The onions that made the BJP shed political tears in 1998, when spiralling food prices hijacked the Delhi Assembly elections and brought a change of guard from the BJP to the Congress, seem to have lost their sting. It has been 12 years since and food prices continue to escalate, with latest food inflation figures at 12.63%, but the political punch is missing.
A clear indicator was the 2009 general election, when price rise was pitched as a major issue along with the likes of the Mumbai terror attack. However, the issue failed to make any real impact on the election outcome and sent the UPA back to the treasury benches, interestingly with better numbers than 2004.
This is not to say that inflation doesn’t hurt us anymore, but the question is whether the common Indian would still make political decisions on the basis of inflation rates, as was tradition around a decade ago. The recent Bharat Bandh called by the opposition was heralded as a ‘great success’, but ordinary Indians were victims of the strike rather than its perpetrators. The Bandh, which resulted in losses close to Rs 3,000 crore, seemed to be as much forced on the common man as food inflation itself.
Politics about alternatives
Experts believe that while high inflation still remains an important issue for the common man as it concerns his pocket and livelihood, certain related factors affect its outcome. ?Inflation is certainly very important, but the political consequences of inflation really depend upon the circumstances. Politics for the common man is about alternatives more than one particular issue,? says Pratap Bhanu Mehta, president, Centre for Policy Research. Mehta believes that the absence of a strong and effective opposition leads to the lack of confidence in the opposition’s agenda. ?We are lacking a serious functioning opposition and despite the Bharat Bandh, I would say it is a mixed bag really. There is lack of credible articulation of the price rise issue by the opposition. Opposition parties have not succeeded in getting people on their side,? he says.
According to Sudheendra Kulkarni, political columnist and former aide to LK Advani, rarely does a single issue affect an election result. ?The current trends in price rise have created strong resentment among the people; however, no single issue determines the outcome of an election for me really. I feel that even in the case of the 1998 Delhi elections, it so happened that the onion prices spiralled around the time of the election. People must have already been unhappy with the government, and onions just became the face of that frustration,? he says.
So, what about the general election last year? ?In the 2009 general election, people were not convinced with the NDA as a suitable alternative at the Centre. And that’s why UPA came back to power despite major issues like price rise,? says Kulkarni.
Digesting inflation
Apart from political alternatives or the lack of them, noted economist Bibek Debroy feels that the 2009 election saw the common man much better off than what the inflation figures of that time say. ?Yes, we were looking at high food prices, but were also looking at higher incomes across sectors. In agriculture, you had things like farmer loan waiver and higher procurement prices while there was the Sixth Pay Commission for government employees. So, the overall net situation was much better for the common man at the time of the 2009 general election,? he says.
Mehta concurs, ?If you look at the past couple of years, there have been some state palliatives like the NREGA and Sixth Pay Commission, which in a way provided the government with a cushion to deal with steep rise in food inflation. So what we are seeing is that there is no constituency willing to come out strongly against the problem.?
However, former union minister and present chairman of the Institute of Rural Management in Anand, Yoginder K Alagh differs slightly on the issue. Bringing India?s growth story into the picture, Alagh believes that the situation is not too bad. ?By and large, the inflation that we are experiencing now is still moderate as compared to the kind of inflation that the country witnessed up to the 1990s and the average inflation back then used to be almost double of what it is now,? he says. He adds that as living standards are improving, people are a lot more accommodative and understanding as compared to the past. ?Living standards have improved quite a bit in the last decade especially. People are not only consuming more but the quality of consumption is also much better than before. This also leads to some price rise. The underlying fact of a much higher growth rate has certainly been a major factor in this issue. Also, people are a lot more aware now, like they know for a fact that fuel prices had to go up in relation to international pricing. There wasn’t much the government could do. Globalisation has its effects after all. All these trends mean that people now take such issues in their stride to whatever extent they feel is justified,? he says.
Mehta agrees partially. While maintaining that inflation of this scale truly hurts people, he observes a behavioural change in Indian voters. ?Since the past decade or so, what seems to have diminished in Indian politics is knee-jerk anti-incumbency. The voters do not seem to react in an impulsive manner now,? he says.
Political stickiness
Though the common man might have kept a distance from inflation as a political issue, political parties have left no stone unturned in raking it up, both in terms of vigour and scale. In the Budget session of the Parliament this year, price rise was one of the hot topics on which the opposition cornered the government. Overall, 30% of the Parliament?s business time was wasted due to frequent disruptions and protests during this session on various issues, price rise being a key one. While the Lok Sabha lost 70 hours, the Rajya Sabha lost 45 hours. Cut motions in the finance bill were also moved by the opposition, which, however, were a casualty of the divisions in the opposition camp. Alagh explains why the voice of opposition parties has been getting shriller on this issue over the past few years. ?As we are witnessing a coalition era since the past decade and a half, successive central governments have been vulnerable and have given into small pressures as well. So while the mandate has been fractured, there has been a lot more noise from the opposition parties. Earlier, governments used to be much more stable and their decisions used to be firm politically as there weren’t many external pressure groups,? he says. Alagh adds that the present UPA dispensation is showing shades of the pre-coalition era governments by refusing to buckle under any pressure on the issue of the recent fuel price hike.
However, the government?s own data is reflective of the grave and strenuous situation the common man is facing today. The price of primary food articles has reportedly spiralled by 10.2% between May 2009 and May 2010. Essential food articles like pulses and sugar have seen a steep rise of 32.4% and 26%, respectively, in the past one year. Between February 2009 and February 2010, food inflation surpassed the general inflation at 17.3%.
No complacency
Experts warn that complacency won?t really help the government, as inflation is still one of the important issues in Indian polity, if not the most important. ?Despite the country?s growth and the rise in the per capita income, inflation should be dealt with seriously and should remain an important issue. People’s pockets pinch as their real income goes down,? says Ila Patnaik, professor, National Institute of Public Finance and Policy. She adds that if India wants to see high growth rates, it has to do its best to arrest inflation and keep it at low levels. ?Low inflation is necessary for sustaining high growth rates. You have the OECD countries taking measures to keep inflation at low levels and India also must concentrate on this,? she says.
Mehta feels that politicians don?t take inflation as seriously as it is ought to be taken. ?What is worrying for democracy is that the politicians no more seem to take inflation as seriously. Earlier they used to be apprehensive about it and thus there used to be better macro-management on that account,? he says. Kulkarni shares the sentiment. ?Politicians seem to care less about it and are not addressing the issue of inclusive development. It just doesn’t show that our political parties are seriously looking at making growth broad-based,? he says.
The general election is still four years away and even the assembly polls in most states, barring Bihar, are not due for some time to come. While many believe that certain measures like the fuel price hike were timed keeping the election calendar in mind, it is certain that the government can be in a position of strength if it succeeds in arresting inflation before it spills on to any important electoral exercise. Debroy succinctly puts it: ?Presently the link between food inflation and electoral response is very tenuous. Public memory is short-term and with elections still far away, so one can’t say if there will be an impact on the electoral outcome. We have had elections in the past where governments have fallen due to the price rise issue. However, it is not necessary that an election is fought and lost or won on the basis of economic issues.?
Bad politics can at times translate into good economics, and the Centre just might be thinking on those lines. The government would like to believe that inflation is no more the issue it used to be, however, it just might be a little early in the day to close the lid on it.