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 

Parliament versus Democracy

By Swapan Dasgupta

In 1927, Carl Schmitt, a German philosopher associated with the conservative parties of the Weimar Republic, proffered a curious formulation in his celebrated book The Concept of the Political. According to him, the existence of a state presupposed the idea of the political. And the defining feature of the ‘political’ was a clear distinction between friend and enemy.

Schmitt’s ideas are anathema to the liberal ideal of a state that believes in harmonising existing and potential areas of conflict and, indeed, de-politicising its citizenry. It is, however, remarkable that politics in India is fast becoming a clash between antagonists who perceive the other side as not merely a competitor but an enemy. This is all the more remarkable because the ‘alternative’, fringe narrative suggests that the enmity of competitive politics is largely spurious and contrived. Arvind Kejriwal as repeatedly asserted in the course of his made-in-media campaigns that there is an unholy “setting” involving the Congress and BJP.

Had the relationship between the two principal political formations been indeed one of covert understanding, it is unlikely that contemporary politics would have become so utterly dysfunctional.  From spats over the ground rules of parliamentary proceedings to bad blood over executive decision-making, there is hardly any facet of politics and government that does not resemble a combat zone. Moreover, this schism has spilled over into civil society. Even a cursory perusal of the social media will suggest that India is in the midst of an undeclared civil war. So far the instruments of combat have been words. But if the fault-lines continue to widen, even the superficial civilities could be replaced by more lethal behaviour.  

Take the case of the executive decision to permit foreign investment in multi-brand retailing, an issue that led to parliamentary proceedings being disrupted for the first few days of the winter session. Going strictly by the letter of the Indian Constitution, the UPA Government was entirely within its rights to notify such a decision, without taking recourse to parliamentary approval. The Constitution, after all, does allow the executive enormous discretionary powers, far more than is sanctioned in other democracies. At the same time, the doctrine of parliamentary supremacy allows the elected representatives to insist on ministerial accountability.

Assume, for the sake of argument, that Parliament, after deliberating on the subject, decides in its wisdom to disapprove the measure. Since a Government defeat does not imply that the UPA-2 no longer commands a majority to govern, there is no obligation on the part of Prime Minister Manmohan Singh to resign. Simultaneously, since the Government did nothing unconstitutional in notify the change in the business rules of the retail trade, it is under no obligation to withdraw the measure.

Remaining intransigent is an option that is in theory open to the Government in the event of a defeat in Parliament this week. But regardless of whether it retreats gracefully or puts up a brave fight to protect its turf, the implications are bound to be grave.

Regardless of whether the DMK and Samajwadi Party vote with the government or not, these two parties have made public their disapproval of any form of FDI in multi-brand retail. Going strictly by the parliamentary strength of those parties that supported the Bharat Bandh on September 20, it would seem that only a minority in Parliament is willing to endorse this particular reform. This implies that there is a potential conflict between a Constitution principle that facilitated the decision in the first place and the principle of democracy which encapsulates the “general will” of the people. Therefore, even if the Government passes the floor tests in both Houses, preying on the fears of an early election, it is possible to argue that in passing the parliamentary test it failed the test of democracy.

Interestingly, Schmitt, who wrote his major works in the last years of a tottering Weimar Republic, had anticipated a conflict between liberal principles (epitomised by the Weimar Constitution) and democracy. By his logic, a liberal parliamentary state can become undemocratic by defying the popular will, which the Weimar Republic did frequently because of a provision that enabled Chancellors to govern and pass laws by the approval of the President.  Likewise, an authoritarian state can in theory be more democratic by being in tune with the public mood.

Schmitt was clearly partial to authoritarian forms of government and his writings were devoted to assessing the larger shortcomings of a liberal political order. But this largely forgotten German professor is not central to our concerns. What is more relevant is that India is being confronted with a systemic crisis caused by the inability of the political class to reconcile parliamentary government with democracy.

Thanks to the government’s brazen disregard of the public dissatisfaction with corruption and inefficiency, the gap between executive credibility and the popular mood is growing. In more normal circumstances, the established opposition parties would have filled the moral and political vacuum. Unfortunately, both the BJP and Left are busy licking self-inflicted wounds. This state of uncertainty could even lead to a situation whereby a UPA-3 is voted in at the next general election, but without securing public trust. In that event, the polarisation between friend and enemy won’t remain confined to just the institutions of parliamentary government and democracy. Indian nationhood is also certain to suffer grievously.

Maybe, exceptional situations demand out-of-the-box responses.

