One question that has been raised in the wake of the recent election results is whether democracy and development are compatible with one another. This has been voiced in the media by television anchors as well as commentators. This issue and the subsequent developments in financial markets have helped public attention to focus on two things. The first is the power of volatile finance. Foreign institutional investors who come for portfolio investments and powerful brokers can mould market sentiments with a telling decisiveness. The market, according to analysts, understands only greed and fear. The second issue is of course the synonymous use of the terms “economic reforms” and “economic development”.

“Economic reforms” is understood, at least in terms of current priorities of the market’s sentiments, as being exclusively about privatization of public sector units and changes in labour laws where the hiring and firing of labour will be made more easy. The sensitive index becomes the exclusive marker of prosperity, its upward mobility the primary index of national well-being. This is somewhat ominous. If democracy throws up a government with a mandate that may assign a low- er priority to the speculative health of financial asset markets, then democracy and the mandate are put under the scanner, not the design of economic reforms as understood by those who live by greed alone.

The crux of a market-friendly economic strategy is to provide enabling environments for markets to function. Such markets would certainly include those for financial resources as well as those for labour services. However, markets do not guarantee equitable outcomes in terms of incomes, profits earned, wealth accumulated. The poor are disadvantaged because their ability to access markets is limited. In exactly the same line of argument, the rich (those who already possess more resources) have a distinct advantage. In markets, as any elementary American textbook will highlight, people vote with their dollars. And markets are amoral in the sense that if a brand of shoes is selling well, no one cares if the killer or the killed wore them on the streets during a communal carnage.

Political democracy is more egalitarian where universal adult franchise grants one vote to each, irrespective of wealth. The wealthy may certainly have more voice and influence in the making of political affairs, but the economically disenfranchised still have a political vote, which in India has been often used to register their opinion on the nation’s state of affairs with quite unambiguous political messages.

The verdict of the elections has left many people in shock and disbelief. Political analysis of the verdict is as difficult as gauging the accuracy of exit polls and opinion polls. India is too large and complex to provide an easy general answer. Clearly, myriad local factors would be of concern to the voter. However, it would be unwise to attribute the verdict entirely to local factors, and hence come up with the conclusion that aggregate numbers have no meaning in a heterogeneous, fractured polity. Indian democracy does have local roots, but is also tall enough to look at the nation as a whole. The overbearing arrogance of a pseudo-cultural nationalism with consequences like the Gujarat riots and a rewriting of national history, and the desperate poverty that is revealed when women die in a stampede for the cheapest sari, do not go unnoticed by the silent majority that never got the chance to shine.

In the light of the experience of the past dozen years, some central issues of economic policy have come to the fore. In the decade of the Nineties, all three major political formations, namely the Congress, the Third Force and the Bharatiya Janata Party-led National Democratic Alliance had had stints in government in New Delhi. None of them has openly, and in sweeping terms, decried a market-friendly economic policy stance. For sure, there have been differences. Privatization, certain important aspects of fiscal and monetary policy, labour market reforms, are just a few issues that have been debated not merely across parties but within political formations as well. The specific role of the World Bank, the consequences of the International Monetary Fund’s prescriptions, or the skewed architecture of power in the World Trade Organization are all of concern for the simple reason that a number of implications go against the perceived notions of national interest and power. There are a number of other consequences that go against the economic interests of the poor and economically deprived, cutting across national borders of developing, low income nations. What then have we learnt from the experience of the past dozen years? Some people are raising the more ominous question — are democracy with universal franchise, and market-based development policies irreconcilable?

The onus is on the Congress and its allies, especially the left, that such reconciliation is possible, necessary and worthwhile. This is all about reforms with a human face. On a very rough and ready count, if we look at the income distribution in India, then we can distinguish three broad groups. First, consider the top 20 per cent. Come democratic socialism and “garibi hatao” or market-friendly globalization, they know how to work the system, for the simple reason that they run the system. The bottom 40 per cent suffers from acute poverty and extremely poor social opportunities for mobility, security and human dignity. This group would require a lot of direct intervention and planning, in ensuring that they lead a decent life. There is also a large 40 per cent in the middle that is not desperately poor, but suffers from lack of opportunities to work the economic system and grow with it.

The new government can easily work on a minimum programme focused on the bottom 80 per cent. The top 20 per cent can take good care of themselves. A social sector and infrastructure investment programme could be carried out with tenacity and urgency. A credible stance would require not allowing anything to come in the way, not organized labour unions, nor vested political interests, and certainly not the handful of brokers and market-makers of Dalal Street. This would automatically create an attractive investment climate for real, as opposed to purely speculative, investments.

If this programme implies that hedge funds desert Dalal Street, so be it. If this implies that privatization of profitable PSUs is scrapped, so be it. If this implies stalling labour-market reforms without a proper social safety net in position, so be it. It is unlikely that the Fund-Bank would be terribly upset. It is unlikely that our foreign policy would be jeopardized. It is likely that we will succeed in creating economic and social opportunities that blossom from the soil.

Congress and the left parties face the challenge of the century in terms of their ability to govern. Can they pull it off, or would they also succumb to the arrogance of power? They have united on a common social-political agenda of stopping the onslaught of religious fascism. But to sustain the resistance they will have to mix their political memories and economic desires really well to breed lilacs out of a wasteland of greed and fanaticism.