Lula and aam aadmi

What our left-of-centre types can learn from the Brazilian experience: whatever you do, economic growth matters

Luiz Inacio Lula de Silva, president of Brazil, is in India on bilateral business. He has bilateral trade firmly in his sights, and is intent on quadrupling Brazil-India commerce from 2.4 billion in 2006 to 10 billion in 2010. The relationship has grown in depth since Lula first took office in 2003, and Brazil has since become India8217;s preferred partner in Latin America. The solidifying of the trade relationship will also further bolster the trilateral India-Brazil-South Africa IBSA Dialogue Forum.

However, Lula and Brazil are interesting for reasons that have nothing to do with the bilateral relationship. Brazil, like India and China, is a continent-sized developing country with rather conventional dreams and measures of future greatness. Unlike China but like India, Brazil is a democracy, and an increasingly consolidated one at that. Thus, Brazil is one of the few countries with which India can sensibly be compared.

Lula, likewise, is a politician whose track record is worth studying. A trade unionist who founded the Workers8217; Party PT, he was expected to pursue traditional leftwing policies, particularly in the economy. Since 2003, Lula has instead followed an economic programme that does not substantially deviate from that of his predecessor, the social democrat Fernando Henrique Cardoso. Like the previous administration, the Lula regime was also beset by all manner of corruption scandals. Despite that, Lula was re-elected for a second term in 2006 with a thumping majority, narrowly missing an outright win in the first round of balloting.

What explains Lula8217;s electoral popularity? Is there some lesson here for India8217;s left-of-centre politicians worried about the wrath of the aam aadmi? Is Lula8217;s Brazil a morality tale, a cautionary tale or a fairy tale? Perhaps, from an Indian perspective, it8217;s all three.

First, the morality tale: in any society, it is the truly wretched who matter the most, and it pays to focus on them. Two flagship social sector programmes have been key to keeping Lula8217;s popularity high. Projeto Fome Zero Project Zero Hunger, an innovative food provision programme, has focused on families in extreme poverty who lack the resources to acquire enough food. It is estimated that 9.3 million households, or 44 million people, 23 per cent of Brazil8217;s population of 188 million, fall into this category.

The Programa Bolsa Familia Family Basket Programme provides financial aid to very low income families with children up to the age of 15 years. It is mandatory for participating families to send children to school and to maintain their vaccination record. Over the long term, the Programa Bolsa Familia could have significant public health and public education paybacks in the form of a healthy workforce.

The political payoff of these social sector initiatives has been massive. Some analysts suggest that Lula8217;s social policy has led to new networks of solidarity between the government and the poorest sectors of the population. In the process, a new base of support has emerged for the Lula government, one that has little to do with the PT8217;s traditional reliance on organised labour unions and affiliated social movements. Thus, Lula8217;s electoral victory in 2006 can be attributed primarily to his innovative social programmes.

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Next, the cautionary tale: for all Lula8217;s initiatives, Brazil remains an extremely unequal society, with a Gini coefficient of 0.63, one of the worst in the world. India, by comparison, has a Gini coefficient of 0.38. The Gini coefficient is a statistical measure of income distribution, where 0 indicates a totally equal society and 1 a totally unequal society. While social sector initiatives may give immediate political returns, the social dividends will be apparent only in the long term.

Left-wing critics of Lula contend that he has abandoned the PT8217;s social agenda in office. From this perspective, Lula is only the latest in a slew of leftist leaders a long and distinguished list that would include Francois Mitterrand, Andreas Papandreou, Felipe Gonzalez, Tony Blair and Carlos Menem who have betrayed their support base once elected to power. The critics make several arguments, some more plausibly than others: Lula8217;s economy and finance ministers have been free market advocates, more intent on promoting FDI and paying off Brazil8217;s external debt than on genuine social sector investment and empowerment. Workers, farmers and pensioners have paid the price for economic reforms that have primarily benefited financiers and speculators. Lula in office has pursued a 8220;neo-liberal agenda8221; dictated from Washington. The PT and the Central Workers8217; Federation have been gagged from criticising Lula8217;s policies. Even the Programa Bolsa Familia is more of a public relations exercise than anything else: its budget is only 22 per cent of the total federal expenditure on health services, and its potential should therefore not be exaggerated.

Most of these criticisms would sound eerily familiar to India8217;s current economic team. And this leads us to the fairy tale: that there exists in any policy environment an easy trade-off between the imperatives of growth and distribution. Clearly, the distribution problem is important, particularly as it relates to the most wretched members and groups in society. But growth also matters 8212; a lot. Real economic growth in Lula8217;s Brazil was 1 per cent in 2003, minus 0.2 per cent in 2004, 5.1 per cent in 2005, 2.3 per cent in 2006 and is expected to be 2.8 per cent in 2007. India8217;s real growth over the same years has been 4.3 per cent, 8.3 per cent, 6.2 per cent, 8.4 per cent and 8.5 per cent. Surely, we haven8217;t done too badly.

The writer is professor in international politics at JNU