Life after Manmohan Singh

One of the nicest things about Dr Manmohan Singh is his humility. Within hours of his electoral loss in South Delhi, he said this had no ...

One of the nicest things about Dr Manmohan Singh is his humility. Within hours of his electoral loss in South Delhi, he said this had no implications for the future of economic reforms in the country. Now while you might think that this in itself was pompous, this has to be set against the huge build up the capital8217;s elite gave his campaign. The prize academics of the Delhi School of Economics, the Institute of Economic Growth and the ICRIERs of the capital did set up his election as a referendum on economic reforms 8212; here was Dr Singh, the architect of change in India, fighting against yet another petty politician, V.K. Malhotra. Change versus status quo, Sense versus Nonsense, and, naturally, Secularism vs Communalism. You decide.

This high-profile blitz was then sexed up, if I may be excused for using the term, by the presence of writers like Khushwant Singh, artists like Anjolie Ela Menon, and the Fab India-clad chic set which exhorted businessmen to contribute handsomely to the honest-and-therefore-broke Manmohan8217;s election campaign: That Mercedes you bought from your export profits was actually made possible only because Dr Singh opened up the economy and decided to encourage exports by devaluing the rupee. Give back to your country at least a part of what it gave to you. It8217;s time.

Does this mean that South Delhi8217;s voters, of which I am one, don8217;t want economic reforms? I can8217;t say, but a few points can still be made. For one, as Jairam Ramesh kept pointing out during his 14-hour television talkathon on Day One of the counting, voters across the country behaved differently for a variety of reasons, but the complete rejection of the Badal government in Punjab was surely a vote against extreme economic irrationality. Badal came to power on his promises of free water and power for farmers, but clearly less than two years after he swept the polls, the voters decided that his brand of populism wasn8217;t getting them anywhere, that the state was getting more bankrupt. The fact that a government building had to be mortgaged to pay last month8217;s salaries probably reinforced this belief.

The fact that the Chandrababu alliance has swept the polls 8212; both the opinion and the exit polls got this one right! 8212; also shows that, whatever else, the voters have not rejected the move towards the next millennium. Our Cyber CM may have changed his tactics on the eve of the elections, and did try to project a pro-poor image in place of the savvy laptop-connected CM, but you8217;ve got to think the voters are really stupid if this was all that it took to get them to vote for Chandrababu. For one, Chandrababu8217;s cyber image has been projected for far too long for the voters in his own state not to be aware of it. What obviously influenced voters, to what extent one obviously cannot say, was the fact that Naidu appeared to be delivering. His reforms, though they have resulted in cutting some of the runaway subsidies, did help get mo-re investment in the state, and did impress enough multinationals to want to set up production bases there as well.

And though he appears to have got this poll partly wrong 8212; his seat prediction for the BJP alliance was 330, though the vote-share prediction appears correct 8212; the economist Surjit Bhalla8217;s model actually shows a significant correlation between economic performance and voting patterns. Based solely on the numbers for economic growth and inflation, Bhalla8217;s model, according to him, has got the vote swings right in 20 out of 24 central and state elections held since 1977. Surely then it8217;s a Rational Expectation ! to believe voters are not influenced just by caste and religious factors. Voters don8217;t cast their votes on the basis of whether or not the fiscal deficit is going up, but they do based on whether the number of jobs available is increasing or decreasing 8212; and that, any economist will tell you, is determined to a large extent by the size of the fiscal deficit.

Having established, I hope, that voters do bother about economic reforms, another point must be made about the perception of Dr Singh. While it would be churlish to deny Dr Singh8217;s contribution as the architect of the economic reforms, I8217;m afraid not enough credit has been given to the house owner, or builder if you will, who contracted Dr Singh8217;s architectural skills. It was then Prime Minister P.V. Narasimha Rao who asked Dr Singh to go ahead and carry out the economic reforms package, at that time largely defined by the IMF and the World Bank. Dr Singh did a lot of improvisation, and adapted the reforms to the Indian conditions, to ensure the country8217;s industry didn8217;t just go under, but it was Rao who gave him the mandate to do so. It is surely hypocritical for the capital8217;s elite to give Dr Singh all the credit for the opening up of the economy and the internal liberalisation of the first three years of his tenure as finance minister, and then to blame Narasimha Rao for the near-complete halt in thereforms process in the last two years of the Congress party8217;s last stint in power.

What8217;s worrying is not the defeats of Dr Singh or his successor and another reformer P. Chidambaram8217;s, but the fact that there8217;s still no clear-cut statement in favour of reforms. No party, not Dr Singh8217;s nor Chidambaram8217;s and certainly not Malhotra8217;s, has gone out and clearly stated that they stand for economic reforms. Reforms in India remain an operation to be carried out by sleight of hand, while mouthing populist inanities. That, whatever anyone might say, puts an automatic glass ceiling to the pace of change. And, consequently, to India8217;s growth.