The Telegraph
Since 1st March, 1999
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- The next few years will be difficult ones for India’s economic growth

The author is former director general, National Council for Applied Economic Research [email protected]

We know that India’s economic growth potential is far greater than its performance. The government continues to target 8 per cent gross domestic product growth. Even more is possible. The relatively poor growth of the past is largely due to the inability of our political and administrative leadership to move in unison on policies required to stimulate it. Is this likely to change in the coming five years so that there is a political context in which consensus might develop in economic policies'

The National Democratic Alliance coalition marked a major political shift. The Bharatiya Janata Party had once in the past been part of a coalition — never, as now, its principal partner. Such shifts have marked a long-term shift in the whole political spectrum. Ronald Reagan’s two terms as American president shifted American politics to the right. Tax cuts, more emphasis on law and order and so on became the concern of the Democrats when Bill Clinton became the president. Margaret Thatcher compelled the reinvention of the Labour Party when it came to power, as a clone of the Tories.

Australia after many years of John Howard with his reversal of the “we are Asians” policies of the previous Labour government, his unquestioning pro-American stance, his barely concealed detestation of Asians and his own aborigines, will leave a state of mind that will not be reversed by the next government, even if it is Labour. The United States of America could open itself to China, reversing decades of a Cold War, only under a right-wing Nixon administration. But despite the best efforts of the Indian prime minister, Atal Bihari Vajpayee, the BJP has been unable to replicate such a transformation in relations with Pakistan. If the BJP is in the opposition, no other political party in power at Delhi can do what the BJP could not do.

The BJP driving the Central government in the NDA coalition has led to a permanent shift in our defence and foreign policies. There is a new context in which every other political grouping must now function. It has brought out of the closet, the many “Hindu fundamentalists” in the police and other government services. This had happened in Tamil Nadu and Maharashtra where the Dravida Munnetra Kazhagham and the Shiv Sena infiltrated government services with their ideological supporters and sympathizers. There is a similar change now in the composition of administration at the Centre.

Indira Gandhi used coalitions of religious communities and castes. V.P. Singh fomented an apparent backward caste revolution for his brief political survival. These started a communal and caste polarization. Even the South, which has had less communal discord (even caste riots have been unknown for decades), now has large and vocal Hindu groups detesting Muslims and perceiving them as anti-national. Ghettoization has become common especially among urban Muslims as they congregate to live in greater safety among their own.

The extremists among the Hindus led by the Rashtriya Swayamsevak Sangh, Vishwa Hindu Parishad and Bajrang Dal are now openly aggressive. Their confidence rests on having many of their sympathizers and supporters in government. Every political party will from now on, for its own survival, woo the Hindu votes and distance themselves in different ways from the other communities. The cancellation of the political iftar parties this year is the first signal.

The imminent change in the leadership of the BJP also poses a major threat. The over-seventies generation that remembers British rule and had a sneaking admiration for Jawaharlal Nehru will soon leave office. The new leadership will be hard-core RSS and VHP, brought up on the Emergency, Ayodhya, Advani’s rath yatra, the Bombay bombings and subsequent riots, Godhra and the killings in Gujarat. Their heroes are Narendra Modi, Praveen Togadia, Ashok Singhal, and Vishnu Hari Dalmia, not even L.K. Advani, let alone Vajpayee. They are not compromisers seeking a middle path, and will push their agenda to the hilt. They will gain further in confidence when, as seems likely, they win the Gujarat elections. If they do not, they already have a case prepared to blame the community affiliations of the chief election commissioner. Whether in opposition or in power by themselves, their political agenda will take priority over the economy.

The BJP pulled off a coup by nominating A.P.J. Abdul Kalam to the presidency. He will go down in history as an unusual and outstanding president. But it does make it very difficult for any non-Hindu to become prime minister during his term. An out-of-office BJP will vigorously rally public opposition to such an “insult” to the majority. The recent stalemates in Parliament because of deals on coffins, intelligence failures or Tehelka would be garden parties compared to what the BJP in opposition will do, given such an opportunity.

The Indian polity has moved from Nehru’s vision of a secular India (that every one of his successors diluted considerably) in which all religions live together in harmony. Non-Hindus will be pressed to be less obvious and ostentatious in their religious practices. The majority community, led by its political leaders, will be watching for real or imagined slights. Disruptions in Parliament and assemblies will increase. Little new legislative work, essential for a reforming economy, can be expected from them. After some years of public quiet, morchas and agitations will be back with a vengeance. Mandal resulted in the birth of a new class of selfish political leaders with no public purpose. Good governance has disappeared in the two largest Indian states.

The inevitable loss of power by the BJP in the next general elections might lead to a similar paralysis in the Central government. With no coalition compulsions, the BJP will no longer be on best behaviour. It will paralyse any government for almost any cause. Its front organizations have already begun the disruptive work, without regard for the effect on their own coalition government.

This political context is likely to provide even less consensus on the management of the economy. The current Parliament has held up and in some cases, still not passed, a variety of economic legislations. There is dissent in all parties on a host of issues, not consensus. Power sector reform, public enterprise disinvestment, privatization of some parts of the railways, distinguishing between procurement prices and minimum support prices for food grains, decentralization of authority over government schools and hospitals, national consensus on water use, de-reservation of the small scale sector: there is a host of issues for which there is ample research on what changes are needed. There is no political agreement or will to bring them about.

Manufacturing has taken a back seat in economic development. Industrial production is growing at a poor rate. Agricultural growth has been erratic. Savings have been static. Capital formation shows no sign of improving. The small investor is disillusioned with almost every investment instrument available to him, plagued as he is by poor returns, prospects of capital loss, mismanagement, manipulation and weak regulation. The government continues to increase current expenditures while neglecting public investment. Red tape and the procedural gridlock choke our economic arteries.

To change all this requires a blueprint, political will, less of the cacophony of interminable discussion and more of speedy implementation with effective monitoring for course correction. Neither our political nor our administrative executives seem interested in any of this.

The small silver lining is the entrepreneurial ability of the Indian farmer and fledgling industrialists. Many have made changes in products and methods. Others have stood up successfully against powerful multinational companies and even in overseas operations.

The next five years will be sad years for Indian economic development, as more focussed nations move ahead to give a better life for their people. We will give our people only speeches, reports and empty promises.

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