Coalition Politics is Still Here

Swaminathan S. Anklesaria Aiyar
Economic Times

First the good news. The general election has improved the prospects of two things – stability and reform. The NDA’s victory promises the most stable government for years. And Chandrababu Naidu’s victory in Andhra Pradesh has shown all chief ministers that abolishing traditional subsidies and liberalizing the economy is a recipe for political success, not suicide, provided you simultaneously promote rural development with local participation.

Next the bad news. Notwithstanding Vajpayees victory, India remains very much in a coalition era, and this will be a hurdle to bold decisive governance. And not withstanding Naidu’s victory, the election results do not fully prove the case for abolishing subsidies and promoting decentralized rural development. So this is not going to be a watershed election. Vajpayee’s majority means he has a good chance of lasting a full five term. So Moody’s has raised Indian credit rating, and the stock markets have exploded. To some extent the new optimism is justified. What is not justified is the notion that India has a government that can act boldly and decisively.

Earlier, the NDA depended on palpably unreliable people like Jayalalitha for survival. Not any more. The NDA has won 298 seats out of 537, representing a comfortable majority of 59. Moreover, the BJP can nominate two Anglo-Indian members to the Lok Sabha, raising its majority to 61. So it can withstand defection by even a substantial group like the United Janata Dal or Telugu Deasm Party. That certainly improves its ability to take hard decisions. Yet a huge obstacle remains – the NDA’s lack of a majority in the Rajya Sabha. Vajpayee promises top priority to passing bills which lapsed in the lst Lok Sabha, on insurance, FERA, coal mines essential commodities and much else.

But without Congress support, these bills will fail in the Rajya Sabha. So coalition politics, not just within the NDA but across the political spectrum, continues to be the name of the game. The Congress may support some bills with which it is already identified. But it will see political advantages in blocking all other legislation, no matter how well-conceived to tarnish the BJP’s image and make look a muddler that promises a lot and delivers much less. The NDA has little chance of gaining a Rabjya Sabha majority anytime soon.

It rules a clear minority of states, of which Uttar Pradesh, Andhra Pradesh and Tamil Nadu are the only significant ones. Each of these has more seats than the combined strength of Punjab, Haryana, Kashmir and Himachal Pradesh, which are also with the NDA. The split in the Janata Dal will help the NDA get a few more Rajya sabha seats in Karnataka and Bihar. But it lost control of Rajasthan and Delhi in the state elections last year, and now looks on the verge of losing Maharashtra. It fared excellently in the general election in Orissa, Delhi and Madhya Pradesh, yet its opponents reign supreme in the respective state assemblies. Chandrababu Naidu is being cheered for a big win in Andhra Pradesh, but he actually won fewer seats than last time.

Without a Rajya Sabha majority, the new government cannot be bold and decisive. It will have to cajole the Congress to pass even a few bills, and abandon others as unpassable. It can take quick decisions in areas where no legislation is required (like confirming the new telecommunications policy). Yet many urgently needed reforms including the privatization of public sector undertakings, require legislative changes.

Similar caveats apply to Chandrababu Naidu’s victory as a spur for reform in all states. His Janmabhoomi (rural development) scheme impressed voters more than the Congress party’s promise of free power and cheaper rice.

Digvijay Singh’s victory in the Madhya Pradesh state election earlier this year also drove home the potential of pachayati raj. Yet all chief ministers will not now go flat out for rural decentralization. They will note that the Left Front in Kerala, which pursued panchayati raj very strongly, fared poorly in the general election. And Digvijay Singh’s gospel did not prevent the BJP from taking the lion’s share of seats in Madhya Pradesh. So the election results present a mixed message.

After Naidu’s victory, we can certainly hope that more chief ministers will abolish high-loss government monopolies in irrigation, power, transport and much else. Yet we must not expect too much. Remember that Naidu felt so panicky after abolishing traditional subsidies that he announced a scheme for free gas cylinders for rural housewives. The Union finance ministry estimates that this unwarranted giveaway could cost Rs 100 crore a year. Hence it has excluded Andhra Pradesh from the list of states that qualify for its loans-for-reform scheme. If Naidu does not renege on free gas, then growing rural demand, fuelled by free supply, could bankrupt the state as surely as free power did earlier.

The political temptation to offer new subsidies at election time remains very strong. True, free power did not save the Akalis from defeat. But the Congress unit in Punjab is as committed to free power as the Akali Dal.

In many states, local Congress units have openly defied all that Manmohan Singh stands for, and even the official party manifesto. The party’s unwillingness to rein in the state units shows how far India is still from a consensus on trimming unwarranted subsidies. A government white paper has shown that subsidies, broadly defined were around 15 percent of the GDP in 1997, as high as in the pre-reform era. Naidu’s success may lead to a modest dent in subsidies, but not much more.

Some will say, thank heaven for small mercies. Fair enough. The election results do indeed contain some good news. But not enough to warrant euphoria about a watershed in politics or economics.