Cong hides its spots as BJP targets identity issues

Written by Swapan Dasgupta | Updated: Dec 31 2011, 06:08am hrs
2011 may well be recorded as the year the unbridled optimism over the India story came to an abrupt end. The metropolitan elite that had been in the vanguard of the resurgent mood appear to have not only lost faith in the Congress-led UPA governments ability to usher in change, but also its willingness to defend the gains of 20 years of liberalisation.

The series of mega scams and the governments cynical approach to corruption was, of course, a major factor in the transformation. It was this perceptible disillusionment that provided Anna Hazare the political space to launch his anti-politician crusade for a Jan Lokpal legislation. Hazares movement didnt succeed in capturing the imagination of the whole of India. But he certainly succeeded in enthralling the middle classes, the media and large chunks of urban India with his simple message against corruption. He heightened the sense of exasperation with a government that appeared to have become rudderless.

The governments attempt to regain the initiative through the reforms route suffered a grave setback when it failed to convince its own allies that a shake-up of the moribund retail sector would give economic activity and wealth creation a fillip. The disquiet in the government over the political ineptitude of the reformists provided the opening for the large paternalist-welfare lobby led by UPA chairperson Sonia Gandhi to bulldoze the Food Security Bill through Cabinet. This Bill, estimated to cost the exchequer upwards of R95,000 crore, is expected to worsen the fiscal deficit and may even lead to a hike in both direct and indirect taxes. Yet the Congress calculation is that a scheme aimed at benefiting 46% of the rural population and 28% of urban residents will boost the government politically. It will also give the reformers the scope to allow market-friendly reforms to piggyback on populism.

In the short term, the political prospects of the Congress arent as bleak as they have been portrayed. The civic polls in Maharashtra clearly suggested that the Hazare movement had not begun to influence voting decisions in the smaller towns. Likewise, there is nothing so far to indicate that the Congress will not oust the Akali Dal-BJP coalition in Punjab. Logically speaking, the Congress should also be within a whisker of ousting the BJP from Uttarakhand and improving its tally significantly in Uttar Pradesh.

If the Congress does indeed perform well in the state assembly elections in February, it will be well poised to approach the next Budget with a greater measure of confidence. However, in the context of the great slide downhill in 2011, this may not prove sufficient. In a globalised economy where GDP, fiscal deficit, inflation and the overall political climate are key indicators, the global monitors will not be too pleased with the statistical evidence. They will want more purposeful action that goes well beyond political sops for elections.

If Prime Minister Manmohan Singh sticks to what he has hinted so far, there is likely to be a spate of economic announcements around the Budget. These will include the implementation of the stalled retail reforms and, maybe, the Pension and Insurance Bills.

Going by pure political logic, the BJP has no constituency compulsions (which it had in retail) to oppose either the pension or insurance reforms. However, it can be expected to oppose both vehemently. The reason is bizarre: A section of the partys decision-makers have concluded that there is nothing to be gained by appearing to be pro-reforms while in opposition.

This is a grievous miscalculation and centred on the dubious assumption that there is an aspirational mismatch between Bharat and India. It was this error that explained its unrelenting opposition to the Indo-US nuclear agreement and the retail reforms.

Yet when opposition was necessary such as the timing of the Food Security Bill the BJP is inclined to rush to the populist bandwagon on the fear that otherwise the Congress will run away with the entire credit.

The point is that the Congress will be able to cover up its shortcomings in the government as long as the BJP refuses to take economics seriously and concentrates exclusively on issues of identity.

* The author is a senior journalist