Policies

Little to choose between

Print edition : April 04, 2014

Congress president Sonia Gandhi at the NREGA sammelan in New Delhi in February 2009. Photo: Rajeev Bhatt

Narendra Modi after opening the tallest tower in Gujarat at GIFT, a smart city near Ahmedabad, in 2013. Photo: Ajit Solanki/AP

AAP convener Arvind Kejriwal arrives to address the media on the outskirts of Ahmedabad on March 7. Photo: AMIT DAVE/REUTERS

India’s adoption of a neoliberal trajectory has done grave damage to its democracy; now elections offer a choice among parties but not much in terms of alternative policies.

PARLIAMENTARY Election 2014, many self-appointed pundits argue, will be a “game changer”. In their view, “development” and “good”, corruption-free “governance” have emerged as the central issues on the basis of which geographically dispersed voters choose their representatives and government. India will have a government that will have a clear economic policy mandate and, hopefully, the numbers and the capability to deliver. Implicit in this view is the argument that other issues and affiliations centred around caste, community and religion, for example, were more important in past elections but have for some reason lost value in the popular imagination. It is often even suggested that just as Indians as a “people” were fixated on nation-building in the immediate aftermath of Independence, only to be divided and fragmented by the disillusionment that followed, they are once again being driven by the potential of the country to be a global success to come together and demand and win “development” delivered by good governance.

There are, of course, many loaded assumptions that underlie such reasoning. One is that there is something called “development”, the contours of which are not just defined but are similar in the minds of all people, rich or poor, upper caste or Dalit, male or female. The second is that good governance lies in implementing the policies that are known and available to realise the goal of “development”. Third, that corrupt individuals and the systems they create are the obstacles to such good governance. And, finally, that rooting out such corruption is a matter of electing the right people and monitoring them adequately.

Interestingly, most politicians, too, seem to adopt this rhetorical stance, though in most cases that does not correspond with their practice in the past, their strategy at present or their beliefs at all times. Development with corruption-free governance is the promise made by all, though they disagree on who is capable of delivering it. What is surprising is that barring the Left parties, which are clearly against what are termed neoliberal policies which privilege the market over state intervention in rhetoric but use the state to transfer income and wealth to the rich in practice, the elements of development are more or less the same among the rest.

Three components

There are three components of developmental success that are referred to by all (but the Left), though not always in conjunction. The first, and clearly the most important, is attracting foreign investment and galvanising domestic private investment by adopting policies favoured by capital and outlaying large volumes of state-garnered resources in areas such as infrastructure in a bid to raise the rate of GDP (gross domestic product) growth which is the privileged indicator of successful development. Liberalisation, privatisation and tax reform (or provision of tax concessions to the rich) are all instruments in the pursuit of this end.

The second is the realisation of certain human development outcomes, such as improved literacy, school enrolment, access to drinking water, and infant and maternal mortality (among many such “millennium development goals”), which put a “human face” on a growth strategy that privileges foreign finance capital, transnational firms, the large private sector and a minuscule group of rich Indians. What is emphasised repeatedly, however, is that this effort to put a human face on inequalising growth should not result in the pursuit of the “populist” policy of using budgetary resources to finance social sector programmes. Every neoliberal’s dream is to realise human development at bargain basement prices, if not at no cost to the exchequer. More so because the decline in revenue mobilisation under a soft tax regime aimed at incentivising private investment and committed to keeping the fiscal deficit low to appease international investors shrinks the available volume of budgetary resources.

The third component of development that has won much traction among the middle classes is combating corruption not only to reduce the annoyance experienced by the ordinary citizen confronted with petty corruption but also to divert to the “development” effort resources leaking out through grand, large-scale corruption. But whether society can be corruption-free in a country traversing a neoliberal trajectory or development would be any different in character and quality from that seen in a world infested with corruption is often not analysed.

What is remarkable about this “model” of development is that it is not by any means new and consists of elements of a neoliberal trajectory that governments in India have embraced since the early 1990s and many governments outside India even earlier. Moreover, there has been an effort to present this model as reflecting the consensus, despite the fact that getting much of it passed through the Cabinet, let alone Parliament, has proved difficult or, at least hitherto, even impossible. In the event, the consensus is presented as technocratic, and the obstacles to its implementation the result of either the failure to comprehend difficult economic reasoning or the work of sectional interests that unfortunately wield influence in a democratic polity.

