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April 16, 2009

Governance & Politics

The Poll & The Economy

By Nitin Desai


The Indian economy is going to face a difficult time for at least another year and a half.  In foreign policy the emerging upheavals in Pakistan and, at home, aggravated threats of terrorism and political violence will require a cool and calculated response by policy-makers. What are the chances that the present election will give us a government that has the unity, stability and political standing that allows it to cope with these challenges?


Most commentators seem to predict a repetition of the present political pattern with various shifts compensating one another.  The Congress is expected to do better in Rajasthan, Kerala and, through their Trinamool ally, in West Bengal but lose some seats in Gujarat, Andhra and Delhi/Haryana.  The BJP on the other hand is expected to make up for its Rajasthan losses in Gujarat and Delhi/Haryana.  Everyone expects the Left to be down with anti-incumbency working against them in Bengal and Kerala.  In Tamil Nadu and UP the general expectation is that the ladies will improve their seat count quite sharply and in Bihar the NDA ally is expected to do better.  The prognosis is of a seriously hung Parliament with four groups of a hundred plus MPs each bargaining for power.  But a lot can happen between now and mid-May and the recent kerfuffle about Tytler is a foretaste of more dramas to come. 


The two majors are no longer leading the same alliances as they were in 2004.  In fact the alliance game has become truly murky, with the regional players distancing themselves from their erstwhile allies, the emergence of the Third Front and now the Yadav-Paswan combination in UP and Bihar.   The Congress seems to be playing a long-term game choosing to go it alone in UP and Bihar presumably to rebuild their party organisation.


One straw in the wind - the allies who are breaking away from the UPA continue to maintain their loyalty, while the ones leaving the NDA are not covering their tracks at all.  Do these opportunistic small parties sense something the media has not yet picked up?  The bellwether to watch is the NCP whose current confused overtures reflect the sense of uncertainty about what the outcome could be.


All the alliances, UPA, NDA, Third Front and the Yadav-Paswan group seem to be united on one goal-stop Mayawati. But will they stop the rise of Dalit power? This could be one major electoral surprise with huge consequences for the formation of a viable coalition at the Centre.


Where could the other electoral surprises come from?  One possibility is that one or the other of the Gandhi boys could cause an upset in UP.  The nasty one is clearly playing a demagogic card to trump his cousin.  Will this work beyond the set of hard core Hindutva fanatics? He seems to be in demand for electioneering; but the celebrity glow seems to be fading. Does the nicer elder cousin have some hidden influence acquired during his steady ground work in the region over the years?  Will the contrast vis-à-vis his abrasive cousin win back some of the old Congress supporters among Dalits and Muslims?  One can only hope.


How will all this play out in the post election bargaining? Clearly the new Yadav-Paswan combine, the independent regional players like AIDMK, TDP and Biju JD and some so-called allies like the NCP are positioning themselves to bargain hard with whoever is first asked to form a government.  The BSP is playing a bigger game.  It hopes to come through with 40 plus seats and then call the shots in the coalition building.  What matters for the future of the country is the coherence of the coalition that emerges from this melange.


In theory the manifestoes should tell us what to expect by way of policy.  The Congress manifesto, which is economic liberalism disguised in a concern for the aam aadmi, promises some continuity of policy.  The BJP manifesto is best characterized as soft Hindutva wearing a modernizing garb. The CPM manifesto, a nostalgia inducing throw back to the left agenda of the seventies, is quite different and promises some major policy switches.  The regional parties will most likely demand some pork-barreling of regional projects and access to the fruits of office, to use a euphemism


From the point of view of the economy the best outcome would be a decisive result that places the Congress or the BJP in effective charge of government formation with a bench strength large enough to refuse inordinate demands from the coalition partners.  That outcome would be actually better than the political matrix of the 1999 and 2004 coalitions.  Unfortunately the most likely difference relative to the outgoing coalition is that the two ladies, in Tamil Nadu and UP, will be dealt a stronger hand and will not offer their support without getting at least one of the four major cabinet posts.  The main coalition leader, Congress or BJP may try and buy their support by offering a disproportionate share in the other cabinet positions, which from a policy coherence point of view is even worse.  The plus point for coherence could be that the CPM will stay in the opposition.


The worst outcome would be one where the two major players, Congress and BJP, fare poorly and lose some of their present numbers.  This would then increase the bargaining power of the regional players and lead to an unstable coalition with members trying to make the most of what they know will be a short stay at the wicket.  Already some such posturing is in evidence. Such a cabal of regional satraps will need the support of the CPM who will then drive the national agenda. The economic consequences of such a ‘khichdi’ coalition are potentially disastrous.


Now comes the crunch question: which of these two is more likely?  My guess, or more accurately, my hope is that the Indian electorate is smart enough to know what is good for the country and will give a much more decisive result in favour of one or the other major party than the commentariat expects. So those who are believers may kindly pray and ask the Gods to look after us once again as they did in 1977, 1980, 1991 and 1999 and guide the great Indian electorate to provide clarity where today confusion reigns.

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