The UPA II era experienced many disruptions in Parliament caused by the BJP. They revolved around the lack of appropriate responses and action on the large scams in the allocations of coal mines and spectrum, as identified by the CAG. There were other troubling actions by government that remained unexplained. The UPA II also did little to increase investment and was unable to keep inflation down. The balance of payments also was in large, continuous deficit. The Congress lost the the general election in 2014 and has, ever since, carried a fury and a desire for vengeance for its defeat.
The BJP-led NDA, after winning in 2014, began governing on a promising note. It was given a big majority in the Lok Sabha elections because of the expectation that there would be accelerated development, more jobs, better living and far less corruption. It was lucky on two counts: that its regime almost coincided with the collapse in crude oil prices, and the collapse of the economies of Europe, the decline of the Chinese economy and the lack of revival in Japan.
These reduced inflation, imports, and improved the balance of payments. India became the star of the global economy since it was the only fast-growing economy. The revival of the US economy was the other feature.
But excessive rainfall in some areas and drought in others led to accelerating food price inflation. While public investment was growing, private investment growth remains modest. The lack of progress in unifying the economy through a national goods and services tax (which the BJP had delayed for years in Parliament), the stumbling blocks for land acquisition by industry and urban development placed by UPA’s land acquisition law, restrictive labour laws, the stifling regime of inspections and controls that made starting and operating business very difficult had to go, but haven’t. The influence of the RSS has also affected improvement in the quality of education.
Now that it is in power, the BJP expects a degree of cooperation from the Opposition parties led by the Congress. The BJP did not give that to UPA II. The trauma of overwhelming defeat in the elections and the skeletons tumbling out of the Congress closet have led to the Congress developing a strategy of non-cooperation in Parliament. Legislations that the Congress initiated when in power are now held up. Increasingly, it appears as if the Congress is adopting a “scorched economy” policy (akin to the military defence strategy of destroying one’s own assets to prevent their use by the enemy). The thinking seems to be: “Since we were stopped from governing, we shall not allow you either, even if the country suffers as a result.”
India cannot afford this vengeful behaviour by either the government or the Opposition. During the last 18 months in power, this government has behaved with an unconcealed lack of civility, arrogance and lack of consultation in its interactions with the Congress. The Prime Minister has barely spoken in Parliament. The absence of regular meetings with chief ministers, the National Development Council and formal and informal meetings with Opposition leaders has created a large distance. Sadly, it has taken the BJP 18 months of being in power to realise that they cannot function without legislation, and that even a handful of Opposition members can prevent legislation.
The present face-off between government and the Congress will wreak havoc on economic development. This is tragic, especially given circumstances for such progress are very favourable.
As the face-off gets worse, what could happen? Arrests of top Congress leaders, prosecution of the Gandhi family for more offences (now mostly only whispers), charges against other leaders, no business accomplished in Parliament, street agitations, and even possibly, riots.
Congress vice-president Rahul Gandhi seems to be developing a Leftist economic philosophy. Its features include leaving agricultural land protected from acquisition for industry or urbanisation, not changing labour laws, returning to heavy social expenditures by the central government with little monitoring for effective receipt by targeted beneficiaries, a fractured, instead of a unified, market across the country, heavy subsidies on “essential” goods and services for the “poor” and for groups like the farmers. He wants to return to the centralised economic control, that was advocated by his grandmother, Indira Gandhi, when she was in power. This would mean central planning and control over all resources, massive give-away as subsidies, large social schemes without ensuring delivery, expansive government ownership in and domination of the economy
But we are not in Indira’s India of the 1970s. We have a large population of the youth, and there is rapid migration to urban areas. Many want to escape the poverty of an agricultural/agriculture-related livelihood. Unless these migrants have the appropriate job skills and are able to get a decent urban living, we will witness great unrest.
Agricultural lands must be converted for industrial use and for urbanisation. India must realise its true economic potential as a nation, with GST in place. We must enable large labour usage for relatively less-automated industries like garments, etc. Our education and skills development policies must reach many more than they do today. We must improve the delivery of our social schemes and reduce theft, waste and improve efficient delivery. We must make it easier for new businesses to start and function. None of this will happen in a “scorched economy” India, which seems to be the Gandhi family objective. The BJP must make itself less stiff and meet Opposition demands in a more fruitful manner.
India is already on the downward path. But there is still time to pull back and give our people the economy they deserve. Political agitation and unrest is the last thing the country needs. India is today a football game played by a weak team against a much stronger one. But the weak team has the power to prevent the stronger one from scoring any goals. The strong team must change its tactics in India’s interest.
The author is former director general, NCAER, and was the first chairman of the CERC