The Holy Cows of India's Politics and Electoral Economics - The New Indian Express

The Holy Cows of India's Politics and Electoral Economics

Published: 12th April 2014 12:44 PM

Last Updated: 12th April 2014 12:43 PM

The cow is of the bovine ilk; one end is moo, the other, milk.”

Ogden Nash may not have quite intended to be political, but this verse in The Cow most eloquently represents the causal relationship in India’s politics between words and votes, between slogans and seats.

The verse applies to political parties of all shades and is fluently embodied in the manifestos of political parties. Reason has obviously yielded substantive ground to rhetoric of the electoral kind, what needs to be done has been undermined by what needs to be won. The contest of competing compulsions has unravelled a catalogue of conflicting claims and contracts.

The party manifestos—released thus far and those that matter—reflect the consensus of the political ilk. Take a look at the marquee of holy cows, the electoral relevance of the moo and the milk.

Entitlements: What is the approach of political parties? The two biggest items on India’s balance sheet are interest costs and subsidy costs. The two biggest enigmas are exemptions to corporates, continuance of exemption on long-term capital gains tax and absence of a real wealth tax. None appear on the manifestos. Interestingly, the words subsidy/subsidies simply don’t appear in the BJP manifesto. So we don’t really know what—if at all—they plan to do about subsidies which cost the government (at least that is the declaration) `700 crore per day in 2013-14. What about the Congress? You would recall that Prime Minister Manmohan Singh told Indians “money doesn’t grow on trees”. Well, the Congress Manifesto creates five new rights—health, pension, housing, social security and entrepreneurship—on page 11 and pays lip service to fiscal responsibility on page 16. The regional parties want the return of administered price raj—particularly for fuel prices. They also want special status and therefore free funds. The Fiscal Responsibility and Budget Management Act will soon be replaced by an Act for EVM—Electoral Viability Management.

Price rise: It has figured in every manifesto since 1951. Every party promises to address it in 2014 too. The BJP promises a cocktail of measures, the Congress more through Food Security Act. Indeed, Congress believes there will be moderate inflation at high growth. Price rise is mostly about food prices. Food price inflation is about demand, supply and distribution. It is also about administered prices. The Congress which doubled Minimum Support Prices for cereals promises to do more of the same. The BJP promises “to enhance the profitability in agriculture by ensuring a minimum of 50 per cent profits over the cost of production”. AAP wants to assure promisis to raise MSP to 50 per cent over input costs, for 25 crops. Higher MSP = higher prices. Add inflation-indexed MGNREGS—which is less a job scheme and more a wage inflator. Yes, farmers must do better. The solution is higher yield through new high yield seeds and investment in agriculture. Yields in France, US and China are thrice that in India. Higher yield x acreage = higher income. Higher MSP x acreage = higher subsidies. India imported dwarf wheat from Mexico and Taichung Native from Manila to ramp up yield and output in the Sixties. Why does it seem like rocket science to political parties to do the obvious?

Nehruvian PSUs: Periodically, you hear revised critiques of the Nehru. This election too has witnessed focused criticism about Nehru and Nehruvian economics. Rhetoric though does not detain parties from expressing their faith in Nehruvian PSUs with a passion that would make Mahalanobis blush. Fact is, one of four PSUs is loss-making, 17 of 32 Central PSUs have wiped out their net worth, they are losing `75 crore every day and have lost over `65,000 crore in three years. Petitions for two dozen bailouts are in the inbox of the finance ministry. The state of PSUs—where ratnas and Navratnas are turning into duds—will only worsen. Take the defence sector. Can the ordnance factories or Mazagon Docks weather competition without professional restructuring once FDI for defence is opened wider? Take a look at BSNL and MTNL for clues. India’s growth story demands efficient resource management, yet no political party wants to utter the P-Word. The Congress which invented the idea of disinvestment is mum about it, others like TMC, DMK and AIADMK are opposed to even disinvestment leave alone privatisation. The BJP, once the most aggressive believer, has no mention of the word privatisation or disinvestment in its manifesto. The rhetoric ‘government has no business being in business’ cannot co-exist with the reality of the Government of India continuing to be the largest industrial house.

These by no means are the only holy cows. But these are the big ones. More importantly, these holy cows are protected by a national “political consensus”. Between 1991-92 and 2013-14, in dollar terms, gross borrowings of the Government of India shot up 33 times from around $7.5 million a day to around $250 million a day—from $82 million to $250 million under UPA— whereas GDP rose only 6.5 times from $275 billion to $1.8 trillion. The yawning gap is in parts the result of the complexity of growth and the lead-lag matrix of development. A large chunk though is profligacy which funds the business model of Indian politics. Do the political math: holy cows are electoral milch cows. 

shankkar.aiyar@gmail.com

Shankkar Aiyar is the author of  Accidental India: A History of the Nation’s Passage through Crisis and Change

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