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18.05.2009

The 2009 Lok Sabha Election: a Storm in the Teacup?

Mritiunjoy Mohanty

Now that the votes have been counted and we know which party has won how many seats, it might be worthwhile reflecting on an intriguing possibility put forward by two of our leading political scientists, Yogendra Yadav and Suhas Palshikar. They argue that for all the vibrancy of our democracy and high levels of participation, it might actually be much ado about nothing because it matters so little as to which government comes to power in Delhi.

In an article in a forthcoming book ‘Electoral Politics in India: Lok Sabha Elections in 2004 and Beyond' (edited by Sandeep Shastri, K.C. Suri and Yogendra Yadav), they argue ''This presents us with multiple paradoxes: as the frequency of accountability goes up, the scope of accountability gets narrower than before; as the possibility of stable parliamentary majority recedes, it leads to greater stability of policies that can be kept out of democratic framework; the higher the suspense over who would eventually form the government, the lesser it matters.'' In other words, a storm in a teacup. [The quote is taken from an excerpt of the article published in the Hindu on 7th May 2009].

I would like to argue that whereas there are conditions under which the Yadav-Palshikar thesis might hold, in the current conjuncture, democratic politics has the potential of shaping policies, the potential of making a difference.

The Yadav-Palshikar thesis: the democratic upsurge and storms in teacups
Yadav and Palshikar argue that space created by the decline of the Congress Party in the late 1980s and occupied for a short while by a non-BJP, non-Congress grouping(s) has slowly been whittled away. And this is despite the fact that the democratic upsurge – increasing non-elite participation in voting that in part created that space – that has characterised Indian politics in the last two decades continues to grow, even though it has begun showing signs of slowing down.

They attribute this to two factors: first, both the BJP and the Congress have become adept at running coalitions and therefore have taken a fragmented electoral verdict and, at the national level, effectively turned it into a bi-polar electoral formation, thereby squeezing out space for an alternative political formation that had been created with the decline of the Congress Party.

Second, and perhaps equally importantly, over the last couple of decades there has been an increasing convergence amongst political formations over matters of policy: economic policy, foreign policy, security policy, issues of social justice (at least at a formal level) and environmental policy. Therefore, around these issues, there are no longer significant differences between political formations that are thrashed out in and through the electoral process.

Therefore, they argue, even as the democratic upsurge in electoral participation continues and in substantive ways democracy in India is deepened, ideological convergence ensures that it matters less and less as to which political formation forms the government in Delhi.

I think that Yadav and Palshikar over-emphasise ideological convergence in policy making and therefore underplay the role that the democratic upsurge might play in shaping the public policy agenda. Admittedly there are areas of convergence, but these are not static or given. They shrink as well as expand, shaped by socio-political and economic forces, and thereby influence the potential of the democratic upsurge to shape the public policy agenda.

The UPA coalition, its legislative agenda and ideological space
In 2004, the Congress-led and Left-supported UPA came to power with the clear understanding that the NDA's defeat at the hustings was at least in part a rejection of the BJP's ‘India Shining' rhetoric. It accepted that growth had left behind both rural and urban India's toiling masses. It understood clearly that this inequality, particularly in opportunities, mattered hugely both in rural and urban India. It understood that opportunity in rural India had been seriously blighted by the agrarian crisis. It understood that inequality in opportunity in urban India had significantly constrained social mobility among lower castes and that this had become politically unsustainable, in part due to the democratic upsurge. It understood that India's polity was in the main secular and uncomfortable with the politics of religious identity. All of this was reflected in the UPA's Common Minimum Programme.

The UPA government introduced a slew of legislation which sought to ameliorate some of the inequality that the process of economic growth generated. Starting with the enactment of the National Rural Employment Guarantee Act and the Right to Information Act in 2005, the UPA government implemented legislation that sought to provide safety nets for those who had been bypassed by the workings of the market. The Central Educational Institutions (Reservation in Admission) Act 2006 expanded reservations in admissions to institutions of higher learning to include OBCs. In the face of sustained legal challenges, the Supreme Court of India in April 2008 upheld the constitutional validity of both the Acts and the 93rd amendment to the Constitution which made the Acts possible. The Rajinder Sachar Committee, set up by the UPA government to enquire into the social, economic and educational status of the Muslim community in India, presented its report in 2006 and detailed the extent of the community's marginalisation. Some of the recommendations of the Committee have been implemented, including the setting up a National Minorities Development and Finance Corporation.

