Lo! thy dread empire, Chaos is restored;
Light dies before thy uncreating word:
Thy hand, great Anarch! lets the curtain fall;
And universal darkness buries all.
The Dunciad - Alexander Pope
Pope may have penned these lines in a different age and context, as a satire on pedants and pedantry, but they so well suit the current state of affairs—or should that be affairs of the state? It is a reality show to beat all reality shows. Almost on a daily basis somewhere someone finds a new scandal, a new scam. The cacophony that greets Indians back into their living rooms every evening reflects the chaos in the political order. The tele-viewer has a choice of menu—ranging from hundreds of children dying of encephalitis to robber baron politics.
Two decades after the so-called liberalisation of the economy, those in positions of privilege are able to monetise their connections by irrigating the canals of discretion. There is little to distinguish one acronym in India’s political alphabet soup from the other. Like in a cricket match, every new catch results in a roar of outrage and then is followed by political equivalence. Every party seems to be doing what the other was doing. Indeed, the anthem of scams should be a line from the jingle—jo mera hai woh tera hai…
Meanwhile, India is waiting at the intersection of a billion aspirations and untold gloom. After almost three years of somnolence the UPA—much like Rip Van Winkle who also had a tendency to avoid
gainful labour—woke up from its stupor. Facing a repeat of history and electoral junkyard, the UPA regime had to bring in P Chidambaram and allow the finance minister to intervene in the economy—re-price fuel products, signal curbing of debt and open up sectors in the economy for FDI. The intervention was not about magnitude but about trajectory. This week, the Cabinet okayed the hiking of FDI in insurance and pension funds. The idea obviously is to stem the fall of the rupee, compress the gap between export earnings and import expenditure, cut expenditure by limiting subsidies and limit debt by capping borrowings.
All the pieces aimed at preventing a downgrade by the rating agencies. The measures have had the desired impact. The rupee has strengthened from `55.47 per dollar on August 1 to `51.85 per dollar—and exuberant punters are now predicting `49 per dollar on the back of expected administrative action. The Bombay Sensitive Index moved from the low 17,000 to cross the 19,000 mark this week—and here again punters are excitedly chirping about 21,000 levels. Sentiments have, to quote one banker, moved from “despondency to hope”. And without exaggeration one can safely say that sentiment is overweight on hope and underweight on realpolitik.
The algebra of economic outcomes now, more than ever, depends on the arithmetic of politics. The initiatives to hike foreign direct investment limits in insurance and pension need the sanction of Parliament. The decision of the Cabinet is good to rid the perception of policy paralysis. But as is well known, this Cabinet has taken many decisions which have been jilted or are queued up at the altar of numerical majority. The Bill on quota for women in
Parliament, the Lokpal Bill and the extension of quota to promotions in government jobs for Dalits being some of the infamous instances.
The Congress-led UPA has been a contextual majority since 2008. And the arithmetic has only worsened following the exit of Mamata. The DMK, which doesn’t know if it is coming or going, is in the throes of an internal crisis. The NCP, similarly, has just suffered a bout of implosion. The UPA’s success has been dependent on how efficiently it stacks the odds of electoral optics on the regional fronts. At every turn, it has managed to align the survival instincts of parties like the Samajwadi Party and the BSP with its own need to survive.
As things stand today, the regional fronts and single-digit entities which hold the cards for the magic majority account for over 200 seats in Parliament. The SP, BSP, BJD, JD(U), AIADMK, and Trinamool Congress are not invested in the current regime and are all players in the futures market of politics. Each one of them and others are working to distance themselves who they are with and vehemently so. The issue is no longer who they are with but who they would want to be with post the elections. Ambition in politics is mostly unstated, but political stance must be. Those with prime ministerial ambitions will decide their stance on what the opportunity cost will be when the chips are cashed after the general elections. Can Mulayam Singh or Nitish Kumar afford to antagonise, say, the Left Front or Mamata?
Of course politics is the art of the possible. But as in markets elsewhere, investment of political capital requires restoration of order. With every party mining its archives for documents, it would seem any expectation of early calm would be an irrational expectation. Indeed, the season of rhetoric will soon be upon us as Himachal Pradesh and Gujarat go to polls in November and December. If Parliament does meet end-November, the floor would most likely be appropriated for posturing, not policy resolution. The future of the economy is trapped in the waiting chambers of political chaos.
Chaos theorists tell us that minor changes in circumstances can deliver widely differing outcomes. Whatever the outcome, it is time to buckle up for the rough ride ahead.
shankkar.aiyar@gmail.com
Shankkar Aiyar is a senior journalist who specialises in the politics of economics