Fears of an Invasion: Anti-Imperialism produces strange bedfellows

By Swapan Dasgupta

A quasi-dysfunctional democracy such as India occasionally needs to showcase Parliament’s role in seriously engaging with the pressing issues of the day. The two-day debate in Lok Sabha which resulted in the UPA Government securing a grudging approval of its contentious decision to allow a caveat-ridden 51 per cent foreign investment in retail trade may not have fully restored popular faith in an increasingly discredited political class. But it at least demonstrated that a large number of MPs (particularly the more seasoned parliamentarians) are aware of issues that extend beyond their state and constituency boundaries.

This may not come as a great revelation to those who look beyond stereotypes of the bumptious neta. However, for the more sceptical breed of Indians, particularly those with modernist and cosmopolitan pretensions, a debate such as this forces a realisation that there is a lot of earthy wisdom in India’s political culture than is often admitted.  

True, an understanding of the larger international trends in the retail trade, not least of which was the awareness of the contested business practices of the US-based retail giant Walmart, was also accompanied by a great deal of humbug. In the days to come, particularly if the agricultural procurement policies of some foreign retail companies has an unsettling effect on the rural economy of Uttar Pradesh, both Mulayam Singh Yadav and Mayawati may be confronted by awkward questions centred on their covert deal to permit a move they held to be anti-farmer and anti-small business. Likewise, if Walmart or any other large retail chain decides to make their presence felt too fast and too aggressively in the National Capital, Chief Minister Sheila Dikshit may find herself challenged by small traders apprehensive of the future.

This is not an unreal prospect. A feature of the determined BJP-Left-Trinamool onslaught against FDI in retail was the invocation of fear. It was suggested that the presence of supermarkets in the large towns would destroy the livelihood of the corner grocery shop, curtail employment, contribute to distortions in agricultural procurement and, in the long run, herald monopolistic practices by the likes of Walmart—already a symbol of ugly Western capitalism. The Nationalist Congress Party’s Praful Patel may have been quite right to remind everyone that India’s entry into the World Trade Organisation had been accompanied by similar alarmist propaganda by both the BJP and the Left. But public memory is woefully short and it is quite likely that the same drama may be re-enacted. The only difference is that while globalisation was a slow, invisible process, the changes in the business rules of retail trade may be a more visible process. If the Shiv Sena does indeed plan to carry out its threat to smash up any foreign retail chains that dare set up shop in Maharashtra, this particular ‘reform’ may actually witness additional drama.

The Lok Sabha debate also witnessed unending references to the East India Company that came to India as traders and ended up as rulers. Gurudas Das Gupta of the CPI was particularly emphatic in his assertion that the likes of Walmart also have a political agenda, and that the foreigner could end up exercising control over the way Indians run their democracy.

It is touching to note that despite 20 years of deregulation and the visible success of some facets of economic liberalisation, the rhetoric of the Left hasn’t really evolved. Indeed, it can be said with some amusement that it has made some unlikely converts in the BJP. There was little in Murli Manohar Joshi’s amusingly distracted intervention that the Comrades would have taken serious objection to. Joshi’s searing indictment of the new imperialism of Walmart, et al, was, however, accompanied by a touching celebration of the unchanging nature of 5,000 years of Indian agricultural techniques. What new technology and techniques can the American firms impart to the Indian farmer who banks on inherited knowledge? Anti-imperialism, it would seem, produces strange bedfellows.

Some reassurance that the Indian Right isn’t merely Marxism plus the cow was, fortunately, provided by Leader of Opposition Sushma Swaraj who was at her eloquent and statesman-like best on both days—quite a contrast from Sonia Gandhi who was seen actively endorsing the puerile heckling of Harsimrat  Badal by a Congress MP from Punjab. Swaraj at least clarified that her party wasn’t opposed to FDI in infrastructure and high-tech but only to the sale of dal and rice to the Indian consumer. At least some facets of the NDA inheritance has been preserved by the BJP.

Indeed, a considerable part of the debate was taken up by the question of political inheritance. The BJP made much of the fact that in 2002 the then Congress Chief Whip Priyaranjan Das Munshi had described FDI in retail as “anti-national” and that Manmohan Singh had opposed any such move a decade ago. On its part, Kapil Sibal beamed in self-satisfaction as he pointed out that it was Murasoli Maran, the Commerce Minister in Atal Behari Vajpayee’s Government, who had first mooted the issue of FDI in retail, and that the NDA manifesto of 2004 promised to allow 26 per cent FDI in that sector. 

If the intention of the debate was to demonstrate that inconsistency is the hallmark of partisan politics, Indians who observed the debate would surely have come away with the conclusion that politicians aren’t doctrinaire. In taking the positions they did, both the Government and the Opposition had one eye on public opinion. This is natural considering that no one really knows how long the minority government will survive. But is there any reason to believe Mulayam Singh Yadav’s cryptic observation that the UPA will soon realise that reforms that affect too many people will be rejected by the electorate?

There are no simple answers. Nor is it wise to compare this week’s debate with the kerfuffle over the Indo-US nuclear accord when the Lok Sabha was divided along broadly similar lines. The nuclear deal, as it was perceived by the middle classes who were remotely interested in it, was all about India’s relationship with the US. It was about the continuing efficacy of anti-Americanism at a time when the cosmopolitan Indian never had it so good. In opposing it blindly, the BJP was completely out of step with its natural supporters and it paid the price in urban India in the 2009 general election.

