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.)
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