What to expect from an Aam Aadmi Mandate

What to expect from an Aam Aadmi Mandate



The fastest counting of millions of electoral votes in the world commenced in the early morning of 16th May. By the forenoon, the battle for the 15th Lok Sabha was all but won.

The great Indian electorate, in its wisdom, has decided to gift the country a stable government, strongly anchored by the Congress Party and run by the UPA. This is all the more remarkable because the pre-poll commentary predicted a much more complicated result with a range of powerful regional satrapies and a close contest between the Congress and BJP nationally.

The surprise results however show that not only will the UPA form the central government with economist Dr. Manmohan Singh embarking on his second consecutive term as Prime Minister, but it will do so without needing to lean on a badly mauled Left.

For the Indian economy, even viewed from an international perspective, a stable government with built-in continuity is indeed a great boon. While this, in itself will not guarantee policies that promote fast-forward double-digit growth, given the Congress Party’s own left-off-centre orientation and its sometimes populist aam aadmi policies; it does provide it considerable elbow room.

Including an opportunity, over the next five years, to truly do something for the very people who have put the UPA in power once again.

The UPA can do so by pursuing constructive and well implemented rural upliftment policies, such as massive food processing and value-addition projects, all round modernisation and automation, better preservation, distribution and marketing facilities -- resulting in infinitely better rural incomes.

And in the building of multifarious and quality rural infrastructure, so that the gap between “Bharat” and “India” is reduced once and for all with a view to its eventual elimination. All this, and not more budget draining, if traditional, populist soppery.

Urban India too should see the various initiatives of the outgoing UPA Government blocked by a rigidly ideological Left and dependence on a number of other allies, being fast-tracked now. These include the part-privatisation of leading PSUs via fairly rapid stock market divestment. This will go some way to unlock value and free up significant funds both for infrastructure development and tackling the huge fiscal deficit.

It is a fiscal deficit in double digits with state incurred red-ink included; that is adversely impacting India’s Sovereign Ratings, its ability to borrow, and its attractiveness as an investment destination.

Infrastructure development itself has been at a near stand-still throughout the UPA first term, including crucial but long-gestation power projects, and hopefully will now receive the policy fillip and administrative will it deserves. Its subset, the construction industry is practically moribund at present.

Reviving infrastructure development is crucial in order to unclog bottle-necks, free us from badly antiquated facilities, and sustain medium to long term GDP growth. It needs to be treated as a national priority.

The stock markets are widely expected to react with jubilation at first. But expectations of a galloping bull run will need to be tempered by the hard facts of a global recession in general, and in the US, a major buyer of our software and other exports, in particular.

And the actual revival of our own economy, greatly slowed, because of unfavourable domestic policies too. In addition, there is the looming national budget 2009, which needs to indicate clear-cut and bold reform initiatives to kick start the process.

The stability of this government, in addition, should afford the ideal opportunity to upgrade and modernise our armed forces, the state of our ill-equipped para-military and police forces, the recruitment and training of new ranks of counter-insurgency and other specialised forces and a total overhaul of our intelligence operations. Our security upgrade will, because of the massive spends involved, become a significant booster and stimulant for the economy in general.

India is viewed internationally as a soft state; a sitting duck for the next 26/11 strike and we have been warned to expect it soon. This soft-statism is very bad for business as foreign direct investment (FDI), finds it uncomfortable to do business in an unsafe environment, however potentially lucrative. And even sportsmen, such as cricketers and those scheduled to attend the Commonwealth Games, have marked their concern.

And liquid foreign institutional investment (FII), expected to flow into our bourses now that the elections have thrown up a favourable result, tends to be skittish if we continue to be a frequent terrorist target and subject to domestic insurgencies as well.

There are many other items on the economic laundry list including insurance and pension fund reform, retail liberalisation, education reform including permission to foreign universities to set up shop here, financial sector reforms including pressing requirements in our antiquated and illiquid debt markets and so on. And after May 16th, the Government cannot, at any rate, blame the fractured mandate for its inability to act.

In this electoral verdict, we are probably demonstrating a level of political maturity not expected of us, given our illiterate but voting masses, and the sheer youth of our democracy. The challenge that lies before the new UPA Government is to show the same coming-of-age economically.

(850 words)

16th May 2009
Gautam Mukherjee

Appeared as Leader Edit in The Pioneer on Wednesday, May 20, 2009 entitled "Can Congress hold this smile?" and online at www.dailypioneer.com. Also archived online under Columnists at www.dailypioneer.com