Another important piece of legislation was the Unorganised Workers' Social Security Bill 2008 which seeks to provide some health care, old-age pension and disability benefits to unorganised sector workers. Unorganised sector workers, it is worth reminding ourselves, account for nearly 92% of the total workforce and as the reports of National Commission for Enterprises in the Unorganised Sector (set up by the UPA government) point out, have been completely bypassed even as the economy's growth rates have surged. Similarly, though rather belatedly, the implementation in 2008 of the loan waiver and debt relief programme for farmers aimed at reducing the crushing burden of debt that has been the major cause of pandemic-like farmer suicides that has afflicted the rural economy for more than a decade. And finally, after a two-year battle, the Scheduled Tribes and Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, that seeks to protect livelihoods and land-rights of tribals and forest dwellers, was notified in January 2008.

There are two issues related to this legislative agenda that are germane to our current discussion. First, that these issues were at all on the agenda was the result of political mobilisation around these issues by grassroots social movements, women's groups, trades unions, lower caste groupings and left and centre-left parties. The umbrella nature of the UPA coalition meant that this mobilisation from below could neither be disregarded nor overlooked. Second, in implementing this legislative agenda the UPA faced serious social and political resistance (sometimes from within its own ranks) though not always from the same socio-economic grouping(s) or political party (ies). Therefore very serious political capital had to be expended to take this agenda forward. There was therefore little ideological convergence around this legislative agenda.

Ideological convergence: the UPA's economic policy
There was however one area in which there was ideological convergence across the political elite (barring left parties) – economic policy. Ever since Narasimha Rao's minority government ushered in pro-market neoliberal economic policy reforms in 1991, there has been an agreement across most of the political spectrum that the path to economic growth lay through a market-led economy with minimal regulation. It is this convergence which explains the longevity of the neoliberal economic reform agenda and the remarkable continuity in economic policy-making despite the fact that five governments of varying political persuasions have come to power since the minority government of Narasimha Rao demitted office in 1996. And despite the fact that most of the 1990s saw a phase of ‘jobless' growth even though the economy itself grew at a reasonably robust pace.

Therefore when the UPA government assumed power in 2004, the growth model underpinning economic policy-making saw no change even as it was accepted that there were serious distributional issues such as those we have alluded to above. In retaining the same growth model, policy makers and politicians were aided by the fact that the economy saw a return to relatively robust employment generation, reversing the earlier trend of ‘jobless' growth. Never mind that most of these jobs, as the National Commission for Enterprises in the Unorganised Sector points out, were low quality and poorly paying. Notwithstanding that, with the economy generating both high rates of both output and employment growth, it was felt that the only thing necessary was to add a few safety nets (such as the NREGA and the unorganised sector social security bill) to address politically sensitive distributional issues. And leave the economic model well alone.

But other than through panglossian lenses, it is the neo-liberal economic model which has been socio-economically destabilising. Financial liberalisation and credit-fuelled consumption meant growth had an urban bias, leading to unsustainable levels of inequality. Within service-driven urban economies, access to quality higher education, which was effectively filtered through caste, became a new driver of inequality. Financial liberalisation not only swung credit flows towards urban areas but also starved agriculture of credit. It was therefore an important cause of the more than decade long agrarian crisis that characterised rural India, out of which we have only now begun to emerge. Starved of institutional credit, farmers switched to high-cost non-institutional sources of borrowing. When farm prices collapsed globally in the 1990s, farmers, caught in the pincer of falling prices and rising indebtedness and with nowhere to turn, started committing suicides.

Low levels of employment growth, poor quality of employment and intense competition for what few jobs there were meant the resurgence of sons-of-the-soil and regional chauvinism such as we have seen in many parts of the country, including Bengaluru and Mumbai. The lack of reasonable opportunity outside agriculture meant, despite the agrarian crisis, a return of land hunger – farmers were simply unwilling to sell land which they thought of as insurance in bad times. Therefore just as rapid urbanisation meant an increasing demand for land, acquisition of land became politically fraught. To add to this was the great neoliberal fad of special economic zones, where industry was to remain beyond even the most minimal labour regulation and exempt from taxation. Here too, SEZ land acquisition came up repeatedly against the wall of rising land hunger. And finally, riding the commodity price boom of the late 1990s, domestic and multi-national capital rediscovered India's mineral wealth and the Indian state(s), ever-obliging, offered sweetheart deals. But this time around, the long marginalised Adivasis resisted and refused to sign away their use-rights for the pittance on offer. In the poorer parts of our country, a combination of land hunger and Adivasi resistance saw the resurgence of naxalite activity, widespread enough for it to be declared India's most serious security threat.

