India’s long month of political choice

Author: Peter Drysdale, Editor, East Asia Forum

The world’s largest national poll is now well under way across India to elect a new parliament and ultimately a new government and prime minister. The poll began on 7 April, and runs through nine stages until 12 May, with the results due out four days later, on 16 May.

In the past week, when almost a quarter of India’s 815 million voters made their choice, the ruling Indian National Congress Party (Congress) which has been trailing in the opinion polls, suffered a further setback, with the latest major opinion poll suggesting that the opposition Bharatiya Janata Party (BJP) might scrape in with an overall majority. With the rise of region-based political power and the emergence of the Aam Aadmi Party (AAP) in the recent Delhi election, the need for whichever party took the largest share of seats in the Lok Sabha (the lower house in India’s national parliament) once more to cobble together a coalition government had become the working assumption. Opinion polls are notoriously unreliable at predicting electoral outcomes in India but the mood of the electorate seems to be that it’s time for change.

Whichever side you’re batting for, this election appears to provide Indians with a real choice. BJP leader, Narendra Modi, promises ‘the most business friendly’ government ever, with his commitment to restore high economic growth and create jobs for the rapidly growing young workforce. He’s also strong on ‘clean government’ which plays well to an electorate disillusioned by a string of major corruption scandals that have tainted the ruling Congress government. As Gujarat’s longest serving chief minister, he has an impressive track record on economic growth. More controversial was his handling of the ethnic violence of 2002 in which 790 Muslims and 254 Hindus died, 2,500 people were injured, and 223 more were reported missing. A subsequent Indian Supreme Court investigation in 2012 cleared Modi of complicity in the violence but he and his BJP are associated with a Hindu nationalist agenda that is nationally divisive.

Meanwhile the Congress dominated government of Manmohan Singh is on the defensive over slow growth, high inflation as well as graft. The Gandhi-Nehru dynastic patronage of Congress has been under scrutiny again in recent days, with the publication of books by a former Singh media adviser and a former coal secretary who portray the outgoing prime minister as well-intentioned but indecisive, answering in the end to Congress party president Sonia Gandhi rather than in charge of government himself. The BJP manifesto at least has nailed its flag to the mast of growth and employment, seeking to distinguish itself from the Congress’ focus on entitlements and handouts.

According to Jagdish Bhagwati, distinguished Indian-born professor of economics at Columbia University in New York, an East Asia Forum regular and a leading protagonist in the political debate on the priority of Indian economic growth, the country desperately needs a Modi victory. Modi gets things done; he’s not authoritarian; and …’if Modi doesn’t come to power’, says Bhagwati, ‘I am not optimistic about India’.

In fact, with the impact of the Modi bandwagon the centre may have already shifted to the right on economic policy in India. The imperative for a new government of either colour will be to restore growth momentum without which the nation faces an enormous employment problem as millions of young Indians flood into the workforce. Nandan Nilekani, IT billionaire and Infosys co-founder, who’s running for Congress in Bangalore, is representative of the new wave in Congress. The need to reinvigorate economic reform, and connect the national development agenda to opening up the economy to business globally, especially its manufacturing sector where the jobs will have to be created should be plainer and plainer for all to see. Bangladesh, a country little more than one tenth India’s size, is currently creating more export-oriented employment in textile and garment manufacturing.

While Modi talks big about India seizing its global role, and being a world player in business, by instinct BJP is reluctant to do what that will take in terms of openness to foreign investment and cutting away the undergrowth of regulation that prevents international business from linking India to the regional and international market. As Rajiv Kumar points out, the ‘BJP’s opposition to FDI in multi-brand retail, omission of foreign universities’ role, lack of spelling out the higher level of FDI in defence production, and the absence of financial sector reform to facilitate the entry of foreign entities, does not bode well, especially when taken together with statements such as “we should no longer remain a market for the global industry”’. This thinking reflects a measure of xenophobia and protectionism, which have been an integral part of the BJP ideology, an ideology that does not sit well with a party that now professes to embrace a confident India which ‘… believe[s] that Indian entrepreneurs have the capability to take on global markets’.

Nikita Sud, in her lead this week, investigates the nature of Modi’s successful pro-growth model in Gugarat, which has privileged entrepreneurs. Bhagwati describes it as a shift from the ‘rent-seeking’ model of Indian corruption (where the incentive is to ‘grab a cut of existing wealth’) to the Chinese ‘profit-sharing’ model where the incentive is to get a straw in the growing milkshake. Whatever the case, says Sud, ‘if Modi manages to realise his ambition of becoming prime minister in May 2014, he will find India very different from Gujarat’ with the political dynamic requiring attention to social development as well as business friendly growth. And, as Arun Swamy points out, his success will depend greatly on his skill in managing his Hindu nationalists and related groups who could derail his sensible economic priorities — a skill in which India’s Pakistani and Bangladeshi neighbours will also have a great deal of interest.

Peter Drysdale is Editor of the East Asia Forum.

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