Congress and corruption

Be that as it may, the fact of the matter is that in terms of the length of time over which this model of development has been pursued in India, the Congress has a clear edge. Unfortunately for the Congress though, the very pursuit of this strategy has created an environment in which corruption has flourished. Living in a world where income and wealth are the preferred measures of individual success, it is not surprising that politicians and bureaucrats, who deliver concessions that ensure huge profits for the private sector, expect to be compensated with a quid pro quo for diverting those profits to one section rather than another. Since this occurs in a context where competitive politics and a ruthless media battle for eyeballs result in periodic revelations of mega-scams, the Congress has earned for itself the reputation not of pursuing the neoliberal model that much of India’s politics embraces but of heading two of the most (or at least among the most) corrupt regimes in post-Independence history.

To boot, the fact that under the Congress’ neoliberal agenda the country recorded for a few years some of the highest rates of growth seen in the post-Independence period did not help. This was because that growth proved to be fragile and ephemeral, and social memory is short. The “stimuli” used—be they cheap land and resources, transfers from the exchequer, large doses of cheap credit from the banking system or the right to violate environmental laws and guidelines—to incentivise investment and realise that growth proved economically and politically difficult to sustain. As the election approached, the government seemed increasingly incapable of greasing the profit-making machine and growth slumped and inflation accelerated, making the “model” a failure rather than a success. Big Capital that celebrated the Congress during its neoliberal success turned away and went in search of a new leader who could deliver undeserved profits.

For the Congress this was a lost opportunity. Its history, its recognition of the need for an economic programme that reached out to the marginalised within India’s parliamentary democracy, and its need for support from the Left during the first tenure of the United Progressive Alliance (UPA), made it place a number of pro-people measures on the agenda—varying from employment guarantee and social security for unorganised workers to food security for the majority if not for all. If it had gone even half-way in delivering on these promises, the majority of the electorate would have seen it as capable of governance. But in deference to the view that such measures were “populist”, it unduly delayed and did not support with adequate resources the implementation of some of the measures and shelved some others, only to cynically retrieve them from the cupboard when Election 2014 neared. The fact that the Congress won in the 2004 general election by showing up the Bharatiya Janata Party’s India Shining slogan and that it revived its prospects in 2009 because of Sonia Gandhi’s decision to return to the “populist” agenda were forgotten quickly. Dumping all these for the neoliberal ideology peddled by a few unelectable ideologues and subordinating them to the belief that neoliberal success can be sustained and will help win elections was its major error.

Modi and development

This, on the other hand, provided the BJP an opportunity to move into this so-called “developmental space” vacated by the Congress. It needed that space because its majoritarian Hindutva agenda soon proved to be a political handicap. After its rise to power, facilitated by the polarising effects of the rath yatra and the Babri Masjid demolition, which helped it temporarily consolidate a large section of the majoritarian vote, the BJP found itself increasingly isolated. The Gujarat riots only intensified this isolation, at least outside Gujarat. Even some sections that were not completely in favour of disciplining the minorities while not averse to strengthening the influence of the Hindu majority seem to find some methods of the Sangh Parivar unacceptable.

It was, perhaps, in this context that the party decided to turn to the development agenda and the India Shining slogan in 2004. In any case, given its right-wing economic origins, neoliberalism was by no means alien to the party. In Gujarat, too, Narendra Modi, who was alleged to have ignored or overseen the rioters in 2002, began feeling the heat not just across the country but within his own party and State. He too decided to move in the direction of painting himself as a votary of development as opposed to communal violence. The fact that historically Gujarat was among India’s more economically and industrially developed States served Modi well. All he had to do was leverage that legacy and turn into an unabashed promoter of a set of carefully chosen business groups who, showered with concessions, registered rapid growth in Gujarat based on dubious means. Allegations of malpractice and corruption are rife there as well. But attention was diverted by making industrial development a virtue.

