Themes > Current Issues
15.02.2005
Will the UPA Survive the Budget?
C.P. Chandrasekhar
As
budget day approaches, there are clear signs of a widening divide between
those who helped put the UPA government in power and those who currently
run it. The divide relates to the professions and practice of the government
on matters economic. The Prime Minister Manmohan Singh and his Finance
Minister Chidambaram, neither of whom is known to command a popular mandate,
seem driven by a missionary zeal to further ''reform'' the Indian economy.
Not a day passes without a statement from the Finance Minister about impending
decisions to liberalise, reform or restructure one or the other sector
of the economy or segment of economic policy. More recently he has been
joined by the Prime Minister, who when he finds a break from onerous tasks
like appointing a new Commission, Committee or Council, demands a white
paper-be it on subsidies, disinvestment or labour law-that would recommend
what he has anyway decided he must do. In the process, he sidesteps what
those who put him in power had promised to do or not do.
Unfortunately, what is a mission for these gentlemen may not be good for the country, the Congress or the UPA. Less than a year back, when the Congress was assessing its prospects at the polls, it clearly made three decisions, among others. The first was that it not only needs to distance itself from, but also frontally attack the economic agenda that the BJP-led NDA had pursued and was promoting through the India Shining slogan. Second, that it needs to advocate a more balanced, rural-biased and pro-poor economic strategy. Third, that it must showcase specific programmes, the most important of which was an employment programme aimed at delivering a guaranteed minimum of employment for each household in the country, so as to make the alternative meaningful.
These decisions suggested that the Congress had chosen ideological clarity in place of the ambiguity which characterized a party torn between its claim to be the initiator of reform and its realization that advocacy of reform may not be the right political strategy. The results were visible in the Congress President Sonia Gandhi's whirlwind election campaign that not merely revitalized a moribund party but also resulted in a remarkable result in which the Congress against all odds emerged as the single largest party in Parliament.
Sonia Gandhi's declarations on the campaign trail were clear. Besides arguing that the NDA government was taking credit for many programmes launched by the Congress, she stressed that its (the former's) policies of liberalization and privatization, rather than delivering a shining India, had adversely affected the poor. Ms. Gandhi noted that the NDA Government's policies had not benefited farmers, Dalits, backward classes, women, minorities, and the poor. Rather, those policies including the privatization of public enterprises, in her view, had facilitated retrenchment and denied employment to hundreds of youths. ``Do not vote for these people under whose rule warehouses of foodgrains are full, but stomachs are empty,'' she said.
Asking the question, "What has the common man got under this rule?'', Ms. Gandhi said that the Congress would do everything for the benefit of the poorer sections of society if voted to power in the Lok Sabha and Assembly elections. This she declared was no mere promise. "What we promise in our manifesto is not for getting votes, but to fulfill the promises when voted to power," she said. The Congress president also criticized the National Democratic Alliance Government at the Centre for its "failure" to fulfill the promises made during the last elections.
In sum, there were a number of distinctive features of the economic programme espoused by the Congress. It stressed that the kind of neoliberal policies adopted by the NDA had implied that the benefits of whatever growth had occurred had bypassed the poor. Second, some of these policies in its view were destroying the ability of the government to deal with deprivation. Finally, it was opposed to privatization of the public sector not only because these enterprises were profit-making, but because the process endangered the employment of those associated with these enterprises.
Given the tenor of these speeches and the promises that were made, it was not at all surprising that soon after the results were declared the Congress and its partners in the UPA released a Common Minimum Programme (CMP) that incorporated many of the promises that had been made in their election manifestoes and speeches. That is, the CMP was not a document forced on the Congress or the UPA by the Left, whose support from outside was crucial for the government, but a document which the Congress and its UPA allies owned. The Left's role was merely to demand some modifications in the light of its own concerns and given its desire to ensure that a government it supports goes at least part of the way in meeting those concerns.
Despite all this, a few months down the line, the UPA government seems to implementing the same kind of neoliberal reform programme adopted by the NDA, with the same haste and the same contempt for mass opinion. Ignoring the CMP, the UPA government is pushing ahead with measures of liberalisation, be it in the form of divesting equity in profit making public sector units, hiking FDI caps in crucial sectors including telecom and banking, pushing ahead with the current form of restructuring of the electricity sector rather than reviewing the Electricity Act, and, above all, diluting and for all practical purposes shelving the promised Employment Guarantee Act.
In the event, a peculiar relationship has emerged between the Congress and the Left. Having chosen to put the UPA in power to keep out the BJP and to work to ensure a full-term for this government, the Left has restricted its expectations with respect to economic policy. It merely wants the Congress to implement the CMP which the UPA drafted and clearly owns. What is more, despite evidence from history that Manmohan Singh and his chosen appointees at the Finance Ministry, P. Chidambaram, and the Planning Commission, Montek Singh Ahluwalia, were the original votaries of neoliberal reform, the Left raised no strong objection to this combination on the grounds of a lack of pluralism in economic policy making. In the belief that, as should be true in politics, it is the Congress President and party leadership, especially that component which can deliver votes, who should call the shots, they ignored the past record.