The retail FDI debate took place in a different environment. It happened at a time when few are wildly optimistic about the short-term prospects of the economy. It was also held in the backdrop of an intense public furore over corruption and crony capitalism. The Congress obviously calculated that ‘reforms’ is the big idea that will transform the negativity and rekindle hope in the future. That is what Charan Singh’s grandson meant when he spoke about his faith in the larger process of parivartan.

Will the voters buy this logic? Alternatively, will they prefer to view the Congress’ belated faith in reforms as a last ditch attempt to divert attention from three years of paralysis and the enrichment of a favoured few?

Anticipating the future is hazardous and prone to misjudgements. The Government has come out of its bunker and gambled on the potential appeal of a big idea called ‘reform’. Whatever its other shortcomings, it is at least forward looking. The BJP cannot hope to counter this by good speeches and platitudes. To prevail, it has to also proffer its version of the good life.

The Telegraph, December 7, 2012 

Why stake all on moth-eaten FDI?

By Swapan Dasgupta

The motives may be extremely cynical but there is no question that the attempt by the Prime Minister and the Finance Minister to engage with the principal Opposition party prior to the winter session of Parliament, will be welcomed by those committed to strengthening the institutional foundations of Indian democracy. With a fragile majority that can be overturned by either design or accident, the Government is aware that it cannot realistically hope to get fresh legislation through unless it commands bipartisan support. And unless it can show tangible progress in securing the passage of ‘reforms’ legislation, the Government of Manmohan Singh may as well retreat into history.

Sandwiched between its visceral loathing for the BJP and its desperation to show that there is still life left in the UPA, the Government has prudently chosen to sup with the representatives of forces it regard as satanic. It marks a change. For quite some time, a civil relationship between the Government and the BJP had broken down on two counts. First, say those in the know of the room temperature in Race Course Road, the PM regarded L.K. Advani as being wilfully discourteous to him on a number of occasions. An incident which is said to have particularly rankled in the minds of the PM involved the NDA chairperson allegedly throwing a document at the PMs table. Secondly, it is said that the PM was livid with Leader of Opposition Sushma Swaraj’s ‘mota maal’ comment in the context of Coalgate.

Whether these constitute the real reasons for keeping any meaningful Government-Opposition engagement on hold, or are being cited as justification for the Congress’ pre-determined haughtiness is a matter of conjecture. What is, however, undeniable is that during earlier sessions of Parliament, when the Government had a comfortable working majority in the Lok Sabha, the UPA-2 leadership never felt a need to forge a cross-party consensus on issues of governance. However, now that it faces difficulties in securing the passage of economic legislation, an attempt is being made to reach out to the Opposition. The Government knows that there are limits to talking up the economy and unless pious intentions are accompanied by concrete action, there is every possibility that the mood of cautious optimism will disappear.

Granted that the overtures by Manmohan Singh and P.Chidambaram are governed by expediency and self-interest, how should the Opposition react? The Opposition has a litany of grievances against the Centre. Apart from non-consultation, there are grave charges centred on the Centre’s duplicitous conduct in matters governing the treatment of non-Congress-ruled states, not to mention the blatant misuse of central agencies such as the CBI. Together, these have contributed to a vitiated environment and the feeling in Opposition circles that blind hostility is the best way to confront the Government.

Then there is the entire corruption issue. Although the Opposition momentum on corruption and cronyism has been somewhat checked by the turbulence in the BJP over Nitin Gadkari’s unwillingness to do the honourable thing and retire to Nagpur, the Parliament session does give the entire Opposition a chance to put the Government on the mat on issues ranging from Robert Vadra and the National Herald properties to the Swiss accounts in HSBC. But the moment the Opposition tries to raise any of these issues, the Congress is bound to respond belligerently and the resulting bedlam is certain to dash all hopes of any constructive engagement. For the Congress, ‘reforms’ are important but not as important as the honour and prestige of the Gandhi family.

Then there is the role of the FDI in multi-brand retail which, for inexplicable reasons, the Congress has chosen to make the signature tune of its entire ‘reforms’ thrust. Regardless of the perceived economic benefits that the entry of retail giant Walmart brings to India, the fact is that political India does not believe that such an entry is desirable at this time. A vote in Parliament will clearly reveal that the Government is in a minority on this issue, which is why the UPA’s political managers will do their best to prevent any voting. But, having smelt an advantage and the Trinamool Congress determined to engage in fierce battle on this issue, why will the Opposition let the Government escape embarrassment? Would the Congress have shown similar generosity had a BJP-led Government pushed through a major move without bothering about the sense of Parliament?

On the retail trade FDI question, the Government finds itself in an awkward bind. As a symbol of ‘reforms’, this is a measure whose effects will be largely symbolic. It is doubtful if the measure will result in any significant quantum of FDI. Neither is there any evidence that the state-centric measure will make distribution channels for agricultural produce more efficient. If good reforms involve good politics, the Government should actually be willing to eat humble pie on this issue and instead concentrate on effecting changes in pensions, insurance and ensuring the passage of the Forward Contracts Regulation Bill which was mooted in 2006.