The Hindutva agenda was displaced by one of presenting Gujarat as having registered considerable progress under Modi in terms of all three components of the neoliberal development myth—growth, human development and good governance. While the legacy of 2002 would not go away, its impact on the BJP’s and Modi’s electoral fortunes was sought to be neutralised by crafting a marketing strategy that presented Gujarat as the most successful model of “development” among Indian States; Modi as a leader capable of bold decision-making and innovative governance; and, when necessary, Gujarat as a “riot-free” State after 2002. Truth was a major casualty in this marketing exercise, as substantial inequality and massive discrimination were papered over. But that was a small issue for a leader who, consciously or unconsciously, spilled untruths almost every time he addressed a mass audience.

Narendra Modi’s partial success in selling his myth of the Gujarat “model” and the fact that big business and the media it dominated saw in him a potential saviour who would continue with the strategy of engineering a massive shift in the distribution of income and wealth in favour of a tiny elite, made him a “natural” choice as the BJP’s prime ministerial candidate. Advani and his rath may have helped bring the BJP to power in the past. But that association with the Hindutva agenda and the fact that little had been done to wipe it clean was a drawback, for which he paid a political price. Modi, too, is scarred by that legacy, but he has managed to tint it with his “developmentalism”.

Regional parties’ dilemma

With the Congress and the BJP cocooned in neoliberalism in this fashion, outside of the Left there was only a motley group of regional parties that could push for an alternative agenda. But they are starved of resources within India’s vertically unequal revenue mobilisation and sharing system. They have also been straitjacketed financially by successive finance commissions that have gone beyond their originally intended mandate to impose a stringent form of neoliberal austerity on the States. On the other hand, they are constantly under pressure to respond to the populations that turn first to State governments when demanding improved welfare and infrastructural services.

As a result, most State governments have little enthusiasm for grand alternatives. Their immediate concern was and is with cajoling the Centre and the Planning Commission to give them more by way of resources, programmes and infrastructural spending and with attracting private investment in order to deliver some additional jobs. A corollary has been competition among States to use concessions to attract private investment, or an enforced traverse to the neoliberal path, in which more developed States like Gujarat have an edge.

The “consensus” over neoliberal “development” across much of the political spectrum is a result of all this. Many argue that the coming of a new force into Indian politics in the form of the Aam Aadmi Party (AAP) could change the discourse. The difficulty with the AAP is that while it has attracted a number of members who have a track record of fighting neoliberal ideology, it also includes in its fold many who are deeply neoliberal. Moreover, its focus on corruption and arguments that reducing or rooting out corruption is itself a development panacea fail to draw attention to the damage that neoliberalism has wrought and is inflicting. As noted earlier, the rhetorical war against corruption is easily accommodated within the neoliberal framework. Thus, as of now, just as it is not clear how influential a political force the AAP will become at the national level, it is also not clear how far it will go to stall and reverse the neoliberal onslaught. The party could well end up joining the “development consensus”.

One question that arises is how all this came to pass in a country that boasts a vibrant democracy in which even the poor wield the vote. Three factors among many seem particularly relevant, two political and the other economic. The first is the fact that given the economic and social structure within which it functions, representative democracy in India (as elsewhere) has been captured in multiple ways by the economic elites. As many have noted, India’s democracy is more formal than substantive. The second is the unusual political history of the Congress itself, in which the Nehru family’s success in retaining control of the Congress despite the devastation that two assassinations have had, implied not only a destruction of the Congress as a party but the ceding of government leadership to individuals who were not politically strong (and therefore not a threat) but were ideologically deeply neoliberal when it came to economic policy. The result was that while the Congress appeals to the poor when it is in election campaign mode, it sticks to the neoliberal development model when in governance mode. Finally, and most importantly, with the rise to dominance of finance globally, fluid, foreign financial capital capable of flowing in and out of countries sets the policy agenda once a country becomes host to large volumes of such capital. Opting for a non-neoliberal economic alternative risks triggering capital flight with damaging consequences for the balance of payments, growth and welfare.

What is required in such a global context is to find ways of retaining a substantial degree of independence vis-a-vis global finance. However, once power over economic decision-making was handed over to a neoliberal elite, which gained immensely from a neoliberal trajectory, that was not to be. India’s economic borders were opened and capital flowed in, and accumulated legacy capital set the terms of debate. India’s democracy has in the process been gravely damaged. Elections offer a choice among parties and candidates. They do not really offer much of a choice in terms of alternative policies. As of now, that is.

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