However, the first few months of this government's rule have seen repeated attempts by the three principal economic decision makers to violate the CMP. In some cases, as is true of the Employment Guarantee Act, this has occurred despite the fact that the National Economic Advisory Council chaired by the Congress President has come out strongly in favour of a bill that would actually deliver on the objectives of the Act. What is more, according to reports, an important section of the Congress leadership has made pre-budget demands of the Finance Minister which go far beyond what the Left has been demanding of the Prime Minister and his team.
The brazen manner in which the self-appointed economic troika has been implementing its own agenda rather than that of the Congress or the UPA has made it increasingly difficult for the Left to maintain a reasonable posture vis-à-vis a government it helps keep in power. Each time the CMP has been sought to be violated or has actually been ignored, the Left has had to protest. The difficulty is that despite evidence of differences within the Congress on economic policy of the kind noted above, the party and its President appear incapable of reigning in the troika. With the Left forced to protest and the Congress Party more cautious, it now appears that the CMP is the programme of the Left and not of the UPA.
In some sense, this is the view which the offices of the Prime Minister and Finance Minister would like to promote. They would prefer to be seen as the modernising force pursuing reform, despite the Left, which is stalling reform using the CMP. In fact, the belief of these gentlemen seems to be that the sheer embarrassment of being seen as retrograde or obsolete would soon force the Left to fall in line. The presumption, of course, is that the Left would sacrifice its ideology and its constituency, for the ''glory'' that comes from being considered pragmatic by international finance.
There are two reasons why this kind of a strategy is being pursued by the leadership in government. The first is that those who are driving economic policy are ideologically neoliberal but have never had to nurture a party and build a mandate to come to power. The second is that it has been true of the Congress that in the past there have been times when its ideology and strategy appeared to be that its rhetoric (currently the CMP) and practice must deviate. A confluence of these two tendencies explains the current direction of movement.
But there are two problems in adopting this stance in the current conjuncture. The first is that the Congress has paid heavily in the past for allowing its practice to deviate from its rhetoric. If the danger of having to pay a similar price this time around is sensed, the party may turn against its own cabinet. Second, this time around the Congress does need the Left to stay in power. And the Left is clearly exasperated: witness the statements of A.B. Bardhan in Andhra, of the CPI(M) leadership in West Bengal and the increasingly strident criticism of the government's economic policy by Left leaders.
If despite this the Manmohan Singh government seeks to push through during the budget session all that it is promising domestic and international capital, it may force the Left to withdraw support. Maybe the Tamil Nadu Chief Minister is right and another national election is in the offing: suicidal tendencies are not uncommon.
Unfortunately, what is a mission for these gentlemen may not be good for the country, the Congress or the UPA. Less than a year back, when the Congress was assessing its prospects at the polls, it clearly made three decisions, among others. The first was that it not only needs to distance itself from, but also frontally attack the economic agenda that the BJP-led NDA had pursued and was promoting through the India Shining slogan. Second, that it needs to advocate a more balanced, rural-biased and pro-poor economic strategy. Third, that it must showcase specific programmes, the most important of which was an employment programme aimed at delivering a guaranteed minimum of employment for each household in the country, so as to make the alternative meaningful.
These decisions suggested that the Congress had chosen ideological clarity in place of the ambiguity which characterized a party torn between its claim to be the initiator of reform and its realization that advocacy of reform may not be the right political strategy. The results were visible in the Congress President Sonia Gandhi's whirlwind election campaign that not merely revitalized a moribund party but also resulted in a remarkable result in which the Congress against all odds emerged as the single largest party in Parliament.
Sonia Gandhi's declarations on the campaign trail were clear. Besides arguing that the NDA government was taking credit for many programmes launched by the Congress, she stressed that its (the former's) policies of liberalization and privatization, rather than delivering a shining India, had adversely affected the poor. Ms. Gandhi noted that the NDA Government's policies had not benefited farmers, Dalits, backward classes, women, minorities, and the poor. Rather, those policies including the privatization of public enterprises, in her view, had facilitated retrenchment and denied employment to hundreds of youths. ``Do not vote for these people under whose rule warehouses of foodgrains are full, but stomachs are empty,'' she said.
Asking the question, "What has the common man got under this rule?'', Ms. Gandhi said that the Congress would do everything for the benefit of the poorer sections of society if voted to power in the Lok Sabha and Assembly elections. This she declared was no mere promise. "What we promise in our manifesto is not for getting votes, but to fulfill the promises when voted to power," she said. The Congress president also criticized the National Democratic Alliance Government at the Centre for its "failure" to fulfill the promises made during the last elections.
