The Telegraph
Since 1st March, 1999
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BJP in reform-or-vote dilemma

New Delhi, Sept. 19: BJP ministers like L.K. Advani, Ram Naik and Murli Manohar Joshi as well as ministers from other NDA partners like George Fernandes and Balasaheb Vikhe Patil are spooked that the economic agenda being set by colleagues like Arun Shourie, Murasoli Maran and Jaswant Singh could erode their support base, causing nasty setbacks in electoral battles.

Sources close to this new, loose grouping of ministers say they are concerned that unless steps are taken to “correct the direction of reforms”, the BJP and its allies would lose most of the coming Assembly elections.

Several state chiefs have also written to the BJP’s central leadership warning the party to go slow on issues such as public sector divestment, opening up industry further to foreign capital and labour reforms. They warned that if this advice is ignored, results of elections to some 10 Assemblies over the next 20 months and general elections after that might go against the party.

Their concerns first led the government to defer a decision on oil sector divestment and now to another postponement — of increasing the limits on foreign direct investment in telecom, aviation and insurance, as suggested in a recent report. At a meeting yesterday, the Cabinet put off a decision, ostensibly because ministers like Shahnawaz Hussein (aviation) were not present.

But the truth is the move to allow more FDI in these areas is not viewed happily by reform-wary ministers. They fear a backlash from middle-class voters, who could read it as a sell-out to foreign capital, leading to compromises on national security in telecom and aviation and a drain of national savings in the case of insurance.

The only thing that could pass muster without much ado would be an increase in the limit on FDI in financial service companies.

Earlier, only fringe groups within the Sangh parivar and smaller allies like the Janata Dal and the Trinamul Congress had opposed reforms. But now the split between ministers who have risen from the grassroots and those who have joined the Cabinet by dint of their professional expertise or closeness to the powers-that-be is culminating in a fratricidal fight.

“We have to fight and come back to power. These ministers don’t have to. So they harp on reforms which are unpopular. Unlike us, they have come into the Cabinet because they are favoured by the top leadership,” said a senior BJP minister from western India. He pointed out that many pro-reform ministers were Rajya Sabha MPs and would never face a “real election or understand popular concerns”.

The dissenters alleged that their personal constituencies were threatened by the reforms. Some, like Fernandes, have won with labour support and are being pressured by their constituents to speak out.

“The Balco privatisation has meant unpopularity for the party in Chattisgarh. The move to sell Nalco has put our MPs in Orissa on the defensive. The sale of VSNL and the fight over the Tatas investing its reserves in their own firm has slighted us in the eyes of our middle-class voters — the list is unending and affects most of us,” said a BJP minister from the east.

The BJP has grown from being a right-wing party of small traders. Over time it has brought under its sway organised labour and urban professionals, who are deeply worried by the three cornerstones of the current phase of reforms — disinvestment, freer flow of foreign capital and labour laws.

BJP ministers point out that in a scenario of jobless growth, it was suicidal to talk of giving sweeping powers for hiring and firing labour. “We need to balance the demands of industry chambers like of Ficci to be given freedom to restructure and the genuine concerns of labour,” they argue.

The Bharatiya Mazdoor Sangh is today India’s largest labour union and its members constitute a major portion of the BJP’s urban vote base. BJP leaders admit that without the wing’s active help it would be difficult for most urban MPs to win elections.

The BMS has forced some changes in policy prescriptions such as during the WTO negotiations where its activism forced the government to backtrack on opening up several sectors. It has also been behind opposition to the initial insurance privatisation Bill and forced key amendments to the legislation on the regulatory authority.

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