Sorry, it146;s still India Shining

Incumbent Congress will face an aspirational, impatient, urbanising electorate. Confused Congress doesn8217;t know any more who aam aadmi is. Recipe for big trouble

You might say I am nuts, but the best thing that could have happened to P. Chidambaram on budget day was a 600-point drop in the Sensex. Politics of the day demanded that Chidambaram should be seen to be hurting the rich. And he achieved just that, never mind the help from the Chinese, whose stock market fell the previous day, taking the rest of Asia down.

If you were in any doubt, this is the point he, being a politician an elected one, unlike most of his party8217;s kautilyas who happen to be Rajya Sabha warriors, has been underlining ever since. The 1997 budget, he says, was about 8220;another dream8221;, of unleashing Indian enterprise and that has more or less been achieved. This one was about distributing the spoils of that success. What he wouldn8217;t say is, every time industry complains of new and complicated taxes, the white collar worker protests about the tax on stock options, or some get their cheap thrills that the really rich will now have to pay a sizeable tax on planes they import they may do no such thing, and register their planes in Dubai instead, he is vindicated in terms of his party8217;s current twisted politics. While on the one hand it celebrates the fact of 9 per cent growth, on the other it8217;s not sure if it makes a large enough section of its voters happy. So it has chosen a novel way of conducting its politics: celebrate the growth, but punish its beneficiaries 8212; or at least be seen to be doing so.

In India8217;s politics, to be anti-rich is usually considered safely synonymous for being pro-poor. It is tough to do something that will make a real difference to the lives so many poor persons that can swing an election your way. But 8220;compensating8221; them with cheap thrills by seemingly hurting the rich is an easier alternative and it has been successfully used by 8220;socialist8221; rogue regimes the world over, particularly by many of the really bad guys in Africa and Latin America after some of whom we have named our main streets. But if this is what the Congress is trying to do, dazzled by the lofty talk of its jholawala fellow travellers and driven by desperate pleas of its Rajya Sabha coterie to hang on to the logic of 2004 to win as the incumbent in 2009, it8217;s getting its politics all wrong. It is showing in its electoral performances. It is failing to see that as India has grown, that growth has changed the definitions of rich, middle class and poor, aam aadmi and farmer, urban and rural. And if a centrist party, at least one that seeks votes across states and regions, fails to see that, it is walking into disaster.

Confused politics produces confused economics as well. So while on the one hand it goes after inflation with a sledge-hammer, it is actually, mostly, hurting the very aam aadmi it swears by. In this mad dash to 8220;moderate8221; inflation, it has allowed interest rates to go up nearly 400 basis points for ordinary aam aadmi home loan borrowers. Because of the way banks structure these things, they will only now realise the implications of this when their annual loan statements come. Banks usually do not increase your EMI. They only increase the tenure of the loan. And that increase can be quite dramatic. For example, if you borrowed for that tiny flat at the age of 28, at 8 per cent, be prepared to keep paying back till 84, if the rate goes to 10 per cent and increases a 20-year tenure dramatically to 56 years and two months.

When people realise what8217;s been done to them, they will react more sharply than they react to increases in arhar dal and onion prices. For the common man, rising interest rates, taxes, all mean inflation. This government may have done a fine job of keeping its deficit under control. But if its tax collections have risen so massively, if there is service tax on all kinds of things including tuition, tents and commercial rents, if all of India8217;s usually bankrupt states are cash-surplus now because of VAT, it is all going out of somebody8217;s pocket. And these additional taxes are being passed on to somebody. That somebody is not exactly one among the handful who constitute India8217;s list of billionaires who fill the pages of some pink papers and fill the rest of us with envy. That somebody is not even you and me. It is your housemaid, my driver, your neighbourhood press-wala and so on. By all accounts, today nearly three crore Indian families carry the burden of EMIs 8212; that is, nearly 10 crore voters. Most of them are ordinary folk, aam aadmi. Billionaires do not have to borrow to buy their toys. The same aam aadmi is today reeling under the weight of new taxes levied in the name of the poor who, in turn, have no idea where that money is going. The Congress, therefore, is setting itself up for slaughter, earning the wrath of the rapidly growing urban and semi-urban populations while at the same time earning no gratitude from the really poor.

These self-inflicted contradictions will continue to produce confused decisions and electoral setbacks, leading to disaster in 2009. You do not have to be an economist or a political pundit to see the perils of confusing the aam aadmi with the farmer, for example. The interests of those two are often in conflict. The farmer wants higher prices for his produce, the aam aadmi, or aurat, who comes out brandishing broom-sticks in anti-price rise protests, on the other hand, wants them to be low. That contradiction shows starkly in the funny games this government is playing this year with wheat procurement. It wants to deny the farmer his rightful free market price by banning forward trading, threatening him with zero-duty imports and also arm-twisting private companies to desist from buying until FCI has filled its godowns. Then, facing the prospect of farmer anger 8212; and the real possibility of hoarding by richer farmers 8212; it added a hundred-rupee bonus. This will please neither the farmer, nor the aam aadmi. Similarly, you may want to block organised retail to protect small grocers and middlemen. But the farmer will want the opposite, to be able to sell to large buyers and cut out the middle-man.

Such confused economics can only make for disastrous politics. And if the Congress hopes to win over the really poor by either its povertarian talk or NREGA, it is mistaken. Most of India8217;s really poor inhabit states like Uttar Pradesh, Bihar, West Bengal and Orissa, where the party has no stakes anyway!

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It is true that the party was brought to power by the votes of aam aadmi in May 2004. But a large number of them do not live where its Rajya Sabha ideologues of 1970 vintage expect to find them now. The Congress or its UPA allies had swept all of the urban centres in India, Mumbai, Delhi, Kolkata, Bangalore, Hyderabad, Chennai, Chandigarh and so on. Its confused economics today is punishing those very voters, without bringing any appreciable benefit to the two sections who did not vote for it, the farmers and the really poor. Unless it makes a course correction now 8212; to just follow the path of sound, growth-oriented economics, better distribution through reformed governance and, above all, an optimistic politico-economic discourse 8212; it is heading for trouble. When an incumbent goes to seek re-election after five years, it cannot say everything is wrong, so give me five more years. It has to come up with its own version of India Shining. And after six years of 8 per cent plus growth unlike just eight months for the NDA that might just be the appeal to cut across old electoral barriers, like aam aadmi, farmer, middle class, poor, urban and rural in a hugely aspirational, impatient and rapidly urbanising society.
8212;sgexpressindia.com