INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Business Commentary/Dilip Thakore

Vote the lesser evil for economic growth

The time of reckoning is here. Next week, the month-long process of electing the nation's thirteenth Lok Sabha will begin. While for the citizenry the outcome of this last general election of the twentieth century is likely to be business as usual, for the economy and Indian industry it is of critical importance.

After half a century of futile experimentation with crazy, mixed-up socialist economic order -- it has scotched the modest dreams and aspirations of a staggering number of 700 million citizens born into post-Independence India -- the Indian economy has finally reached the take-off stage and is beginning to attain critical mass.

For corporate and middle class India which understands the vital importance of sustaining the current 6-7 per cent annual rate of GDP growth, the overwhelming issue in this general election is the return of a central government which will restrain itself from throwing a spanner in the works.

Within the Indian media and the intelligentsia which has always been driven by mawkish sentimentality rather than by hard-headed reason, it is customary to pay homage to the great sagacity and innate wisdom of the Indian electorate. Yet the on-the-ground reality is that the overwhelming majority of those who vote -- just about half the electorate bothers to vote -- will be marking their ballots on caste or religious considerations and/or will be bought for petty favours or concessions.

The bitter truth is that the neglect of elementary education for over 50 years has gravely flawed Indian democracy to the extent that two-thirds of the electorate is incapable of understanding basic issues, which is a prerequisite of national development. This is why India, which in the early '50s looked like the nation most likely to succeed, is now stewing within the bottom heap of the world's poorest and most corrupt nations.

Nevertheless, it is a blessing that half a century after the roseate false dawn of national independence, India is still a genuine democracy -- even if a gravely flawed democracy. By accident rather than design, the electorate has usually returned the best of a bad lot in most elections.

A 150-200 million strong educated middle class has sprung up on Indian soil. It is this middle class which has a strong vested interest in annual gross domestic product growth rates of 6-7 per cent, which needs to ponder deeply upon the relative merits of the major political parties in the electoral fray and pass on their assessment to the general populace the best as they can.

And though rustic and Leftist politicians are loathe to admit it, the great Indian middle class is a societal peer group with considerable influence over the hearts and minds of the general populace.

The good news is that the Congress and its allies, the Bharatiya Janata Party-led alliance -- the two major political combines which are in the running to form the next government in New Delhi -- and surely all thinking citizens hope that the others will fall by the wayside in the interests of stable government. Both the Congress and BJP seem to be committed to taking the economic liberalisation and deregulation initiative of 1991 forward to a greater or lesser degree.

Therefore, it is no small gain for the economy that both these parties have agreed that the inflow of foreign direct investment into the Indian economy be doubled from the current $ 4-5 billion per year to $ 10 billion. The economy needs an estimated $60 billion to improve industrial infrastructure -- power supply, road networks, ports, etc. Thus there is a strong likelihood that FDI clearances will be simplified and that the long-awaited single-window clearance proposal for foreign investment will soon become a reality.

Both the Congress and the BJP-led National Democratic Alliance agree that there is a need for legislation to limit government borrowing to contain the fiscal deficit. This is to stabilise, if not reduce, the government's huge annual interest burden. It is no small blessing that both the parties agree that the national investment in education has to be raised from the current 3.5 per cent of GDP to six per cent and that rural India requires a massive infrastructure investment programme.

Of course, a lot else needs to be done in New Delhi and the state capitals to get the Indian economy -- like Rip Van Winkle, it has been hibernating for half a century -- moving again. The nation's public sector needs to be comprehensively privatised without ifs, buts and qualifications; a massive food transport and storage infrastructure needs to be created; a twenty-first century food processing industry has to be encouraged to spring up to eliminate the indefensible waste of agriculture and horticulture produce; the transportation sector -- including Indian Railways -- needs to be thoroughly modernised, and export-import policies and procedures have to be radically recast.

These measures would enable Indian industry and agriculture to register a presence in the rapidly crystallising global marketplace of the new millennium.

But all this will follow naturally if the Congress or (as is more likely) the NDA actions the core agenda on which they agree.

Therefore, the fundamental issue upon which intelligent voters will need to deliberate in the decisive silence of the polling booth is which party is more likely to fulfil its promises. The critical issue in this general election is bona fides and credibilty. The voter must bear in mind that within both the parties, the entrenched bureaucracy, the trade unions, the powerful mafia of brokers, fixers and middlemen and perhaps within industry itself, there will be fierce opposition to opening up the economy and reordering national priorities to improve the current annual rate of economic growth.

The big question that needs to be asked is which of the two major political alliances is more likely to resist the anti-reform pressures of vested interests and do the right thing by the people and for the people.

Appraising the Congress and the NDA from this perspective, my vote will go to the Congress for being the lesser evil and marginally more credible and reassuring than the NDA. After all, the radical (in the Indian context) economic reform agenda of 1991 was written and actioned, even if hesitantly, by the Congress. Therefore, its commitment to comprehensive economic reforms is more credible. Moreover, Dr Manmohan Singh, the author of the 1991 economic liberalisation and deregulation Initiative, is the Congress party's unofficial candidate for the Prime Minister's Office. And in spite of his prevarications, he is the politician the Indian economy -- and the nation -- needs in the PMO.

There is one other consideration which makes the Congress with all of its many faults and drawbacks, the preferable option. The NDA-BJP is a one-man band: Vajpayee. But he is now well into his seventies. If the unthinkable were to happen to him, the leadership of the BJP is likely to be seized by the fundamentalist hawks within the party. And this lot is very likely to create a law and order problem within Indian society, which means all plans and formulations for sustained economic growth will go out of the proverbial window. These considerations require careful deliberation in the decisive silence of the polling booth.

Dilip Thakore

Business news