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Thursday, November 7, 2013

THE INDIA CONTEST

Bentley at the Red Light: Old Poverty, New Wealth

For the first time, the electorate faces a clear ideological choice. The Congress is the architect of liberalisation that unleashed the animal spirits of competition and innovation in the economy. The ensuing economic boom peaked in 2004; in the following decade, the economy grew at an average of 8% a year. This is evident as many sectors, including telecom, automobiles, pharmaceuticals and IT, became globally competitive.

Somewhere down the line, this growth story came up against some cruel facts: a large population afflicted by poverty and illiteracy, high malnutrition and abysmal public health. In stark contrast, world-class private schools, private hospitals, private estates, private planes, private roads and private banks blossomed.
There was always disparity, but never in your face. The pathetic picture of a car worth over a crore, waiting at a red light, besieged by begging children, is a new phenomenon. There have always been beggars, never Bentleys and Jaguars. Over the years, the rich became richer. This was not the outcome that Manmohan Singh, as finance minister, envisioned in 1991.

A year later, the BJP changed the debate with its sacking of the Babri Masjid. Suddenly, the debate was about Hindutva and the Ram temple. In the tumultuous decade that followed, the opened economy was hijacked by crony capitalists and middlemen. Mistaking this to be genuine reforms, the NDA government launched a highvoltage “India Shining” campaign. They even called an early election, hoping to cash in. In the event, a Congress-led coalition came to power in 2004 on an inclusive growth manifesto and was reelected in 2009.

Now, Narendra Modi, the new RSS mascot, has turned the BJP around to make it a US-style Republican party, stalling reforms in the legislature, promoting laissez faire and protectionist policies in the same breath, railing against government welfare spending, espousing a hardline but whimsical foreign policy. He speaks to an urban, upper-middle class audience and believes there are enough votes there to see him through.
Modi and his supporters believe he can form a government in 2014. It’s hard to believe, though, that his agenda of gated communities, luxury cars and conspicuous consumption will garner votes from the urban and rural poor, Dalits, tribals and Muslims who form the bulk of the young population. Meanwhile, the Congress has again arrayed itself in support of the excluded. More than his mother, Sonia Gandhi, who nudged the government into adopting a welfare-based legislative agenda, Rahul Gandhi is vocal about the skewed priorities.

The Indian business elite is up in arms against the Congress welfare agenda. They say India can’t afford it; they demand business-friendly policies that encourage growth, never mind the disparity. Senior ministers in the government are at pains to point out an inclusive agenda is not anti-growth and point to the national manufacturing policy that aims, in the next 10 years, to boost the share of manufacturing to 25% from 15% and, in the process, to create 100 million jobs.

In the face of heightened disparity, no political party can embrace trickledown economics and expect to form a government. Hence, the Congress lays emphasis on welfare along with its track record of growth. Modi’s noisy campaign, on the other hand, is based on disputable claims about growth and governance; the underlying message, however, is an unmistakable one of Hindu chauvinism.

Modi hopes to ascend on many contradictory platforms: authoritarian capitalism, muscular nationalism as a subliminal plank against minorities. In voting the Congress back in 2004 and again in 2009, the electorate turned its back on the BJP’s growth hype. The question now is whether voters will buy Modi’s high-voltage pitch. The idea behind the multilayered campaign is to fudge his track record that is sullied by allegations of his involvement in the 2002 Gujarat riots.

These charges have proved difficult to shake. Modi’s controversial role in the riots also attracted global concern. Major western countries instituted a diplomatic boycott; the US revoked his travel visa and is yet to restore it. Will the US presidential-style campaign help overcome the stain of 2002?

This article appeared in The Economic Times, November 5, 2013.