideological position advocated by the World Bank-IMF, that all SOEs, profitable or not, should be put on the auction bloc.
Just as the Left Front is likely to be flexible in its thinking, Manmohan Singh is likely to be responsive to the changed circumstances in which he has assumed office. It should be recognized that the reforms initiated by Manmohan Singh as Finance Minister under the Congress government of Narashima Rao were a product of the thinking of the 1980s. At that time, market-oriented structural adjustment
are far from satisfied with the outcome of India's reform process. This is without prejudice to the outcome of the unending debate amongst India's economists as to whether poverty has significantly been reduced or not. The electorate in India, over the last quarter' of a century, have cast their vote with reasonable consistency, against the incumbent government, whatever be its political complexion. In 1989 the Congress was voted out of office and replaced by the Janata Dal led by V.P. Singh. In 1991 the Janata Dal was voted out of office and the Congress replaced it. In 1996 the Congress was again replaced by the Janata Dal. In 1998 and more so in 1999 the BJP replaced the Janata Dal only to be voted out of office in 2004. This
reforms of the sort put in place across the world over the last 2 decades, whether under the diktat of the World Bank-IMF or by more indigenously motivated reformers such as Manmohan Singh or the BJP, have yet to secure the mandate of the less privileged members of their society. Much more can be written on the intrinsic limitations of the traditional reform process or why they do not excite the voters. Here let me conclude by saying that if Manmohan Singh wishes to both continue in office for the next 5 years and more to the point, be remembered by the people oflndia rather than the Indian Stock Market or the London Economist, long after he leaves office, then he may have to rethink his entire approach to economic reforms. Such a
pose a complex set of dilemmas for the Congress. The Left Front has a definite political perspective. Popular rhetoric, originating from the business-owned media in India and a Western media which maintains a quite superficial view about policies and politics in India, projects the Left Front as some sort of Stalinist political force. However, in practice, the Left Front of today after long exposure to state level power in both West Bengal and Kerala, has become a much more pragmatic organization with few hardline positions. Its list of demands submitted to the Congress for incorporation in the Common Minimum Programme is distinguished by its moderation. Such issues as the pro-poor orientation of the policies and expenditures of the Congress-led government are indistinguishable from the position of the World Bank or most European governments who also emphasise "pro-poor" policies. The Left Front's position on privatization is not ideological but pragmatic arguing that profit
reforms were still the dominant fashion in global development thinking. Most developing countries, including Bangladesh, had already initiated a process of reforms under World Bank/IMF direction. India, had initiated its own reforms after 1984 during the Congress regime of Rajiv Gandhi. At that time Manmohan Singh was Deputy Chairman of the Indian Planning Commission. When Singh assumed office in 1991 as Finance Minister, India's macro-economic situation was particularly adverse. Singh used this opportunity to accelerate the pace of reforms through a macro-economic stabilization programme and accelerated the process of deregulation initiated in the 1980s. The economic reforms in India were thus not initiated by Singh but accelerated and broadened by him. But to hear the world media discuss the subject one could assume that India was being run as some sort of command economy where Manmohan Singh had emerged out of nowhere in 1991 as a Milton Friedman-like economic liberaliser.
In actual practice, Singh as a veteran senior bureaucrat, had since the late 1960s been associated with a policy regime associated with the Congress Party which ascribed an important but far from exclusive role to the state. During this time Manmohan Singh had, under successive Congress administrations, held the position of Advisor to the Commerce and then the Finance Ministry, Secretary, Ministry of Finance, Governor, Reserve Bank of India, Member-Secretary and eventually Deputy Chairman of the Indian Planning Commission. He had also for 3 years served as Secretary General of the South Commission, chaired by the late Julius Nyerere, no patron of the Washington Consensus, which produced a strong report challenging the orthodoxies of the development discourse of the 1980s as well as the existing Northern hegemony of the global economic order. Singh therefore came to office in 1991 with a much more nuanced view on economic reforms and was no ideological liberaliser. Towards the end of his tenure as Finance Minister Singh was already facing some challenge to his reform programmes from his own Cabinet colleagues who apprehended that some of the outcomes of the reforms could be electorally damaging to the party in the forthcoming elections. This apprehension was not without foundation since the Congress was voted out of office in the 1996 elections.
The BJP regime continued the reforms accelerated by Singh during his tenure. In some areas, such as privatisation, they became more pro-active which generated its own backlash within the BJP. Arun Shourie's initiative to sell off shares in the profitable energy sector SOEs came under strong opposition from some of his more nationalist-oriented cabinet colleagues known as the Swadeshis. The green signal to go ahead with the sale of the energy SOEs was only given in the last days of the BJP regime.