It is inexplicable why the Government has made the moth-eaten FDI in retail a prestige issue, unless, of course, we are to read grave meaning in the recent revelation that Walmart played the bribery game in India. If the Government gives in to the Opposition on this issue, its chances of addressing the more substantial reforms becomes brighter.

Sunday Pioneer, November 18, 2012 

Rousing a sleeping giant without moral authority

By Swapan Dasgupta

Reflecting on the spread of the British Empire to which he was passionately committed, Lord Curzon once remarked that “We have often blundered into many of our greatest triumphs.” Many Indians who cherish a vision of a vibrant India but were nevertheless disappointed by the prolonged drift in public policy could well be wishing that what Curzon held to be true for the Empire will also turn out to accurate for the Indian Republic.

Contemporary India has rarely conducted itself with a sense of mission. The economic deregulation initiated by P.V. Narasimha Rao and Manmohan Singh in 1991didn’t happen because the two were conviction politicians made by the same firm that created Lee Kwan Yew and Margaret Thatcher. India turned its back on an inefficient socialistic path at gunpoint. Likewise, the second wave of liberalisation was prompted by the NDA Government’s desire to offset the possible adverse consequences of the sanctions imposed on India by the West after the nuclear tests of 1998.

If Prime Minister Singh was indeed the great reformer he is portrayed to be, he would have unleashed India’s “animal instincts” immediately after his May 2009 victory when he had little to fear but fear itself. Instead, he waited till GDP growth had fallen below 6 per cent, the rupee was fragile, inflation soaring, the fiscal deficit out of control, politics vitiated by corruption scandals and business confidence at an all-time low. What would have been bold initiatives in 2009, grudgingly digested by a dispirited opposition and accepted by a people anxious for more of the good times, has become a last-ditch, cynical gamble three years later.

The public discourse in India cherishes boldness and decisiveness. To the extent that the Government has been propelled into a burst of activity, there is critical appreciation of the fact that there is more to the Prime Minister than the ridicule that was heaped on him for the past year. Industry bodies have rallied enthusiastically to his support, stock market speculators have given their thumbs-up, the editorial classes are awe struck and even a demoralised Congress appear to have convinced itself that it is better to have fought and lost than not to have fought at all. On the face of it, a sleeping and indolent giant appears to have been aroused.

However, as the old colonials used to remark, for everything that is true of India the opposite is also true. For the past 20 years, market economics has become the new consensus. With the exception of dinosaurs in West Bengal and Kerala and ideologues who nurture a visceral hatred of what they call ‘neo-liberal’ economics, mainstream India is committed to the idea of reform. However, like vocational education which is always good for the neighbour’s child, reform is also expected to be detached and morally uplifting at the same time. In the 1990s, reforms implied dismantling controls and opening up large chunks of a fortified economy to the private sector and global forces. This liberation from Nehruvian dogma unleashed entrepreneurship and put an end to the shortage economy. Some people got very rich but a larger number of Indians moved into the middle class and ceased to be impoverished. It was win-win situation.

Today, the situation is different. The Government is asking people to lower expectations, make sacrifices, to reconcile themselves to the erosion of subsidies and to tighten their belts—all for a larger cause. Unfortunately, for the past few years this larger cause has become both hideous and blurred. After repeated scandals, some involving unimaginable sums, the earlier mood of expectancy has turned to cynicism and disgust. The Government stands discredited; the political class is equated with venality and brazenness; and India Inc. is increasingly being seen as the nesting ground of cronyism and dodgy practices. Almost all the institutions associated with public policy have become objects of disrepute.

In an India overwhelmed by disgust and despondency, the Government’s plea for a sense of national purpose may well end up being viewed as a cruel joke. It has become necessary to refurbish the moral authority of the economic order first. Unfortunately, that is beyond the scope of economists.

Sunday Times of India, September 23, 2012

Burden of Survival

By Swapan Dasgupta

Posterity tends to be excessively harsh on losers. In the coming months, after the present political storm has either subsided or transformed itself into a fierce cyclone, the Congress will no doubt reflect on the course of events that led to Mamata Banerjee withdrawing her Trinamool Congress (TMC) from the UPA-2. Will the Chief Minister of West Bengal continue to be described as a maverick, unsuitable for the serious business of running the Government of India? Alternatively, will she be regarded as a canny politician who, despite her mercurial ways, had her finger firmly on the pulse of the popular mood?

Amid the clutter of the hour-by-hour developments in a Delhi that is salivating over the excitement provided by politics, it is difficult to predict the judgment of history. However, certain things are clear.

First, Mamata’s withdrawal from the UPA-2 last Tuesday after a three hour-long meeting with her senior colleagues in Kolkata was not an impulsive decision. For the past six months or so, the whisper from knowledgeable political circles in Kolkata strongly suggested that Mamata was convinced that the UPA-2 had run out of steam and that the Congress was heading for a massive election defeat in the general election, regardless of its timing. For Mamata, good politics dictated that she detach herself from the burden of the Centre’s rising anti-incumbency and move to grab both the regional party space and the terrain the Left threatened to occupy.

It wasn’t merely the opprobrium attached to being part of a regime that was burdened by both economic mismanagement and corruption that moved Mamata. What may have clinched her final decision was the unease in the state’s large Muslim population over the belief that the Congress Government in Assam shared the blame for the attacks on Muslim ‘immigrants’ in Kokrajhar.

