Millennium Post

Domestic politics, foreign money

Domestic politics, foreign money
It is ironic that the news of the union government’s electrifying recovery last week from a long spell of governance paralysis came with the message of former Rashtriya Swayamsevak Sangh [RSS] chief K S Sudarshan passing away. May his soul rest in peace; however, in the Sangh parivar, Sudarshan was both the source and the repository of all that is regressive in the ‘family’ – such as its exclusivist politics and xenophobic economics. His swadeshi
economics was much trumpeted by his influential disciples in the saffron brotherhood like S Gurumurthy and K N Govindacharya, who made it a handy stick to beat A B Vajpayee, the liberal National Democratic Alliance [NDA] prime minister, with.

Nevertheless, the anti-globalisation and anti-liberalisation content of Sudarshan’s philosophy had a political poignancy that was not lost in the post-NDA era. It had resonance with the entire spectrum of politics in the post-reform era. Everyone knows that 40 per cent of food and vegetable rot away in India as there is no cold chain worth the name, and no Indian company has the money, or the nerve, to invest in thousands of air-conditioned warehouses and pick-up trucks before knowing that its stores will not be attacked or ransacked by politically supported mobs. Everyone knows that the price of a pumpkin increases four to five times along its journey from the field to the roadside place where you buy it, the unreasonable margin enriching the pockets of India’s ‘food economy intermediaries’. Yet everyone must swear the loudest against allowing foreign direct investment [FDI] in multi-product retail. Till Indira Gandhi’s time, contempt for foreign investment was the hallmark of the Congress’ economic thinking. No wonder President Pranab Mukherjee, who is the most authentic intellectual representative of that era, before becoming president, testily asked Parliament if we had been ‘eating rats’ before FDI became an everyday phenomenon. Manmohan Singh, who, in popular wisdom, is the man to turn this perception on its head, as finance minister in 1991, seems to have done it, for the first time as prime minister. Clearing FDI in multi-brand retail up to 51 per cent may not immediately witness the Tescos and Sainsbury’s and M&S’s queuing up for entry. Allowing 49 per cent foreign capital in aviation may not bring more flights, and airline seats to choose from, straightaway. Nor will the 9-10 per cent hike in diesel price, cap on subsidised cooking gas and the decision to sell off chunks of government shares in a slew of public sector companies, by themselves, bring back what the country has sadly lost – optimism. But this sudden return of positive thinking may go a long way in lifting the pall of gloom that has shrouded United Progressive Alliance-II.

All these years, Singh remained in a state of inertia because he is unfortunately a surrogate prime minister. ‘He’d stand on the burning deck/whence all but he had fled’ – until there is an appropriate signal from his boss, Sonia Gandhi, Congress president and UPA chairperson. And Gandhi is habitually wary of reform because she’s convinced it will spoil the delicate balance she has struck with UPA allies and supporters, most of whom are populist local leaders with little or no commitment to long-term national progress.

But it is not that she’s absolutely devoid of political risk. Without her nod, Singh could not handle the 2008 Communist Party of India [Marxist] blackmail on Indo-US civil nuclear agreement with a firm hand. However, in the 2009 election, the Congress got more seats but the arithmetic of the coalition became such that it had even less headroom than before. Without reform, there was no infusion of capital. And without capital, there could be no growth and no jobs. Seeing the government caught between a rock and a hard place, the UPA partners upped their ante by refusing to agree on any reform unless their individual demands – be it for extra-constitutional financial demands or for executive leniency in graft cases against their ‘leaders’ – were met. Tied to these was the inevitable danger of being charged with discriminating.

Nor was the Congress an honest assembly of do-gooders whose hands were tied because of a greedy bunch of UPA partners. The Comptroller and Auditor General [CAG] accusations on coal mining block allocations show that they were jointly involved in plundering the country’s mineral resources. Be it in coal block allocation, or in gifting away wireless spectrum, the prime minister was made to look the other way probably because Gandhi thought it was the price she must pay for the coalition government to continue. Was it necessary to pay an unreasonable price for staying in power? Did Margaret Thatcher become friends again with rapacious trade union leaders because there would be an election in the future? She didn’t, because, like most leaders of modern democracies, she saw election as a swing door that opens and closes at periodic intervals. But the Congress under Gandhi lacked the confidence to stay out of power. Why, nobody knows.

The Bharatiya Janata Party [BJP], itself embarrassingly involved in the coal scandal, thought it is time to strike. It brought Parliament to a dead end simply by raising hell within its walls and thus drowning out all official businesses. The idea must have been to force a mid-term poll in which the Congress number can either fall behind BJP’s or be much lower than its 2009 tally of 206, forcing it into yet another term of even more numbing policy paralysis. In such a situation, the Congress can only pray for
coup de grace.


This time round, Gandhi as party leader and Singh as her obedient prime minister have taken a calculated risk. They did not care for the return fire, enemy or friendly. UPA partner Mamata Bannerjee has of course been prompt at issuing ‘ultimatum’ but she must wait for a Finance Bill, or some serious debate in Parliament, to topple the government, if she has the capability. But that’s many months away. The mood of the nation may change before that. And in Bannerjee’s absence there may be Mayawati and Mulayam Singh Yadav – both having important appointments in court in connection with some vexing cases [one is over but others are waiting] – who would do anything to bail out a beleaguered UPA-II government.Last Friday’s bold moves by the government, and an interest rate cut by Reserve Bank of India [RBI] widely expected this week, may close a gloomy chapter in India’s evolution as a modern state. But the question remains: how did Gandhi conquer the fear of reform and mid-term poll? Has she finally been able to exorcise the ghost of her mother-in-law’s politics?
Sumit Mitra

Sumit Mitra

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