Sunday Pioneer, December 2, 2012

Of debates, divisions and discretion

By Swapan Dasgupta

It is in the nature of contemporary politics that the more profound facets of political change are often subsumed by the clutter of immediate developments. The first days of the winter session of Parliament has been disrupted by a determined Opposition demanding that the Government subject its decision to facilitate foreign direct investment in multi-brand retailing to a parliamentary floor test. As much as the BJP and Left’s defence of small and medium retailers who may be threatened with unequal competition, the insistence on a voting resolution owes considerably to the belief that the Government is extremely vulnerable on this one issue.

On its part, the Government has maintained that the Constitution is explicit in allowing executive decisions in matters that are not governed by specific laws. Since the larger conduct and organisation of retail trade has been governed by executive orders, the Government is on strong legal ground in maintaining that changes to existing orders, such as the one the Centre notified earlier this year, does not warrant parliamentary approval. Legally speaking, a Government is not obliged to even withdraw its executive orders in the event of parliamentary disapproval—although it is certain that the embarrassment would have triggered a demand for a trust vote.

In the past, Governments haven’t stood on prestige over allowing debates under a voting rule on subjects that are governed by executive discretion. Under the NDA, the Congress and Left joined hands in pressing for a vote on the privatisation of BALCO. Likewise, even though the conduct of foreign affairs is totally in the realms of executive discretion, a ‘sense of the House’ resolution was adopted in 2003 to forestall the possibility of India getting embroiled in America’s war against Saddam Hussein. It is precisely because the UPA-2 was unsure over its ability to cobble together a majority that it fell back on principle to prevent a vote. Once that problem had been successfully negotiated, it became agreeable to a debate followed by a division. At the time of writing, it appears that a debate followed by voting will not create any awkwardness for the Manmohan Singh Government.

Yet, the issue of parliamentary scrutiny of contentious executive decisions is a problem that is unlikely to go away. The Indian Constitution was formulated at a time when the Congress exercised a stranglehold over politics. Under Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi, the Congress had a commanding majority in Parliament. Consequently, the Opposition rarely pressed for a vote on executive decisions. However, now that India has entered a prolonged phase of coalition governments of varying stability and coherence, the issue is certain to present itself over and over again. Governments with uncertain majorities cannot expect the same measure of indulgence as regimes with a clear mandate.

The Constitution accorded the Centre with more discretionary powers than enjoyed by its counterparts in other democracies. Those familiar with British Constitutional history will be aware of the tussle in the 19^th century between the Whigs and Peelites over ministerial responsibility. The Whigs favoured the entire governmental process being subjected to parliamentary oversight while the Peelites favoured strong government, the insulation of ministers from constituency pressures and sought to emphasise responsibility over responsiveness. These debates have persisted to this day. Parties which appeared to uphold Whig principles while in Opposition have tended to become Peelite when occupying the Treasury benches. India will also witness similar flip-flops.

Yet, some changes have already begun to be felt. As opposed to the time when appointments to important state agencies were left completely to the discretion of the executive, there is an attempt to curtail the element of discretion by involving the Leader of Opposition in many of the selection committees. The Supreme Court’s annulment of the appointment of K.V. Thomas as Central Vigilance Commissioner also demonstrated that the executive cannot act as before. Likewise, the process of appointment of the Director of the Central Bureau of Investigation looks set to undergo a radical change in the coming years, a development that augurs well for the beleaguered body.

Overall, the process of governance by discretion is under serious challenge because the polity is fractured and there are many more aspiring stakeholders. Even foreign policy looks set to witness important shifts. The intervention of Tamil parties in nudging India to vote against Sri Lanka in Geneva earlier this year and Mamata Banerjee’s veto of the Teesta waters agreement with Bangladesh are indications of which way the wind is blowing.

In the short-term, this move towards asserting the supremacy of Parliament over executive discretion may well further impair decision-making and even force a political stalemate in the future. However, there are two positive developments that can also result from this shift to responsive government. First, the curbs on discretionary powers may actually erode the influence of an over-bearing state on civil society. It may actually provide an extra space for citizens to go about their lives without bothering about a vengeful and venal political establishment. Secondly, the process of greater parliamentary oversight may actually propel MPs to look beyond narrow party interests on many matters. If MPs start exercising their independent judgment on most issues, the quality of public life is calculated to improve significantly.

Meanwhile, the UPA can take heart that ‘reforms’ don’t need to be undertaken by stealth. It can be legitimised by parliamentary approval.

Deccan Chronicle/ Asian Age, November 30, 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 

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 

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