The extent to which the events in Assam and coloured reports of an ethnic cleansing in Myanmar have contributed to Muslim anger all over India has been insufficiently noticed. It is still too early to be sure what political form these stirrings will take but Mamata has moved with great speed to ensure that the Muslim sullenness against the Congress does not rub off on her. By using both a regional and populist plank to justify her revolt against the Congress, she may have ensured that the 27 per cent minority votebank remains attached to her, but without any corresponding risk of playing the “Muslim card’ overtly. Observers of Bihar politics may find strong traces of Mamata’s approach in some of the recent moves of Nitish Kumar.

Many commentators mistook the 60 hours gap between the announcement of her withdrawal and the formal resignation of her ministers at the Centre as evidence that she was amenable to some last minute persuasion. The symbolic significance of using the day of Friday prayers to mark her go-it-alone strategy was not adequately understood.

Secondly, unlike the Left which chose the ideological issue of anti-Americanism to walk out of the UPA-1 arrangement in 2008, Mamata was careful to choreograph her grandstanding around livelihood issues. This has put the Congress in a serious quandary. Regardless of how much the Prime Minister, the Finance Minister, the court economists and Corporate India see the fuel and cooking gas price hikes and the qualified opening up of the retail sector to foreign players as indicative of a fierce desire to usher a new wave of reforms, the political class isn’t convinced that market economics is electorally saleable. A section of the Congress may have taken heart that at least Coalgate has been relegated to the inside pages, but this is a small consolation prize. At the end of the day, the party knows that there are ominous implications behind the grand show of political unity for the largely successful Bharat Bandh.

In 2004, a copywriter in an advertising agency borrowed the term ‘aam aadmi’ for the political use of the Congress. It worked, beyond the party’s wildest expectations. Unfortunately, in the business of selling reforms which involve pain, austerity and dislocation, it is the ‘aam aadmi’ slogan that has become a millstone round the neck of the ruling party. It is now being unceasingly taunted by what was once its most effective brand positioning exercise.

Finally, even if Mamata’s exit fails to dislodge a minority government from power, the TMC has more or less ensured that Manmohan Singh and P.Chidambaram will no longer be able to muster the political strength to push through another wave of reforms. Those who enthusiastically cheered the diesel and cooking price hikes as being bold steps in the daunting battle against a soaring fiscal deficit and a possible ratings downgrade by international agencies, may find that the big bang has culminated in the equally big whimper.

The full-page advertisements issued by the beleaguered Ashok Gehlot Government of Rajasthan promising generous state subsidies to mitigate the hardship caused by reforms tells the story of growing panic. The Congress can’t disown its own Prime Minister and Finance Minister but it can’t embrace their reformist zeal either. Therefore, since the political costs of the ‘reforms’ became apparent, the Congress endeavour has been to shift the burden of subsidies from the Centre to the states.

By the time the survival game gets over for the Congress, the R-word may be sharing a berth with the FDI retail proposal in the political deep freeze.

Deccan Chronicle/ Asian Age, September 21, 2012 

United we vote, divided let's shop

By Swapan Dasgupta

In one of the few meaningful interventions on the state of the economy in this disrupted Winter Session of Parliament, Leader of Opposition (Rajya Sabha) Arun Jaitley imagined he put Prime Minister Manmohan Singh in a spot by referring to his expressed opposition to foreign direct investment (FDI) in multi-brand retail in 2002, when the Atal Behari Vajpayee government was in power.

In stressing that Dr Singh is as governed by expediency as any lesser being, Mr Jaitley was undoubtedly making a powerful debating point. Yet, in his speech he deftly avoided a more obvious question: Why do politicians across the board behave one way in government and the opposite way in Opposition?

The question is relevant in the context of both the Congress and the BJP. The idea of opening up India’s protected retail sector to some form of foreign competition was an idea that was first mooted by the DMK’s Murasoli Maran when he was minister of commerce in the NDA government.

It wasn’t an idea that found enthusiastic support from everyone: the Bharatiya Mazdoor Sangh led by the uncompromising RSS leader Dattopant Thengdi was vocal in its public opposition, as were politicians belonging to the “swadeshi” camp in the BJP.

But the idea was sufficiently attractive to be included in the 2004 election manifesto of the NDA — although not in the BJP’s vision document. If it was the coalitional imperative that scuttled the scheme this month, it was coalitional enthusiasm that put the scheme in the NDA manifesto.

The inconsistencies don’t stop here. Mamata Banerjee was viscerally opposed to FDI in retail and was even willing to vote against the government in Parliament if it came to the crunch. The Congress in Kerala was similarly discomforted by the government’s initiative.

At the same time, the Shiromani Akali Dal, which has experienced the benefit to farmers from organised retail, was enthusiastic in its support. So apparently was Gujarat chief minister Narendra Modi who, however, bowed to the party line and put his preferences on hold.

It also seems that many BJP MPs were dismayed by the party’s unequivocal opposition and preferred a more nuanced position. They were struck by the absence of any discussion within the parliamentary party before the BJP firmed up its position. Congress MPs would doubtless have the same complaint about its government’s unilateralism.

