Electoral Shock

The two principal factors at work in India's recently concluded elections -- economic policy and divisive identity politics -- were starkly revealed in the aftermath. The Bombay stock exchange lost more value in one day than at any time in its 129-year history, and the xenophobic right wing of the evicted government unleashed a vitriolic campaign against the Italian-born leader of the victorious coalition, Sonia Gandhi, because she was not "Indian enough."

The results of the election were a surprise. Analysts were shocked that the incumbent National Democratic Alliance (NDA) government, led by the Hindu chauvinist Bharatiya Janata Party (BJP) had been voted out. NDA Prime Minister Atal Bihari Vajpayee was well liked, and his government had presided over economic growth rates that were impressive on paper. However, a dispassionate observer who bothered to travel outside the islands of prosperity in the metropolitan centers would have noticed what I did in January -- and on previous visits for several years: Despite the over-heated government rhetoric of "India Shining" and the media harping on the "feel-good factor," the welfare of most Indians had in fact deteriorated during the NDA government's tenure, and as a direct result of neo-liberal policies such as privatization and opening of the economy to foreign capital.

The new Prime Minister of India will be Manmohan Singh, who as Finance Minister a decade ago designed and set in place the neo-liberal "economic reform program." Singh is an economist and technocrat. The choice of Singh will calm the financial markets. However, it is noteworthy that an election that is widely interpreted as a resounding rejection of the neo-liberal economic reform agenda, or at least of its consequences, should have produced this Prime Minister. Singh will head a government of the United Progressive Alliance, led by the once-dominant Congress Party.
Unfortunately, the new Prime Minister, like many of the senior leaders of the Congress Party, is lacking in the political strength and skills to simultaneously set and control a policy direction and hold together a varied and multifarious coalition. Given the ideological variety and precarious majority of the winning coalition, this bodes ill for its long-term survival.

Since Congress and its allies lack a parliamentary majority to govern by themselves (they won 217 of the 545 seats in the Lok Sabha, the all-important lower house of parliament), they will need the support of the Communists and smaller leftist parties (which won 60 seats) to choose a government and survive votes of no confidence. The BJP and its NDA allies won 187, and smaller uncommitted parties more than 70.

In the weeks leading up to the Indian elections, the talk among the India experts in Washington had been about the high likelihood of the NDA's re-election. In this, US-based elite analysts concurred with the majority of Indian political commentators, certain that a government that had set its sails to the prevailing neo-liberal international economic ideology must come safe to port, particularly one that had been sagacious enough to strategically align itself with the United States in defense and security policy.

The Congress Party was once unambiguously secular and firmly committed to a mixed economy, state subsidies, social welfare and direct attention to the needs of the poor. In recent decades it had begun to move more towards the contemporary neo-liberal mantra of "poverty alleviation through growth" - a restatement of what in the US in the 1980s was called "trickle down economics," and a subtle and progressive pandering to religious identity, particularly that of the Hindu majority.

Nonetheless, Congress remained more secular than the brazenly chauvinistic BJP, and, faced with fading into irrelevance, the party made a shrewd calculation: It moved away from the market-driven, neo-liberal economic policies, opposing, for instance, privatization of national assets and public services. Conveniently, this also allowed them to pick up the support of the left wing and Communist parties.

Much of the press coverage after the election result has suggested a too-neat dichotomy between urban dwellers, who had benefited from the NDA's economic policies, and the rural poor who are alleged to have been behind the upset result. A closer look shows that the NDA lost even in big cities, such as Delhi, Mumbai (Bombay), Chennai (Madras), Hyderabad and Bangalore, which have been the prime beneficiaries of these policies -- even symbols of the new economy and new industries, and where the middle class has done better than the middle class in smaller cities.

The case of the state of Andhra Pradesh summed up the reality rather neatly. As a center of the information technology industry, favored by Bill Gates and similar others, the state was also marked by perhaps the highest rate of the nationwide epidemic of suicides by farmers suffering from crushing indebtedness. This particularly Indian phenomenon results from the one-two punch of the high cost of fertilizer and farm machinery bought at international prices and steeply declining prices for their commodities owing to elimination of subsidies and competition from bigger producers. Small farmers, once iconic in Indian politics, were now perishing on the altar of neo-liberal ideology.