In sum, there were a number of distinctive features of the economic programme espoused by the Congress. It stressed that the kind of neoliberal policies adopted by the NDA had implied that the benefits of whatever growth had occurred had bypassed the poor. Second, some of these policies in its view were destroying the ability of the government to deal with deprivation. Finally, it was opposed to privatization of the public sector not only because these enterprises were profit-making, but because the process endangered the employment of those associated with these enterprises.
Given the tenor of these speeches and the promises that were made, it was not at all surprising that soon after the results were declared the Congress and its partners in the UPA released a Common Minimum Programme (CMP) that incorporated many of the promises that had been made in their election manifestoes and speeches. That is, the CMP was not a document forced on the Congress or the UPA by the Left, whose support from outside was crucial for the government, but a document which the Congress and its UPA allies owned. The Left's role was merely to demand some modifications in the light of its own concerns and given its desire to ensure that a government it supports goes at least part of the way in meeting those concerns.
Despite all this, a few months down the line, the UPA government seems to implementing the same kind of neoliberal reform programme adopted by the NDA, with the same haste and the same contempt for mass opinion. Ignoring the CMP, the UPA government is pushing ahead with measures of liberalisation, be it in the form of divesting equity in profit making public sector units, hiking FDI caps in crucial sectors including telecom and banking, pushing ahead with the current form of restructuring of the electricity sector rather than reviewing the Electricity Act, and, above all, diluting and for all practical purposes shelving the promised Employment Guarantee Act.
In the event, a peculiar relationship has emerged between the Congress and the Left. Having chosen to put the UPA in power to keep out the BJP and to work to ensure a full-term for this government, the Left has restricted its expectations with respect to economic policy. It merely wants the Congress to implement the CMP which the UPA drafted and clearly owns. What is more, despite evidence from history that Manmohan Singh and his chosen appointees at the Finance Ministry, P. Chidambaram, and the Planning Commission, Montek Singh Ahluwalia, were the original votaries of neoliberal reform, the Left raised no strong objection to this combination on the grounds of a lack of pluralism in economic policy making. In the belief that, as should be true in politics, it is the Congress President and party leadership, especially that component which can deliver votes, who should call the shots, they ignored the past record.
However, the first few months of this government's rule have seen repeated attempts by the three principal economic decision makers to violate the CMP. In some cases, as is true of the Employment Guarantee Act, this has occurred despite the fact that the National Economic Advisory Council chaired by the Congress President has come out strongly in favour of a bill that would actually deliver on the objectives of the Act. What is more, according to reports, an important section of the Congress leadership has made pre-budget demands of the Finance Minister which go far beyond what the Left has been demanding of the Prime Minister and his team.
The brazen manner in which the self-appointed economic troika has been implementing its own agenda rather than that of the Congress or the UPA has made it increasingly difficult for the Left to maintain a reasonable posture vis-à-vis a government it helps keep in power. Each time the CMP has been sought to be violated or has actually been ignored, the Left has had to protest. The difficulty is that despite evidence of differences within the Congress on economic policy of the kind noted above, the party and its President appear incapable of reigning in the troika. With the Left forced to protest and the Congress Party more cautious, it now appears that the CMP is the programme of the Left and not of the UPA.
In some sense, this is the view which the offices of the Prime Minister and Finance Minister would like to promote. They would prefer to be seen as the modernising force pursuing reform, despite the Left, which is stalling reform using the CMP. In fact, the belief of these gentlemen seems to be that the sheer embarrassment of being seen as retrograde or obsolete would soon force the Left to fall in line. The presumption, of course, is that the Left would sacrifice its ideology and its constituency, for the ''glory'' that comes from being considered pragmatic by international finance.
There are two reasons why this kind of a strategy is being pursued by the leadership in government. The first is that those who are driving economic policy are ideologically neoliberal but have never had to nurture a party and build a mandate to come to power. The second is that it has been true of the Congress that in the past there have been times when its ideology and strategy appeared to be that its rhetoric (currently the CMP) and practice must deviate. A confluence of these two tendencies explains the current direction of movement.
But there are two problems in adopting this stance in the current conjuncture. The first is that the Congress has paid heavily in the past for allowing its practice to deviate from its rhetoric. If the danger of having to pay a similar price this time around is sensed, the party may turn against its own cabinet. Second, this time around the Congress does need the Left to stay in power. And the Left is clearly exasperated: witness the statements of A.B. Bardhan in Andhra, of the CPI(M) leadership in West Bengal and the increasingly strident criticism of the government's economic policy by Left leaders.
If despite this the Manmohan Singh government seeks to push through during the budget session all that it is promising domestic and international capital, it may force the Left to withdraw support. Maybe the Tamil Nadu Chief Minister is right and another national election is in the offing: suicidal tendencies are not uncommon.
© MACROSCAN 2005