The point I am emphasising has, however, less to do with the lamentable secrecy and lack of consultations that surround most executive decisions — the retail liberalisation may well have gone through had it not happened in the midst of a Parliament session.

What I find interesting is that, political considerations apart, the government’s decision had supporters and opponents cutting across the political divide. More significant, the broad support for corporatising retail trade appears to have come from states which are either relatively better placed in the GDP — states such as Punjab, Haryana, Delhi, Gujarat and Maharashtra — or smelt gains from an efficient cold chain — as, say, Himachal Pradesh, Sikkim and Arunachal Pradesh.

For West Bengal, Ms Banerjee’s unrelenting opposition was quite understandable. Having lost its manufacturing base during the 34 years of Left Front rule, the unorganised retail sector is one of the largest sources of livelihood for a large range of people from the very lowest strata of the middle class to the rural poor.

The relative lack of other opportunities has made retailing the only possible source of livelihood for many people. A shrewd politician, Ms Banerjee would not meekly have handed over such a large and vocal community to the Left. For her, opposition to organised big retail made a lot of economic and political sense.

The real problem that the government faced was a conceptual one. There was just no way in which a momentous decision over retail trade would have a uniform effect throughout India. In certain states the benefits to both farmers and consumers would far outweigh the threats to the local kirana shop or middlemen. In other states, however, there would be disruption of local communities which had the potential of triggering social unrest.

The question that needs to be asked is: should, say, Gujarat or Punjab be denied the opportunity of becoming more integrated with the world market for the sake of West Bengal and eastern Uttar Pradesh? The concentration of power in the Centre makes this inevitable and forces absolutely local considerations to become pan-Indian impediments. Logically speaking, it seems absurd that the decision to allow a Tesco to operate a chain of supermarkets in Delhi should invite a veto from a Tamil Nadu-based regional party.

But that is how India has organised its politics and separation of powers. In a genuinely federal state, such decisions should be taken at the state level and be governed by mundane considerations such as municipal planning permission. Instead, it became a test of the Union government’s credibility.

The simple truth is that the idea of a redistributive Centre which was at the heart of the socialist planning process has run its course. In today’s India, it is the centralisation of power on crucial issues such as labour, power, infrastructure and environment that constitute obstacles to growth.

Uneven development is a fact of life that cannot be controlled by bureaucrats and politicians. There is often talk of a twin-track Europe. In India, we need to acknowledge the necessity of a multi-track, federal India.

