Every regime in post-Independence India wears a distinct character, more so in the post-1990 era of coalitions. The Narasimha Rao government, a contextual majority kept alive by seasonal support, delivered economic freedom. The Gowda-Gujral regime of United Front, mostly remembered for chaos, also ushered in a lower tax era. The 23-party NDA led by Atal Bihari Vajpayee focused on connectivity, on linking Bharat with India.
How will chroniclers define UPA I and UPA II? It could have been the Indian Decade. Instead it has been a decade of wasted opportunity, the decade where hope drifted into despair and decay. It is hard to find parallels from history, of such drift and decay in governance and of such political indolence in the face of failure. The competing crises confronting India are mostly from a future foretold, the alarming prophecies that were not acted on.
Life and livelihood both face increased risks. In 2006, Maoism was described as “the single biggest internal security threat” by the Prime Minister but no blueprint to end red terror is ready even in 2013. Depending on the electoral cycle, Maoists are terrorists or misguided youth. Bringing back the aggrieved into mainstream demands evangelical empowerment and legislation. But critical legislation is trapped in Parliament and empowerment in administrative sloth. Meanwhile, between 2006 and 2013, red terror has claimed two lives every day in over 12,000 incidents.
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The approach on cross-border terrorism is just as foggy or worse. The 26/11 attack terrorised India for 72 hours and claimed over 166 lives. Five years later, the three-part doctrine to thwart terror has been inverted. The agencies meant to fail terrorists—NatGrid and NCTC—are yet to take off while the one to probe the success of terrorists—NIA—is in place. And yes, Pakistan is yet to deliver on promised justice! There has been little or no change in Pakistan’s approach with India. While the UPA has huffed and puffed peace, successive regimes in Pakistan have persisted with the duplicitous ‘wage war and talk peace’ routine as evidenced in the killing of Indian soldiers on the border.
It is not just Pakistan; small islands and nations too are cocking a snook at India. Britain has proposed a bond for Indians seeking visa to the country, the Italians had to be read the riot act before the marines returned and the Chinese army is routinely challenging Indian troops inside the border. Bhutan and Bangladesh are upset about promises not honoured. The much-discussed new strategic relationship with the United States—following the civil nuclear deal—is stuck in a quagmire of issues ranging from patent issues, taxation and indeed nuclear commerce.
The UPA had much going for it when it came to power beginning with the element of surprise—the unexpectedness of coming to power. In inclusive growth it had the perfect slogan for a political economy—an omnibus plank that lends itself to many ideas for good governance. Many committees and commissions were formed to ideate on solutions but much of the intellectual support lies in waste for want of political gumption. The idea of GoMs engineered first in the Vajpayee era was meant to evolve consensus in coalitions. Instead, GoMs have become preferred instruments to delay/defer/deny. Legislation in Parliament—on critical bills—is pending not because of House arithmetic but intra-party politics. Institutionalised indecision has come to be the calling card.
The stereophonic outrage over corruption and inflation has always been the background score of politics; this decade has seen it worsen with the addition of decimals and decibels. The need for structural changes in governance was obvious to all who cared. And it isn’t that the UPA lacked administrative experience. Between 2004 and 2012, the UPA cabinet included nine former chief ministers—Sharad Pawar, A K Antony, Farooq Abdullah, Sushil Kumar Shinde, Virbhadra Singh, Ghulam Nabi Azad, S M Krishna, the late Arjun Singh and Vilasrao Deshmukh. And its three finance ministers have between them presented over 20 budgets.
Led by a person known for personal integrity, the UPA is tainted by the perception of one of the most corrupt regimes. Spin doctors first blamed coalition partners for scams but soon hit the dead end of Alibi Street once the CWG and Coalgate scams erupted. Rarely have two cabinet ministers been sacked on the same day. Yes, the UPA did deliver on the Right to Information Act, its biggest achievement. It also hosted a series of scams and ironically sees RTI as a millstone and aims to emasculate it. The scams germinate in discretion raj but there is no hurry to dismantle what a former chief economic advisor described as “permission-ism”. Neither is there any urgency to propel deterrent laws.
Inflation, always a seasonal bi-annual visitor to India’s political discourse, has acquired naturalised residency. In five of nine years, consumer price inflation has knocked at double digits. In the last five years, the average has been around 9 per cent. Thanks to unfettered profligacy, waste and indecision. Food price inflation—a result of unimaginative policies and unimaginable sloth in the system—has stayed above double digits virtually for six years. Unsurprisingly, inflation has hounded out growth.
