Montrose Journal: Summer 09
INDIA’S ELECTIONS: A STRONG MANDATE, BUT TO DO WHAT? -
Democracy in India is an awesome phenomenon. As many as 420 million voters cast their ballots during 5 days phased over a month in 828,804 polling stations spread out over the huge and diverse subcontinent, overseen by 4 million electoral and security staff, choosing candidates from more than 1,000 political parties, and all voting is through electronic voting machines. The biggest winners from the recently concluded general election in India are the people themselves as they continue to defy predictions that Indian democracy will implode, victim of its own impossibilities.
Churchill famously said that democracy is the worst form of Government, except for all the others that have been tried. This description seems to fit Indian democracy like a fine shahtoosh shawl. Messy, noisy, often corrupt, Indian democracy throws up poorly qualified leadership of fragmented coalitions that struggles and often fails to take tough decisions. Yet it somehow works, however imperfectly. It has succeeded in holding the country together, and has broadly delivered over 62 years for the majority of people of India. Churchill may have been right on democracy, yet he was profoundly wrong on India itself. He termed India a geographical term, no more united than the Equator. However true in 1947, democracy has welded India into a true nation today, one which is now emerging rapidly as a major political, strategic and economic power.
Indian elections may be awesome, but they are certainly always surprising. Predicting the outcome of elections in India is a pastime as rewarding as casting horoscopes or forecasting currencies. Opinion polls are flimsy tools compared to the complexity of India's regional, social and caste diversity, and voters appear to take pleasure in confounding predictions. Few correctly called the outcome of the 2004 election, in which the BJP was expected to strengthen its grip on power after five years of adequate governance and economic progress, but in fact lost out to the Indian National Congress and its unwieldy coalition, supported from outside by the Communists. And this last election, the results of which were announced in May, was equally surprising. Despite being in power for five years, despite a relatively poor record of concrete achievement in that term, despite the economic slowdown, the Congress Party strengthened its position dramatically and is well placed to govern for a further full five year term with little risk of being undermined by the petulant demands of coalition partners as was the case in the previous Lok Sabha.
The Congress Party was the clear winner of the election, emerging with 206 seats itself, and leader of a coalition with 262 seats, in a lower house of 543. Congress and its allies are short of the 272 seats required for a majority, but close enough to run a stable Government. And this time Congress itself rather than its allies is clearly in the driving seat, having increased its tally from 145 seats last time. Its extra seats were won in the northern heartland of Uttar Pradesh (+12), Rajasthan (+16) and Madhya Pradesh (+8), as well as the coconut coastal red bastions of West Bengal (+18) and Kerala (+15).
Manmohan Singh has become the first Prime Minister since Jawaharlal Nehru to be re-elected after a full term in office. In his first term, Singh had often appeared weak and out of control, beholden to the socialist conservatism of Party Chairperson Sonia Gandhi, and in thrall to the leftists and Communists on whom his Government relied for survival. Only over the US India Civilian Nuclear treaty did Singh exercise true leadership and challenge the naysayers. Otherwise his Government's biggest achievement seemed to have been to have survived in power and to have enjoyed the fruits of unprecedented economic growth without having to take difficult reform oriented policy decisions. Now, in his second term, Singh is in a much stronger position to move India forward socially and economically. Singh is a highly intelligent technocrat and academic economist who knows fully what India needs. As Finance Minister in 1991 he was the author of India's liberalisation, but despite assembling a Dream Team of reformers in his first Government he failed to deliver a new impetus to India's economic development. He now has a freer hand and greater influence over cabinet colleagues to push ahead.
Rahul Gandhi is the other Congress figure who has been much strengthened by the election outcome. Son, grandson and great grandson of Prime Ministers, Rahul was earlier seen to be an unlikely politician in India. The common view was that his political instincts were less astute than those of his sister Priyanka, who reminds many of her grandmother Indira Gandhi. Yet Rahul is given credit for Congress's unexpected revival in Uttar Pradesh, the most populous and politically important State of the Union. His decision to turn down a Cabinet berth in the new Government in order to concentrate on party organization has echoes of his mother, Sonia's, decision to decline the Prime Minister's seat in 2004. If Manmohan Singh, 77 years old and a recent heart patient, does not complete a second term, Rahul may well be India's next Prime Minister.
The final clear winner of the election is Mamata Banerjee, the leader of West Bengal's regional party, Trinamul Congress. Best known internationally for her successful campaign to prevent Tatas building a factory for the Nano car on farmland in the state, Banerjee has dedicated her career to dislodging the Left Front Communist Government of West Bengal, in power in the state now for 32 years. A tenacious and effective protest politician, Banerjee failed in her best shot of displacing the Communist Party of India (Marxist) led coalition in the 2001 assembly election, then led her party to near annihilation in the 2004 general election when she won just two seats. Now she is back with 19 seats in this recent general election and seems well placed to challenge the CPI (M) for control in West Bengal in the 2011 state election. She becomes Railway Minister in the new Government in Delhi, a post she previously held in the last BJP led coalition Government.