Indeed, even the "new economy" is in large part smoke and mirrors. The job opportunities in the communications, information and consumer services sectors -- a significant engine of the economic growth -- are unavailable to the level of education of a typical Indian. Persons lacking good English can't man offshore call centers serving the US. And consumer, entertainment and western-style retail outlets are beyond the reach of most, and thus suffer from a limited market, while the average Indian is quite unequipped by skills, education or cultural background to work in these.

Large numbers of Indians are falling behind in life, even further than the chronically woeful state of the Indian poor. Access to water is increasingly problematical, land for the smallholding poor is increasingly scarce and the salaried middle class -- like the poor and the working class -- are suffering from inflation produced by global economic integration. Lastly, retired persons on fixed incomes have experienced staggering declines in real incomes because foreign and Indian investors have successfully pushed for lower interest rates.

So much for the economic losers: the poor, the small farmers, the wage earners, the civil servants, and the urban middle class without competitive western-oriented global market skills. But why did the former government's beneficiaries desert it as they did?

The answer lies, not in the economic policies of the NDA government, but in their politics of hatred. The BJP had stood by, and some of its leaders even acquiesced, as its allies among the chauvinist mass organizations (VHP, Bajrang Dal, RSS, Shiv Sena) had unleashed hateful rhetoric and violence against religious minorities, and pursued a frankly fascist agenda of censorship (often enforced by mob violence) against any independent scholarship, art and intellectual work which contradicted their narrow and fictional view of a Hinduised Indian history and cultural tradition.

It is little surprise that the well-to-do responded, perhaps simply by not voting, to the loss of a rich and varied sense of Indian identity, a sense of shame at the loss of the tolerance which was once the proud hallmark of Indian (and Hindu) society, and the narrowing of intellectual freedom.

There's another reason why the NDA was deserted by the relatively well-to-do beneficiaries of neo-liberal policies. In recent decades, the role of organized crime in politics and society has loomed larger. When the BJP government in the prosperous western state of Gujarat not only acquiesced in, but in fact planned and promoted an anti-Muslim pogrom, with rioting that destroyed billions in property and took thousands of lives, and when that government protected the thuggish perpetrators of that mayhem, it had an unintended consequence: Everyone's security was threatened, criminal elements were systematically emboldened and empowered, and investment and economic activity in Gujarat took a nosedive.

Let us pause though to note that, in the run-up to the election, the weight of "respectable" and "expert" opinion in the US found the prospect of an NDA victory unambiguously beneficial, notwithstanding this ugly fascist side of the coin. Why should the liberties of Indians, even the integrity of their national mind, stand in the way of economic opportunity for us, and the strategic interests of the United States?

Well, what of the future? The selection of Manmohan Singh as Prime Minister suggests that the project of neo-liberal "economic reform" will not be abandoned wholesale. The will of the Indian people, as reflected in the election results, will simply suggest a more deliberate balancing. The new government's spokespeople have indicated that they will continue with reform, but with more discrimination about the implications for social and national welfare. To the extent that it was a vote on economic policy, it was a rejection only of unfettered liberalization and globalization and privatization, not a rejection outright of any of these. We should expect a pragmatic and empirical criterion, not an ideological one.

Yes, Communists are essential to the government's survival, but a Communist-run state government in West Bengal has won elections for a quarter century while pursuing economic reform and investment.

Economic reform can only succeed if it has long-term political viability and sustainability. In a democracy, this can only be accomplished by ensuring ordinary people a beneficial stake in it. A more balanced reform agenda may also be the best guarantee of long-term political stability. It is a pity that the new government is so precarious that its ability to even begin to model such a balance between economic reform and social welfare is seriously in doubt.

Amit A. Pandya, a lawyer and ethnographer, is a development consultant who has served in the State and Defense departments, USAID and on the staff of the House Foreign Affairs Committee.

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