The UPA inherited a robust economy. The NDA under Atal Bihari Vajpayee, with Jaswant Singh as Finance Minister, steered the economy through sanctions and a war-like situation. Banks were recapitalised, scam-torn UTI fixed, interest rates were brought down and investment fuelled through public works programmes like the national highways and rural roads. GDP growth (at factor cost/Planning Commission) grew at 8.06 per cent in 2003-04.
Riding favourable fundamentals and global growth, the economy notched 9-plus per cent growth rates three years in a row. Indian entrepreneurs spurred by the growth steroid were on an acquisition spree—Tatas, Mahindra, Birlas, Ambanis and many others hunted down targets to expand scale, acquire technology and build balance sheets. India, at the World Economic Forum in Davos, was branded as the “fastest growing free-market democracy”. As Ricardo would have said, the India Story was too good to last.
Momentum and the opportunity that good times afforded—to make the hard choices—were squandered. Fixing the structural speed-breakers of the economy—inadequacy in ports, power, railways and roads—would have fuelled investment, consumption and job creation. Instead the UPA chose to use the good times to unroll the carpet for populism. It produced a rural employment dole. The bill: Rs 1,75,000 crore between 2006 and 2012. In the run up to the 2009 polls, it added a farm loan waiver. The tag: Rs 70,000 crore. Nothing deterred the Congress, not even the worst global crisis since 1930s, from promoting hazardous populism. It didn’t help that the Opposition didn’t even question, leave alone oppose the profligacy—neither the NREGA, nor the loan waiver.
And then the UPA won the polls, with the Congress notching 206 seats. It scarcely mattered that victory was enabled by vote splitting—by the parties led by Raj Thackeray, Chiranjeevi and Vijaykanth. Populism met with serendipity and the formula of sops = votes = victory = power was now the writ. Not surprisingly, in the run up to the 201-whenever polls, the food security ordinance has been rolled out. Again there are no naysayers!
Ironically, the markets, reflecting the triumph of hope over history, celebrated the 2009 victory with a 2,100-point Sensex salute in the hope of speedy reforms. In 2013, every indicator in the economy is blinking amber and red. None of this crept up overnight. Between 2009 and 2012 under finance minister Pranab Mukherjee’s watch, government borrowings shot up from Rs 748 crore a day to Rs 1,560 crore. Current account deficit shot up from over 2 per cent to 6 per cent of GDP. Savings and investments slid, over Rs 7 lakh crore worth investments were stalled and GDP growth fell from 8-plus per cent to 5 per cent.
It is hardly surprising, given the magnitude of neglect, that only 2.76 million jobs were added between 2004-05 and 2009-10 as against over 60 million in the previous five years. Investor confidence was shattered by unimaginative retrospective legislation, by a regime that didn’t stand by its own policy decisions. The economy in 2012 was as much a train wreck as the home ministry was in 2008.
The UPA would have dwelt in denial had it not been for the review of outlook and threat of a downgrade. Realising that a downgrade would result in the junk rating of the reformists, the government and the party, the Congress moved P Chidambaram back into finance ministry. Not much else has changed. Much of what is proposed is opposed, by Congress ministers. The economy is paying the price for the twin devils of profligacy and indecision. When Lehman Brothers went belly up, ministers were triumphantly chiming how India was insulated. Ironically, today they can’t stop blaming global conditions. Fact is: this is a Made-in-India crisis.
The UPA led a charmed life for most of its tenure—insured by the pathetic lack of real opposition between 2004 and 2012 from the principal opposition party, the BJP. Indeed it was the Left Front in UPA I and Trinamool Congress in UPA II which occupied the space of opposition. In fact, till recently the BJP was far too busy with its internal Mahabharata to present any credible alternative. The arrival of Narendra Modi has changed the script. The indecisive UPA is now confronted with the Modi Model which assures solutions and growth and is therefore attractive to the aspiring middle class. The Congress has taken to rebrand indecision as the consensus model and the Gujarat Model as authoritarian. It has shifted the goalposts of the debate from development to secularism. It, however, has no explanations for the failures on many fronts. It is early days into the battle, the jury is yet out. But it is hardly surprising that the regime resembles one under siege.
There is no such thing as a free lunch—in politics or in economics. This regime allowed hope to be hunted down by hubris and hoopla. Led by the Oxbridge-educated Manmohan Singh, it was expected that the regime would restructure the political economy, enable good governance and transparency. Those expectations have been badly let down. Through its tenure the UPA has been obsessed with electoral profitability and afflicted by bipolar disorder. The theory of leaving politics to the party chief and governance to the prime minister looks good on paper. Its practice brings out a fatal flaw: lack of ownership and accountability. The erosion of authority catalysed the breakdown of trust in individuals and in institutions. The after-taste is bitter. The unstated question in the hearts of young and aspiring India is: surely we can do better?
(Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change)