Deccan Chronicle/ Asian Age, December 16, 2011

At A Moment of Change: The UPA Government is remarkably out of sorts

It is striking that economists have joined hands with politicians to practise sophistry. Earlier this week, a British Treasury official, Sir Stephen Nickell, expressed hope that this year’s so far exceptionally mild winter in his country turns out to be as severe as last year’s. Sir Stephen’s wish had a tangential connection with the High Street retailers who have been frustrated by the slow sales of winter wear this season. In the main, however, his calculations had more to do with statistical jugglery. A severe winter invariably leads to slowdown and disruption which tell on the quarterly results. However, the wintry bedlam also leads to a rapid catching-up process once the snow melts and the sleet is washed away. What Sir Stephen was thus really hoping for was that one dreadful month of depressed or even negative growth is followed by a much better performance the following month. As The Daily Telegraph helpfully explained, the Nickell logic was based on the jugglery that “[O]ne dreadful month and the next slightly positive don’t count cumulatively as a recession”. The Indian economy, despite all its shortcomings, is nowhere as precariously poised as Britain’s. The awesome 8 per cent growth of the gross domestic product may have fallen to below 7 per cent, but we are far from uttering the dreaded R-word. At best, the effervescent deputy chairman of the Planning Commission, Montek Singh Ahluwalia, may have admitted to seriously miscalculating the persistence of high inflation, but hismea culpa was so discreetly buried in the inside pages that there was not even a token demand for his head to roll. Consequently, the need for economists and economic advisers to engage in statistical jugglery to show that they were right after all was less pressing. In India, economists are rarely, if ever, charged with quackery; the fall guy for economic mismanagement is inevitably the politician. The commerce minister, Anand Sharma, who was looking terribly self-important last week and choosing his words with a great deal of thought, is a much deflated figure this week after the Bengali Brahmin duo comprising the finance minister, Pranab Mukherjee, and the West Bengal chief minister, Mamata Banerjee, decided that foreign direct investment in multi-brand retail could wait a more favourable constellation of stars and planets. The prime minister, Manmohan Singh, emerged from the 10-day storm that exposed the vulnerabilities of his government with his maun vrat strictly intact. India must be a novel democracy for a political crisis to come and go with the three key figures of the dispensation — the prime minister, the United Progressive Alliance chairperson, Sonia Gandhi, and the designated heir apparent, Rahul Gandhi — to emerge without saying a word on the subject. Yet, lots of people said lots of things and the social media went viral with uncharitable remarks about the silent triumvirate that governs India silently. Was that the reason why the multi-portfolio minister, Kapil Sibal, entered the arena and, without any compelling reason, demanded that the anarchic social media be subject to political censorship? To many economists the logic may have seemed flawless: if you can’t outdo China in the economic race, you can at least start emulating it politically. To the less intellectually endowed, however, the timing seemed characteristically Sibal-esque. During the brief storm over retail trade liberalization, the Congress (if not the UPA as a whole) appeared to be recovering its composure and getting over its state of rudderless inertia. There was evidence to show that a section of the alienated middle classes welcomed the move to liberate the consumer from the distributional inefficiencies that contributed to exceptionally high food prices. The media, unrelentingly hostile since the Commonwealth Games scandal broke in August 2011, also seemed in a mood to be charitable towards the reformist impulses of the government. Even the letter-writing Eminent Persons Group seemed inclined to be supportive. And, more important, the principal Opposition party which had backed retail reform in its 2004 manifesto appeared cussed and blindly obstructionist and too willing to obliterate the difference between itself and the Communist Party of India (Marxist). In such a situation, in stepped Sibal with his dossier of grievances against netizens who are naturally irreverent and insolent. The result is that the Congress is back to exactly where it was before the cabinet met last month to approve FDI in retail with the added stigma of intolerance attached to it. Not since Charan Singh waged civil war against Morarji Desai and brought the Janata Party edifice crashing down in 1979 has India witnessed a government that is so utterly out of sorts. The problem stems only partially from an Opposition that is hell-bent on disrupting Parliament for the most trivial of reasons. At the heart of the growing dysfunctionality is the fact that the Congress no longer seems entirely convinced that the system of dyarchy that saw the UPA through in its first term is working. There is still personal respect for the prime minister. But his clumsy political management and his deadpan style of communication have convinced many of the party faithful that the next election is as good as lost unless there is a shake-up. By instinct the average Congress activist is wedded to the idea of dynastic succession. In 2004, when Sonia’s “inner voice” told her to refuse the prime minister’s post, the party accepted it grudgingly and with the realization that the ‘Regency’ would facilitate the political apprenticeship of Rahul, the chosen heir. Since Manmohan Singh had no political base and was disinclined to create one for himself, the interim arrangement was accepted. What has changed? First, the economic situation is no longer conducive to the mega-welfare style of governance that came with 9 per cent growth. The resources to fund Sonia’s lady bountiful act no longer exist, and the cost of uninterrupted profligacy is a mounting fiscal deficit, a declining rupee and a possible balance of payments crisis. The Congress is in a limbo between a preferred recklessness and the countervailing pulls of responsible governance. Its instincts favour rolling back the reforms initiated between 1991 and 2004, yet it lacks the political will to pursue the path of counter-revolution in a country where the majority of the electorate will be below the age of 40. Secondly, Sonia’s health problems — still a State secret — are a source of worry. This is a subject that is still not discussed openly but Congress leaders are aware that the issue of succession can no longer be put off indefinitely. Earlier it was imagined that a good showing in the Uttar Pradesh assembly elections next summer — by which is meant the Congress’s ability to finish third in the four-cornered race — would be sufficient to catapult Rahul to the top job. Yet, as the election approaches, there is insufficient confidence in the Congress’s ability to break new ground in India’s largest state. A bad result will leave the Congress even more disoriented. Finally — and this is the truth that dare not speak its name — Congress supporters are worried that there is nothing else going for Rahul apart from pedigree. His aloofness and unbroken banality has been masked by careful handling but doesn’t appear to be yielding the necessary electoral dividends —Bihar being a prime example. It is not that Rahul is without charm but he lacks charisma. His only hope in 2014 lies in the Bharatiya Janata Party scoring many self-goals and putting forward someone completely inappropriate as its prime ministerial candidate. Rahul can perhaps win but only by default. He is no longer the ‘youth icon’ as he is made out to be; he is merely the face of the dynasty. The Telegraph, December 9, 2011

A matter of choice

By Swapan Dasgupta

One thing that unites both the proponents of foreign investment in multi-brand retailing and their disparate opponents is the conviction that foreign capital will introduce a spectacular degree of efficiency in a largely chaotic sector. It is recognized, and has been recognized since the NDA was first excited by the idea, that bulk buying and a streamlined distribution channel will help lessen the huge 'farm to fork' differential. That a transformation of retail into a part of the modern, organized sector will have a multiplier effect is also not seriously disputed.

But that's where the convergence ends. For the past week, Parliament has been disrupted, the Lokpal Bill and Anna Hazare put on hold and the government confronted with the most serious internal challenge since the Left withdrew support over the nuclear deal in 2008. Most MPs and a majority of chief ministers have chosen to mount a robust defence of inefficiency and opposed the likelihood of discounted grocery bills for three reasons.

First, even after 150 years of its liquidation, India hasn't got over its mental fear of the East India Company. In the language of socialism-which we still carefully preserve in the preamble to the Constitution-all foreign trade is suspect and calculated to puncture our national sovereignty and independence. Last week, a senior BJP leader who was feted as a great champion of economic reforms in his time as minister, was actually heard cautioning about the "strategic" consequences of foreign players in the retail sector. It was reminiscent of the time India was warned that WTO membership would involve a ban on chewing neem twigs.

Second, when it comes to shopping at home, we would rather buy from a Haldiram rather than a Heineman. It is a different matter that no trip to London is complete without the mandatory shopping at TESCO-a great British company which, some people deem, must never travel to India. It is a bit like Jawaharlal Nehru who preached austere self-sufficiency at home but let it be discreetly known that he wasn't averse to a decent bottle of Burgundy, preferably Grands Echezeaux, during his European tours. Nehru had good taste, as did Indira Gandhi, but they were clear about one thing: what was good enough for the first family wasn't appropriate for the rest of us. That was the essence of India's socialism.

