Sunday, August 14, 2011

Politics of Economics

Inflation, it is said, is the bane of the common man today. Inflation is basically the incremental amount you need to pay to procure the same set of goods and services that you would have procured cheaper say a year, two years or even a decade earlier. Political parties, especially in the opposition too are experiencing inflation - albeit of a different kind. With the same formula and effort of the last decade, they find that their returns are diminishing; their space is shrinking. The driver of this new inflation is the Congress leadership team, which is silently changing the rules of the game.

Since India's economic liberalisation began in 1991 the social segment that has seen the greatest opportunity for growth is the lower middle class and the middle class. Their dynamic growth has meant that this segment has a continuously growing and changing list of aspirations. This class is the bhadralok that influences the opinion of many vocal sections of the society. V.P. Singh had cast his charm on them in the late 80s and the BJP in the 90s. The combine of Manmohan Singh and Sonia Gandhi has attempted to neutralise this phenomenon with a conscious effort to reconvert this nomadic tribe of voters to the Congress fold.

The 2009 election threw a decisive verdict in favour of the Congress led-UPA. The undercurrent was however to return to one of the old governing principles of Indian democracy - a strong Centre led by a strong centrist party. While our Constitution enshrines the Centre with greater powers, coalition politics in the last one and a half decades ensured that ruling parties at the Centre left many crucial portfolios and policy making roles to regional allies, who often did not rise above parochial interests.

The mandate for the BJP in 1998, 1999 was also essentially for a stronger Centre, but the party could not seize the opportunity. On the contrary the party went for a blind pursuit of allies, creating a government with a weak Centre and often surrendering crucial portfolios to its allies. A Congress party with only 145 seats in '04 ensured that the defence minister was from their party, while the BJP with 182 seats in '98 and '99 could not do so. The pursuit of power thus sometimes dilutes a focus on policy and governance that a strong Centre can give.

The Sonia-Manmohan combine has attempted to solve this dichotomy by uncoupling the process of creating a stable party and government and the process of creating a policy environment. Sonia and Rahul Gandhi focused exclusively on strengthening the party apparatus while the administration has been left to a policy-driven management which used the growing clout of the party to shape decisions. The BJP did the opposite; it used its growing power to attract allies that impacted its base and did not find means to increase its hold over policy-making.

An ability to enforce policy consensus while strengthening the party organisation is a combination that can prove lethal for any opposition. While the Congress does have a focus on Bharat Nirman, the fact is that in an economy where the share of agriculture is shrinking, the party has turned its attention to urban and semi-urban population of India. The two ministries that directly impact the growing urban and semi urban population are the Urban Development Ministry and the Human Resources Development Ministry. Both have made the right noises since the government came to power. Replacing old pipelines, providing new sleek buses, providing assistance for building flyovers, creating new universities and scrapping board examinations are some of those. The new year will see a whole host of measures such as the new tax code, converting the bill for Equal opportunities Commission into legislation and the possible passage of the judicial accountability bill. Several initiatives taken by the government such as the unique identity mission will have long-term impacts and help the ruling party strengthen its hold over the urban and rural poor alike. The Food Security bill is another example.

Politically the Bihar election is expected to help the Congress party consolidate its position as a kingmaker. The party came third in several seats in the recently concluded by polls in Bihar. Importantly, many backward class leaders of smaller parties like the LJP joined the party strengthening it further. This would enable the Congress party to cross into a respectable 20 to 30-seat tally from the current single digit score. With greater numbers on its side the Congress party could look to wean the JD (U) from the NDA and whittle the size of the NDA further. The Congress party is likely to work hard towards strengthening its position in the state of Tamil Nadu - the Youth Congress saw its enrolment drive lead to an all time high number of 13 lakh new enrolments. This is another state where the Congress will drive a tough bargain with an existing ally.

In the '90s, P.V. Narasimha Rao presided over a declining Congress and that offered ready space for a host of opposition parties. Now, they will have to battle hard for that very space. Inflation! 

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