The United Progressive Alliance (UPA) entered 2011 with its political centre of gravity shaken by the cumulative effects of various scams, reinforcing the popular perception that it was somewhat losing its grip on governance. Any new year does give hope of some renewal but then the baggage of the past is not so easily wished away. So, the question on everyone?s lips is?how will 2011 pan out in political and economic terms? In my view, the risks are pretty high for both the polity and the economy in the current year. Also, it is quite likely that the political and economic risks will reinforce each other in the months ahead.
Political instability will flow from the BJP leadership?s firm view that its boycott of Parliament, demanding a JPC probe into the 2G scam, has paid off. The BJP believes there is immense popular anger over the way the UPA had dealt with the Commonwealth Games as well as 2G spectrum allocation. This assessment is bound to tempt the BJP to disrupt the Budget session in February.
There was a faint hope that the BJP might soften a bit after the Prime Minister?s assurance that, if needed, he would appear before the Public Accounts Committee (PAC), which is examining the CAG report on the spectrum allocation. However, as a means to mollify the Opposition, the Prime Minister?s offer seems to be coming unstuck.
The BJP forced its senior leader Murli Manohar Joshi, who is also the chairman of PAC, to make a statement that the demand for a JPC probe was valid even if the Prime Minister appears before the PAC.
Meanwhile, the Congress?s chief trouble shooter Pranab Mukherjee did not exactly further the cause of peace with the Opposition when he uncharacteristically suggested the Prime Minister should not have offered to appear before the PAC. If one takes a charitable view of Pranab?s statement, one could argue he was merely implying that the Prime Minister?s offer is being seen as a weakness that the Opposition will exploit even more. Pranab?s own thinking perhaps was his own offer of a special session of Parliament to decide on the JPC matter should have been good enough. But that was not to be.
What is disturbing about Pranab?s statement is that he revealed to the public he was not consulted on the Prime Minister?s offer to appear before the PAC. By saying so, Pranab also betrayed the fact that the Congress president had not kept him in the loop either. For Manmohan Singh would not have offered to appear before the PAC without consulting Sonia Gandhi.
This also says something about the communication levels among the top leaders in the Congress party and government. Of late, top leaders and Cabinet members of the UPA have tended to talk through the press, perhaps in a bid to themselves figure out what Manmohan Singh or Sonia Gandhi might be thinking.
Meanwhile, apparently innocuous events like the Income Tax Tribunal pronouncing a tax on commissions paid to the Bofors agent Win Chadha add to the already conspiratorial air in the corridors of power in New Delhi. One had thought there would be some semblance of stability within the Congress after Sonia Gandhi firmly put her weight behind the Prime Minister at the Congress Plenary session last fortnight. Unfortunately, conspiracy theories are refusing to die down, in spite of assurances from 10 Janpath.
This is not good for political stability at the Centre. The Opposition will also view this as an opportunity to stir the melting pot. As a strategy, the BJP wants to keep the UPA unhinged till the West Bengal and Kerala elections this year. BJP leader Arun Jaitley clearly articulated this at the Express Group?s Idea Exchange last month. He said there was a consensus that the Left Front would suffer serious political reverses in West Bengal and Kerala this year. Once that happens, the Left will cease to be a lynchpin for a potential Third Front formation. The Left and TDP leader Chandrababu Naidu still want to revive the Third Front. Therefore, once the Left falls in both their bastions, other erstwhile NDA constituents like Naidu would naturally veer towards the BJP.
So, the BJP wants to keep the political pot boiling at the Centre through its disruptive approach until the ground is fertile for a larger realignment of forces.
However, a strategy of prolonged political disruption will not be good for the economy. True, the overall economy and the stock markets have been shrugging off political instability so far. But this good run may not continue for very long. Continued political instability can cause policy paralysis. When politics turns very nasty and disruptive, the bureaucracy in general loses incentive to take decisions. Various critical economic legislations are put on the back burner.
Worse, in such a situation the government may start taking decisions with a mid-term general election in mind. Such possibilities cannot be ruled out if things don?t get resolved amicably between the Congress and the Opposition. For instance, if the BJP boycotts the Budget session, it would be unprecedented and completely negative for the stock markets and economic stability, in general. In such an atmosphere, other negatives like higher inflation expectations, hoarding by traders and general chaos can prove risky for the economy as a whole. Unfortunately, when the political momentum against any ruling alliance gathers critical mass, various negative and disruptive tendencies feed on each other. 2011 would seem to be ripe for such a cocktail.
mk.venu@expressindia.com