The current hype that Manmohan Singh, was the avatar of economic reforms (World Bank style) in India is thus as fanciful as the belief shared by the media and the Mumbai Stock Exchange that the presence of the Left Front in the alliance will resurrect the ghost of P.C. Mahalanobis and the closed economy of the 1950s. There is however a more substantive consideration for Manmohan to consider where he may find that his alliance with the Left Front is more relevant to his fortunes as Prime Minister oflndia than the speculations of the Western media or the gyrations of the stockmarket.
The voters of India, mostly the more numerically large deprived classes, have indicated that they
suggests that 6 sitting governments in India have been voted out of National office in 15 years, during a period when economic reforms were moving ahead with some celerity and economic growth was quite robust. At the State level incumbent governments have been regularly voted out of office over the last 15 years. Most recently we have seen the defeat of Congress led governments in Madhya Pradesh and Rajhastan, led by Chief Ministers who were believed to be role models. More recently we have seen the defeat of the globally applauded Chief Ministers of Tamil Nadu (TDP) and Karnataka (Congress). The only government which has remained immune to the anti-incumbency vote has been the Left Front which was elected to office in West Bengal in 1977 and has remained in office for 27 years whilst around 10 Prime Ministers have come and gone in NewDelhi.
Is there a message to be found in the voting behaviour of the Indian electorate? I would argue that the voters were giving a clear message to the political parties oflndia, with the exception of the Left Front in West Bengal. The voters message states: We do not believe that you care for the concerns of ordinary people. You have pursued policies which have been good for a certain class of people which has left us where we were while social disparities have widened. We do not understand GDP growth figures, we only know that the benefits of this growth are inequitably distributed. This arrangement is unacceptable in a democracy. I want water to drink and for my parched lands. I want a decent quality of education for my children. I want to be treated like a human being when I go to a State hospital. I do not want to be oppressed by police but to be protected by them from politically patronized criminals.
This message of perceived neglect and injustice is not just being proclaimed by voters in India. In every part of the world where public opinion has been consulted within a reasonable degree of freedom the same message is conveyed by the voters. In Argentina, the show case for economic reforms in Latin America, a virtual revolution has thrown out a series of governments. In Peru, Ecuador and Bolivia, reformist regimes have been voted out of office and occasionally, as in Venezuela, replaced by a quite radical regime. The political life of the current regime in Mexico hangs by a thread. In the most populous country of Latin America, Brazil, a regime, led by a labour leader known to the world as Lula, who spent his political life challenging the Washington Consensus style economic reforms, has been voted into office after 3 unsuccessful attempts in Presidential elections. Across Eastern Europe, successive regimes of ex-communists and anti-communists, all associated with reforms, have been periodically voted out of office.
Over the last decade in Bangladesh, Sri Lanka and Nepal incumbent regimes, with strong commitment to reforms, have been evicted from office as a result of elections. In Indonesia, once the success story of reform, the patron of reforms, President Soeharto, was unceremoniously evicted from office by the people. In South Korea and Thailand incumbent regimes have been voted out of office after the 1997 financial crisis. The only regime which has survived reform has been Russia, an oligarchic dictatorship, under President's Yeltsin and Putin, who have both frustrated free elections in order to ensure that their corrupt regimes and highly unjust policies, can never be taken to account by their voters.
The lessons to be learnt from this manifestation of public will across the developing and former Socialist world is that economic
reform process, will have to take cognizance of the message of the voters. They will have to incorporate the concerns of farmers, workers, the day labourers, the small businesspersons, the salaried middle class, the unemployed youth, the destitute, the disabled and above all the women in each of these categories, all of whom have felt excluded from the benefits of the reform process.
So far it was assumed that the only people who need to be motivated through reforms were large business houses and foreign investors particularly the speculators whose volatile behaviour excites so much media comment and the anxiety of the IMF for "correct" behaviour by Finance Ministers. But this elite class is only part of the growth equation in any society. The majority of people who drive the economy and who determine the outcome of elections come from more modest backgrounds. A meaningful reform agenda therefore needs to be designed which gives this underclass a direct stake in the growth process, whether by ownership of assets or through enhancement of market opportu-
nities, access to credit, quality education, or simply a regular source of employment. This refocusing of priorities will graduate the reform process from promoting growth which may but rarely does benefit the poor into a process where the deprived remain both an integral part of the growth process as well as its beneficiaries. Such reforms will be more economically as well as politically sustainable.
When the voters of India and across South Asia, living in its villages and bustees, can identify a regime which prioritises their concerns through a genuinely democratic policy regime, they will re-elect them to office. Until more just regimes ascend to electoral power in South Asia holding political office is likely to remain an insecure business. That is likely to remain so unless a regime can "manage" the outcome of the electoral process as was the practice in some countries in South Asia up to the 1990s and remains so in others even today.
Rehman Sobhan in Chairman, Centre for Policy Dialogue.