Finally, each side has its own reasons to explain where they stand. The Prime Minister is anxious to refurbish his reformist credentials and, if possible, ensure that the outflow of money from India is reversed. The swadeshi types smell a great opportunity to embarrass the government and, maybe, even engineer its fall. They claim to be speaking for both the middlemen and the petty retailers-groups genuinely apprehensive of the impact of supermarkets on their livelihood. But in all this high economics, low politics and appeasement of special interest groups, one group is missing from the debate: the consumer.

In an erudite article in Economic Times, opposition leader Arun Jaitley made a curious observation: "Domestic retailers source domestically. International retailers operate on the principle of buying internationally at the cheapest cost." The assertion is dubious since the city corner shop today stocks everything for the price-conscious consumer. These include Italian spaghetti, Chinese light bulbs and South African peaches. But that is beside the point. What Jaitley is fearful is that the consumer's buying decision will be dictated by her budget rather than the 'Made in India' label.

The consumer may well be charged with being innately unpatriotic. But, is nationalism, by definition, high cost? What does it say about Indian manufactures if shoes made in Vietnam turn out to be cheaper and more durable than one made in Aligarh? Should the consumer be compelled to buy an inferior, expensive item on swadeshi principles, as used to happen in the past?

International competition can have two possible reactions. It can either generate lethargy or it can spur India to take those measures needed to make the economy truly competitive. The retail reforms could make India shake off its complacency. Or, the nation could wallow in the sense of entitlement that high-cost inefficiency brings. At least we now have a choice.

Sunday Times of India, December 4, 2011

A house of mirrors

By Swapan Dasgupta

An unintended consequence of the disruption of the first quarter of the Winter Session of Parliament over the decision to allow foreign direct investment in multi-brand retailing is the growing support among the middle classes for a presidential system of government. The monotonously routine scenes of disruption and adjournments appear to have bred a mood of disgust about the efficacy, not of democracy but of democratic institutions. With India clamouring for both purposeful governance and accountability, it is becoming increasingly clear that India’s MPs lack the wherewithal to uphold lofty ideals.

The Opposition has to shoulder the lion’s share of the blame. When proclaiming that Parliament would not function unless the government rescinded its executive order on retail trade reforms, the BJP was too engrossed in the momentum of the battle it has undertaken to worry too much about the public response to the disruption. Like trade unionists unmindful of how a strike is perceived in society, the Opposition was too gleeful about the likelihood of the government being seriously embarrassed to worry too much about how the country as a whole perceived the shenanigans in Parliament. The pitfalls of catering to a single interest group were not seriously deliberated before rushing into action.

For its entire life, the Bharatiya Jana Sangh, the precursor of the BJP, was handicapped by a perception that it was a Brahmin-Bania coalition, catering to the narrow interests of beleaguered elites and the trading classes. In the past decade this perception has eroded, not least because any party requires a much bigger social base to emerge as a mass party. By sticking up so ferociously for a trading class that perceives a long-term threat to its dominance, the BJP has reinforced stereotypes of itself. Most important, it has left the field wide open for the Congress to show its concerns for the two groups that have been ignored in this debate: farmers and consumers. Of course, given its present state of disarray, it is unlikely the Congress will be able to exploit these openings.

It is not that the UPA government comes out of the episode like an innocent victim of the Opposition’s cussedness. Far from it. There is an element of mystery as to why the government timed its announcement to coincide with the Winter Session of Parliament, unless it really believed that the move would be widely welcomed and leave its parliamentary majority unaffected. However, having rushed in with the notification, the government could hardly expect that the Opposition would not capitalise on the fact that there is near-complete unity in its own ranks and division among the coalition partners of the government.

Even if no one questions the legal right of the Cabinet to issue a notification amending the rules of the retail trade, no one also questions the right of Parliament to discuss the subject and, if necessary, vote on the subject.
The frequency with which the government is shying away from debates that involve voting — whether on price rise or the retail reforms — has brought into question its commitment to the institutions of democracy. Governance in a democracy doesn’t merely involve taking the right decisions; it necessitates blending decisions with the will of Parliament.

True, any successful adjournment motion against the recent retail trade reforms doesn’t imply a vote of no-confidence in the government. The Trinamul Congress and the DMK may well either vote with the Opposition against the reforms or stage an expedient walkout. However, it is unlikely they will vote to topple the UPA government and force an early general election, as many in the BJP seem to desire. Yet, any expression of parliamentary displeasure against the retail reforms will seriously embarrass the government, erode the standing of the Prime Minister and, maybe, even force his resignation.

If Prime Minister Manmohan Singh was unaware of the larger implications of an inevitable parliamentary scrutiny of his decision, he was displaying amazing political naiveté.

Yet, astonishing as it may seem from the eye of the storm, it is conceivable that both the decision and the timing were carefully pre-meditated. For the past 18 months or so, Dr Singh has allowed himself to look indecisive and pathetic. The Prime Minister has particularly disappointed all those who believed that the 2009 victory would open the floodgates of radical reform, thereby allowing India to live up to its potential. The retail reforms are the only meaningful steps the government has undertaken since it assumed office in June 2004. The Opposition’s robust response to these innocuous changes that present India with, at best, a post-dated cheque has willy-nilly brought reforms (rather, the lack of them) into the political centre-stage. Most important, it has taken the focus away from Anna Hazare and his Jan Lokpal obsession.

