Rising angst

Prime Minister Manmohan Singh. People are wise enough to understand that excessive populism should not be allowed to derail the progress our country is making, he said after the fuel price hike.-B. MATHUR/REUTERS

The Congress and the UPA are banking on the absence of opposition unity to ride out the resentment against the fuel price hike.

IT was not the usual indifference of this quintessential middle-class city that greeted us this time. In many places, young and old alike responded positively to our campaign and said the protest against the fuel price hike and price rise needs to be registered strongly with the government, for whatever it is worth. This was a comment heard at a discussion by a group of Delhi-based activists of the Left parties on July 5, the day of the Bharat bandh. Clearly, the average Delhiite had set aside that day his/her general hostility to proactive political action. The bandh was organised severally but simultaneously by the Left parties and the National Democratic Alliance (NDA) led by the Bharatiya Janata Party (BJP), the principal opposition party in the Lok Sabha.

This popular support for the mass agitation resonated in other forums too. The Confederation of Indian Industry (CII), the country's premier business association, stated that the agitation had a significant impact on business and trade in some parts of the country. It estimated a total loss of over Rs.3,000 crore to the economy on account of the bandh. It said that while the CII has been a strong advocate of market-linked pricing and taxation of petroleum products and hopes to see the reforms in this direction completed in the course of the year, it also believes that targeted subsidies are necessary to ensure protection from price volatility for the needy and to ensure access. The CII statement emphasised that supply-side measures are required to deal with this problem in a more comprehensive manner.

Clearly, the popular response to the agitation was such that even the business body could not ignore it as it had done many times in the past. Asked about the comments of the Left activists and the CII, Minister for Overseas Indian Affairs Vayalar Ravi, a senior Congress leader, admitted that the hike in fuel prices in the background of the overall inflationary tendencies had evoked a downbeat response from the people. However, this by itself does not signify concrete negative political fallout for the government or the ruling coalition, he added. We are going through a period characterised by a lot of tokenisms, posturing and nuanced politics, and right across the political spectrum. It is a context where the trends are generally status quoist and even the subversive ones can at best be described as nascent and tentative.

Vayalar Ravi went on to explain that it is difficult to sustain the indirect understanding that was there between the Left and the BJP on the Bharat bandh, despite the great enthusiasm shown by senior BJP leader and former Deputy Prime Minister Lal Krishna Advani in relation to the development. (Advani had, in his blog, written about an interaction between himself and Communist Party of India (CPI) leader Gurudas Dasgupta, wherein the Left party leader had apparently described his visit to the BJP office in Parliament as a kind of first foray into forbidden territory.)

He added: The anti-communal, secular credentials of the Leftists are too dear to them and Prakash Karat, general secretary of the Communist Party of India (Marxist), has already emphasised it in an article in People's Democracy, the party's mouth-piece.

The Congress leader also pointed out that regional outfits such as the Bahujan Samaj Party (BSP), the ruling party in Uttar Pradesh, and the Rashtriya Janata Dal (RJD) and the Lok Janshakti Party (LJP) in Bihar did not join hands with the BJP and the Left parties for the bandh though they had opposed the fuel price hike. Clearly, these smaller parties are nuanced in their politics in order to retain multiple options, he said.

Developments within these parties indicate that there is some merit in this assessment. Both RJD leader Lalu Prasad and LJP president Ram Vilas Paswan have softened considerably towards the UPA and its government despite periodic statements opposing the government's polices. So much so, Paswan is even tipped to join the government in the next Cabinet reshuffle, expected around the end of July.

Another factor being referred to prominently in UPA circles in New Delhi relates to the timing of the fuel price hike. The overriding opinion within the UPA stresses the fact that the Central government has just begun the second year of its five-year term and argues that any unpopular decision can be taken at this point of time. This is not bound to have an impact that will stay for the next three and a half years. In any case, the Congress and its partners need to face even State Assembly elections only during the last months of this year or early next year. We hope the government will be able to take measures to overcome the present popular resentment by then, said a Congress Minister. Elections are due in Bihar, West Bengal, Tamil Nadu, Kerala, and Assam during the latter part of 2010 and early 2011.

A section in the Congress holds the view that the negative political and electoral fallout of inflation, fuel price hike and the rise in the prices of essential commodities will, in any case, be not as strong or decisive as is being visualised by many, including some Congress leaders. Advocates of this view emphasise that the political status and prospects of the party or the UPA government will remain largely unaffected. They point to the experience of the party and the UPA in the 2009 Lok Sabha elections. The entire Opposition as well as some partners of the UPA had the conviction that inflation and price rise would cause electoral reverses to the Congress. But that is not what happened. An important reason for this is that large segments of the population are steadily acquiring the ability to absorb the effects of inflation, said Law Minister M. Veerappa Moily.

Many others who hold the same view, including a couple of party spokespersons, said academic studies, too, corroborated this no major impact theory. According to one of these leaders, who did not wish to be named, a study conducted by Consumer Pyramids, a private centre for monitoring the Indian economy, during the run-up to the 2009 elections and covering the largest database on Indian households showed that over 80 per cent of Indian households had the ability to absorb inflation without hurting their consumption levels. The leader added that the significant rise in investments in recent years had created many new jobs all over the country and that there was a growing realisation that inflation was a small price to pay for this change.

Prime Minister Manmohan Singh's comments in the wake of the fuel price hike also reflect such thinking. People are wise enough to understand that excessive populism should not be allowed to derail the progress our country is making, he said and added that the adjustment made in the prices of kerosene and cooking gas was necessary considering the very high subsidy that is implicit in their pricing structure. These subsidies on petroleum have reached a level which is not connected to sound financial management of our economy. So, this decision has been taken to put some burden on the common people, but it is manageable.

However, there are some sections in the government, including many leaders of the Nationalist Congress Party (NCP) and the Trinamool Congress, who are not ready to go along with this line of thinking. A senior NCP leader said there was a growing impression that the government was protecting and advancing the interests of corporate bigwigs alone and that the aam aadmi, on whose strength the UPA returned to power, had been left by the wayside. This impression is steadily growing, especially in the small towns and villages across the country. All the statistics and analyses about 80 per cent Indian households having the capacity to absorb inflation do not pass muster before this impression among the people. This certainly does not bode well for the UPA and the Congress. We need to take urgent corrective measures, the leader said.

According to the NCP leader, government agencies themselves have accepted that prices of potatoes and onions have risen by 50 per cent in 2009-10, while those of vegetables and fruit have increased by 15 to 20 per cent. The increase in sugar prices has also caused great harm to the poor, especially in north India. Clearly, the overall impact is much more than what it was in 2008-09, and this is all the more reason not to hide behind clever statistics and analyses, the NCP leader said.

According to a number of UPA leaders, the request from Sharad Pawar, Union Minister for Agriculture, Consumer Affairs, Food and Public Distribution and NCP president, to the Prime Minister a reduction in his job responsibilities could well be related to a perception that the country is about to witness a runaway spiralling of food prices. Pawar seems keen to give up the Food portfolio, which he apparently surmises will soon become an unbearable political cross on his shoulders, an NCP leader said.

Opinion is divided within the Congress and the UPA on the political impact of the price rise. What gives strength to advocates of the minimal impact hypothesis is the fact that a larger and long-standing opposition unity between the BJP and the Left parties is impossible despite joint actions on specific programmes.