The leading losers of the election are the BJP, led by Lal Krishna Advani. With 116 seats in the new Lok Sabha, down 22 on last time, the BJP has lost all semblance of being "the party with a difference" with destiny on its side. The BJP can only take crumbs of comfort in its performance in the southern state of Karnataka, well outside its homeland in the northern Hindi belt, where it won 19 seats (+1) and in Gujarat, home state of its star Narendra Modi, where it won 15 (+1). Otherwise the BJP's performance was poor across its normal bastions of UP, Rajasthan and Madhya Pradesh. After 40 years in the shadow of Atul Bihari Vajpayee, this was LK Advani's chance to become Prime Minister at last and at 81 he is unlikely to have a second shot at the top job. The party is now in disarray as there is no clear successor to Advani, unless it is Modi and his record during the 2002 riots make him a hugely controversial figure to aspire to lead multi-faith, secular India.
Also badly mauled by the voters were the Communists, both the CPI (M) and CPI. They had supported the last Government from outside the coalition and effectively stalled any attempt to liberalise the economy. They parted company with Congress over the US India Civilian Nuclear Treaty, and were projecting themselves as the guardians of India's traditional socialist, self reliant and non-aligned domestic and foreign policies. They lost 36 seats, concentrated in West Bengal and Kerala, and now hold just 24 seats in the new Lok Sabha.
The last set of losers were many of India's regional or caste-based parties, whose rise in key states over the past 20 years has made ruling India so complex. After her strong performance in the last UP state election, UP's "Dalit Queen" Mayawati and her BSP had hoped to emerge as the kingmakers in Delhi, and even for Mayawati herself to become Prime Minister. Yet they won just 21 seats (+2), all but one of them in UP. Lalu Prasad Yadav's RJD won just 4 seats (-20) while Mulayam Singh Yadav's Samajwadi Party won 23 seats (-13), and the former Steel Minister Ram Vilas Paswan lost even his own seat. This election has marked a turning point in India's long electoral journey away from national parties, especially the Congress, and towards smaller regional parties with parochial or very personal agendas.
Manmohan Singh's return to power has cheered the stock markets and foreign investors, hopeful of seeing a purposeful Government committed to addressing India's needs for reform—reform of the public sector, privatisation of state companies, liberalisation and decontrol of the many sectors of the economy still subject to bureaucratic restrictions, and a focus on education and infrastructure development. Yet the prognosis for a dream second term is so far very mixed.
Manmohan Singh successfully saw off the unreasonable demands of his Tamil ally, the DMK, for more and more powerful cabinet seats, allocating them 3 berths. Yet the signals from his Cabinet appointments are not entirely encouraging. The total size of the Council of Ministers is a whopping 78, 33 of whom hold Cabinet rank and a further 7 are Ministers of State with Independent Charge. The choice of key positions disappoints overall, with few fresh, young faces and too few agents of change. P Chidambaram is retained as Home Minister and AK Antony as Defence Minister, both of whom are effective performers with a clean image. Yet the key appointment as Finance Minister went to Pranab Mukherjee, a veteran Gandhi family loyalist who had earlier been Finance Minister under Indira Gandhi in the early 1980s. Respected as a political negotiator and a competent Foreign Minister in the last Government, Mukherjee is not by inclination a reformer nor noted for economic literacy. The new Foreign Minister is SM Krishna, the former Chief Minister of Karnataka and Governor of Maharashtra, an intelligent and experienced professional politician who is expected to be a good team player in cabinet. Kamal Nath who took great pleasure in skewering the Doha negotiations as Trade & Industry Minister in the last Government is effectively demoted into the Ministry of Road Transportation, and is replaced by Anand Sharma.
If the new Ministerial line-up hardly inspires, nor did the President's Speech setting out the new Government's priorities. Much emphasis was laid on social entitlements including 25kg of rice to every family below the poverty line at a price of Rs 3/kg, extension of the Government's controversial National Employment Guarantee Scheme and a commitment after many years of delay to pass the Women's Reservation Bill which will allocate at least one third of seats in Parliament and state legislatures to women. Commitments to economic reform were much more muted, beyond nods towards the importance of fiscal responsibility and infrastructure, for which a Delivery Monitoring Unit will be established in the Prime Minister's Office to ensure implementation of high profile projects. The public sector banks are to be recapitalised, but no mention was made of intent to liberalise the banking sector. The public will be offered shares in public undertakings, but the Government will retain at least 51% control, so privatisation will need to await a future Government.
This is neither the Ministerial team nor the policy priorities of a reform minded Prime Minister in a hurry to usher India forward to realisation of its full economic potential. It smacks more of Manmohan Singh the cautious administrator, respectfully nodding towards the political priorities of 10 Janpath, Sonia's residence, than of Manmohan Singh the father of the Indian reform programme. His announced priorities for his first 100 days are more about continuity than change, socialist paternalism of the old Congress rather than market reforms and liberalisation to free up new, young India. But then, predicting Indian politics is almost as hazardous as predicting Indian elections. Reform in India is seldom trumpeted politically, but rather introduced through technical changes of administrative rules that few appreciate initially. India needs reform and economic restructuring, and the Prime Minister well understands this. Emboldened by his unlooked for success in adopting the Civilian Nuclear Treaty with the US and returning to power in such an electoral triumph, will Manmohan Singh yet surprise as a true economic reformer and build on his historic work of the 1991 reforms?
Alan Rosling OBE recently established Griffin Growth Partners to assist clients to develop and implement winning India strategies. Until 31 March 2009 he was an Executive Director of Tata Sons Limited.