Was this carefully calculated by a Prime Minister who some say is a better politician than an economist? Unless the Congress has made up its mind to jettison Dr Singh for the Crown Prince or a stop-gap arrangement, it is likely that the party has to unite behind its Prime Minister. If Dr Singh shows determination in that fight, the message to the electorate will be largely positive — people love a doughty politician. As a bonus, he has already succeeded in winning over a hitherto critical media to his side. All that the Prime Minister has to do is to be seen to be fighting to satisfy India’s blind craving for decisiveness.

Asian Age/ Deccan Chronicle, December 2, 2011

BJP risks losing urban support

By Swapan Dasgupta

Economic reforms in India are usually achieved at gunpoint. It was the horrible balance of payments crisis and the emotional effects of the mortgaging of the country’s gold reserves that facilitated the historic process of deregulation by the Manmohan Singh Government in 1991. Seven years later, it was the wave of global sanctions after the Pokhran-II blasts that propelled the Atal Bihari Vajpayee Government into using reforms as a weapon to neutralise the West’s hostility to India.

The qualified opening up of the retail sector to foreign investment announced last Thursday is the only step in the direction of economic liberalisation that the UPA Government has taken since it assumed power in 2004. It is being said that the retail initiative will be the precursor of reforms in civil aviation and, perhaps, insurance.

For the Prime Minister, the retail initiative may have salvaged his jaded image in the outside world as a reformer. But while this may have played some role in encouraging him to overrule Cabinet and Opposition objections, it was not the clincher. What tilted the scales in favour of a politically high-risk initiative was the rapid depreciation of the Rupee, soaring inflation and the dismal state of public finances. In other words, the opening up of the retail sector wasn’t occasioned by a deep rooted conviction that the present protectionist regime was inefficient and served neither the farmer nor the consumer. Had the  realisation—as Commerce Minister Anand Sharma put it—that under the present system “the famer bleeds and the consumer is fleeced” been widespread, the Indian politician would have rushed in with reforms much, much earlier. The Congress, after all, has very little support base in the wholesale and retail sectors. The Akali Dal is essentially a party of Sikh farmers and its endorsement of the reforms is revealing. It suggests that the agricultural sector wants greater choice in determining who buys farm produce.

The present system was allowed to continue for 20 years after the liberalisation process was initiated because successive governments chose the line of resistance and allowed themselves to be intimidated by traders. The traders’ veto on reforms would have continued had the government not been forced to make changes. The consumers should thank the Eurozone crisis and the UPA’s profligate expenditure policy that the monthly grocery bills should register a decline in the medium and long term.

In the short term however, the Government still has a problem on its hands. There are projections that the retail sector should see nearly Rs 1,75,000 crore additional investments (some Rs 70,000 crore in foreign investments) in the next five years. Yet, it is going to be a slow process. For the moment, the UPA faces a situation whereby the possible losers are incensed by the changes but the beneficiaries aren’t terribly excited—because the gains will take a long time to be felt.

In political terms, this is dangerous. It is estimated that nearly a lakh of people per Lok Sabha constituency will see themselves as an aggrieved community. The petty retailers and their families are almost certain to be receptive to the populist rhetoric against foreign companies and the demonology that is building up around Walmart. The doomsday scenario may well be terribly exaggerated since urban clusters with populations below 10 lakhs will retain their protected status for the foreseeable future. Yet, a grievance is a grievance and with this retail reform the Congress has replenished the numbers of the burgeoning anti-Congress vote bank.

They may, however, be compensatory advantages for the ruling party. Economic reforms have traditionally won the support of the urban middle classes—a group that swung to the Congress in sufficient numbers to decimate the BJP in urban seats in 2009. Despite being a natural supporter of deregulation and the free market, the BJP has, since its defeat in 2004, adopted a cussed approach to economic reforms. This has led to a growing middle class indifference to a party it supported quite enthusiastically in the 1990s. In fact, like the Reagan Democrats, the 2009 election saw the emergence of the Manmohan BJP voters—people who broke away from traditional support to the BJP and endorsed a pro-reforms Congress.

In actively championing the cause of the vyapari mandals in the big cities, the BJP has to be careful of two things. First, it must convince its supporters that it is not a status-quoist party wedded to serving particular lobbies. Secondly, it must be careful that the anti-foreign and, by implication, anti-West imagery of the protests it plans on December 1 and thereafter does not end up creating a cultural mismatch between the below-35 generation and the ageing leadership of the party.

One of the features of contemporary India is that the below-35s, who will soon make up nearly half the voting population, combine fierce patriotic with an approval of westernisation and western lifestyles. In overdoing the anti-Walmart rhetoric, as Uma Bharti did last Friday when she threatened arson against the multinational if it set up shop in India, the BJP risks imposing a new cultural barrier for itself.

In 2009, the BJP ceded the modernity plank to the Congress with its hyper opposition to the Indo-US nuclear accord. It has to take care that in opposing the government, it doesn’t paint itself as a party of the Flat Earth movement. 


Sunday Pioneer, November 27, 2011