It could not get better. The election verdict is stunning in its simplicity and in its definitiveness. Not only has the UPA been returned with the same Prime Minister but on its own it could possibly form the government without the Fourth Front and, think about it, without any support needed from the Left. If I had been a believer in God, I would have thanked her.
The UPA is a tighter coalition with only a few parties besides the Congress. The Congress is polling above 200, which is a landslide. But the others are the NCP, DMK? both from before?and the Trinamul Congress, which has been in and out. The allocation of portfolios can be on somewhat more rational grounds than last time. I do hope that the Prime Minister will not take any old family rubbish as cabinet ministers even from coalition partners, but insist on some proof of efficiency.
Indian voters have voted not just for the UPA. If you add up the Congress plus BJP on their own, they pool 300-plus seats together. This is a big rise on 2004. If you add up the UPA and NDA, they have 420-plus seats. Thus, the long tail of Indian political party structure has been severely chopped off. The much vaunted non-Congress, non-BJP option has bitten the dust. India can now go back to grown-up politics. At last, the Indian citizen will not need to flash his/her caste card to get public goods; but can access them as a citizen entitled to the best the government s/he elected can deliver.
For a long time, there has been a confusion prevailing in Indian politics about the state and the market. Even after 18 years of economic reforms, few political leaders claim the good outcomes for the reforms. Every one rails against reforms and blames them for poverty and inequality and shortfalls in healthcare and education.
Recall, however, that pre-1991, the Indian economic policy did not remove poverty; it only shouted slogans of Garibi Hatao. Growth rate being pathetic, employment creation was low and the few good jobs in the formal sector were protected. This prevented any large-scale manufacturing growth for 50 years and more. India lags behind in low-tech manufacturing growth unlike many Asian economies that were less industrialised than India in 1950 and now have surpassed it. India can make a nuclear weapon. But it can?t take surplus rural labour off land and provide workers with full time round-the-year jobs. This is because pre-reforms, the emphasis was on creating a military-industrial complex with heavy industries which made machinery which cost a lot of capital and could have been bought abroad for a fraction of the price. Education and health expenditure was for the elite in the public sector, but not for those in the informal and rural sectors. This was called the ?Socialist Pattern of Society?.
It crashed, but its lure still beguiles the ?progressive forces?. Since 1991, accelerated GDP growth has halved headcount of the poor. It has begun to pose questions of rural infrastructure and universal provision of healthcare and education. It is thanks to the reforms that the state has the resources to tackle these issues. But the state is not good at the delivery of public goods. We know this from the statistics about the poor households which send their children to private schools. Public school provision has either to be improved or to be handed over to the private sector, either non-profit making NGOs or profit-making firms.
Now India has the room to get back to sensible economics. Team Manmohan has the knowledge and the sense of equity to be able to do the task properly, without red noise from the Left. As readers of this column know well, priority has to be given to the reform of land laws whereby the sale and purchase of land becomes a private contract between two parties without the state using Eminent Domain arguments of an 1894 law to bully and harass farmers. Labour law has to be reformed to allow large-scale factories to be launched that will exploit the economies of scale and size. Employment growth should be central to the growth plan and it can only come through more, not less, labour market reform. Health and safety are not protected by leaving a large section of workers in the informal sector, even on the much proclaimed Left-wing grounds of protecting the workers in the organised sector.
There is no conflict between growth and poverty removal if only the old shibboleths are abandoned. The Great Indian Voter has now removed the shibboleth of the Left parties. Let the UPA and Team Manmohan seize their chance and transform the Indian economy in the next five years. This time, there are no excuses left.
?The author is a prominent economist and Labour peer