But despite these acts of resistance and the masses of toiling Indians who gained but little from growth, old caste and class cleavages made alliances difficult. On the other hand, a rapidly growing economy driven by urbanisation, a small but burgeoning middle and upper middle class that had gained from globalisation and neoliberal policies and an entrenched elite, ensured that the ideological convergence around economic policy remained intact and closed off any policy-making space. This was despite the democratic upsurge and a regular change of guard in parliament in Delhi. It has therefore become fashionable to talk of two Indias, almost as if they were not related – one urban, dynamic and forward looking and the other, rural, poor and backward looking. The two of course are. They are two sides of the same coin – to understand the one we need to understand the other.

The global financial crisis, the unravelling of ideological convergence and the opening of political space
So confident was the Congress Party of the continuing ideological cohesion around economic policy and its own safety net strategy that it pushed through the nuclear deal with the USA despite opposition of Left parties in the coalition. And it also ensured the fact that the UPA coalition survived the exit of Left.

Crisis did come but from a rather unexpected quarter. The collapse of Lehman Brothers in September 2008 led to a run on investment banks and globalised the US sub-prime crisis. And as capital flows reversed, it exposed the Achilles heel of India's growth model. Over a period of three months $60 billion left India, leading to a stock market crash, a sharp decline in the value of the rupee and a liquidity and credit squeeze in the economy. As global demand contracted on the back of the financial crisis, India's export and manufacturing growth saw a sharp contraction. As liquidity and credit was squeezed out of Indian financial markets, high rates of interest choked off urban demand growth, which has not revived even though interest rates are at historic lows. A combination of contracting global and urban demand saw economic growth slowdown sharply, from the heady 8-9% to around 5%. A direct consequence of this slowdown was a sharp increase in unemployment. By some estimates as many 20 million people have been laid off. Paradoxically, it is the revival of agricultural growth that has saved the economy from a much sharper slowdown. As a result of robust agricultural growth, rural incomes and demand has held up and stabilised the economy.

Politicians (and most economists!) were of course quick to change tack: everybody began talking about how India's financial sector (and therefore the economy) had escaped the worst because it was much better regulated and the RBI had much greater control over banks. Sonia Gandhi immediately pointed out that the RBI's greater control was a direct result of the fact that Indira Gandhi had nationalised the bulk of the banking system in 1969! All this is not to say that as a result of the financial crisis, economic reforms ushered in by Narasimha Rao's government will somehow be reversed. But it is to say that the ideological convergence around neoliberal economic policy, which had characterised the last decade and a half, has been broken. One only has to take a look at party manifestos for this election to see the change – the Congress Party actually trumpeted the benefits of state intervention and how it (the Party) always used intervention to further economic growth. Even the BJP's manifesto worried about a purely market-led economy! And compare this with the 2004 manifestos of both parties where hosannas were sung to dynamic pro-market economic reforms.

Therefore an important space that was closed in the Yadav-Palshikar hypothesis has opened up. The breaking-up of the ideological convergence around neoliberal economic policy taken along with the democratic upsurge that continues to animate our politics makes the 2009 Lok Sabha elections of particular importance. It opens up the possibility that political pressure from the democratic upsurge might finally be able to force the crafting of a truly inclusive economic policy that works not only for the elite and the upper middle class but also for India's toiling masses, both urban and rural, for lower castes, for women, for muslims, for adivasis. None of this might happen. But the space within which it could happen has been opened up.

In this context, a few observations about the outcomes of the 2009 elections are in order. First, the Congress Party reaped the electoral benefits of the UPA's safety net strategy and revival of rural expenditure. Rahul Gandhi acknowledged as much when he dedicated the electoral victory to the youth and poor of the country. Second, despite the fact that the BJP has suffered a few reverses it still remains a politically significant force. Third, there are today those within the Congress Party who are sceptical of the market's ability to deliver inclusive growth. Fourth, but equally, there are those both within and without the Congress Party who feel that this an opportune moment to push forward neoliberal reforms, given that the UPA does not require Left Front support to form the next government. The battle to shape economic policy has been joined. Finally, the Left Front's electoral debacle could not have come at a more inopportune time, given the unravelling of the ideological coherence around economic policy. There are of course other ways to use that space, but a significant presence in parliament, even outside the UPA alliance, would have helped in crafting a more inclusive economic policy.

This is not to argue about the nature of the coalition that will form the next government. But it is to argue, unlike Yadav and Palshikar, that the current conjuncture does afford the possibility of democratic electoral politics being more than a storm in a teacup.

(Mritiunjoy Mohanty teaches economics at Indian Institute of Management Calcutta.)

 

© MACROSCAN 2009