The sudden burst of energy in policy making and the political grit displayed by the Congress-led United Progressive Alliance (UPA) in the last few days has taken everyone by surprise, impressing even the government’s harshest critics. The Indian government, particularly Prime Minister Manmohan Singh, has been receiving immense flak, from not just within the country but also from international quarters, for the policy paralysis that has gripped the nation ever since this government came to power in 2009 on the wave of a decisive mandate.
Shackled by ‘coalition compulsions’, temperamental allies, corruption scams, spiraling prices, constant infighting and its own inability to do anything meaningful, this government has floundered at every step, inviting criticism and making a mess of the country’s economy. It earned itself the tag of being a ‘lame-duck’ government, making itself more vulnerable to bullying by its allies and rancorous attacks by the opposition. However, in the last one week, Singh and his government have displayed political courage, conviction and authority reminiscent of its previous term at the centre.
On Friday, the government opened the gates for foreign investment in various sectors—a policy reform that had been stalled because of immense political opposition and arm twisting by allies—including retail and aviation. Clearing 51 percent foreign direct investment (FDI) in retail and 49 percent in aviation, along with a go-ahead for disinvestment in four PSUs and also raising diesel price by Rs 5 a liter, the Congress has sought to dispel the perception of policy stagnation.
Whether this is a case of too little too late, only time will tell, but what is clear from last week’s sudden activity is that even a little bit of political will can go a long way in tilting the power scales in your favor. Whether or not these measures are economically sound and justified is a separate debate, but there are definite political dividends the government can reap from its new-found assertiveness.
One, it has shown that the Congress and indeed Manmohan Singh are back in the driver’s seat. By going against its crucial allies who are now threatening to walk out of the coalition, the Congress has also sent out a stern message that it refuses to be arm twisted anymore, clearly underlining its authority by virtue of being the single largest party in Parliament. These firm decisions, even at the cost of losing its key allies, will go a long way to address concerns about a ‘leadership’ gap in the Congress. With Sonia Gandhi’s interest in day-to-day affairs declining because of health issues and heir-apparent Rahul Gandhi’s inexplicable reluctance to take any sort of charge, combined with Manmohan Singh’s ineptness, the Congress and hence the government seemed directionless and mostly, headless.
However, it seems Singh is now back and the reform push shows he is willing to take charge emphatically once again. In the last week, he has displayed the grit similar to his uncompromising position on going ahead with the Indo-US civil nuclear deal in 2008 during the UPA’s first term, despite losing very crucial allies—the Left parties.
Two, it helps assuage not just domestic concerns but also ward off attacks from the international community. Singh and the Congress have been at the receiving end of scathing criticism by various international journalists, experts and media groups for their ineffectiveness and sluggish leadership. But it is not just about a few international commentators dissing the government. It is the drastic erosion of faith in the India story in international business circles as well as among key strategic partners. As much as India thinks it can stride the world stage alone, its level of development is such that the country requires international capital for growth as well as alliances to hedge off adversaries. The recent reforms—being hailed by some as only next to the watershed 1991 reforms—will signal to the world that the Indian government has woken up from its unfortunate and untimely slumber.
Three, it sets the stage for the 2014 Lok Sabha election. If the reforms can usher in benefits and if the Congress can capitalize further on its re-invented avatar, it can perhaps even turn the public tide in its favor. People want to see certain qualities in their leader, be it a party or individual. They want to see conviction, ideological beliefs, the ability to take hard decisions, and a certain political assertiveness—everything that the Congress has lacked since 2009. Of course, there will still be various constituencies opposed to the party and its decisions, but anything is better than heading a dormant government.
If the Congress can utilize this opportunity to push its core social sector agenda—something that was relegated to the backburner in the past few years—then it can perhaps even regain its image of being a ‘pro poor’ party. The much awaited but equally delayed proposed legislation on food security is one such reform that needs to be introduced at the earliest. Pragmatic politics is all about playing to the galleries and as they say, public memory is fairly short; hence if the government can put in all its political and intellectual capital in making the next two years vibrant policy-wise (with the correct blend of social reforms and economic liberalization), then it can perhaps even dilute the rather dubious memories of the past three years in people’s minds.
Four, it is a great signal for the economy. This term of the government with veteran leader Pranab Mukherjee as finance minister had seen some of the most regressive economic decisions and budget announcements. The economy is in the dumps and the picture gets grimmer with each passing day. However, now with Mukherjee safely ensconced in Rashtrapati Bhavan and the Congress seemingly willing to take bold and progressive economic decisions if the last week is any indication, the economy could well be back on the revival track. The proposed measures will take time to fructify, and will spark off new tensions. But it sends the right signal to India’s capitalists and entrepreneurs that the government is not returning to the protectionist era and they should unleash their ‘animal spirits’.
It is too early to say if these reform measures would have any significant impact or if at all the government will continue with its new-found energy. The Congress may well slide back into a state of inertia and vulnerability, thus negating the very slight glimmer of hope it has offered. However, for now, the Congress has surprisingly shown some real leadership, which means asserting yourself for your convictions, and at least sometimes, keeping national goals and needs above petty politics. Manmohan Singh and Sonia Gandhi-led Congress took Indian politics to a new low in the last three years, but if it continues with its recent resoluteness, it may not only redeem itself slightly but also, usher in a more nuanced era of coalition politics.