Will India fly?

This is a test for the UPA. If a bunch of unionised employees either disrupt air services or stop/postpone/further dilute airport modernisation 8212; which is, of course, the negotiating position of the AAI Employees Joint Forum 8212; the list of victims will not be confined to air passengers and civil aviation growth. At stake are some crucial future reforms in state-owned or state-managed services and industries, as well as India8217;s appeal as a liberalising economy. Power unions will threaten sabotage when the already urgent question of reforming state electricity boards is seriously approached. Reform in the extraction industry has stopped after allowing foreign investors to run captive mines. Miners8217; unions will want to bury a full-fledged FDI regime. Look at the long-running farce over privatising Delhi8217;s state-run water utility. Opposition to change will become vicious, and contemplating similar policies in other cities will be impossible, if AAI unions are seen to win the airport modernisation battle.

And since airports have a big symbolic value over and above their obvious substantive importance, an assessment of India8217;s commitment to a liberal economic policy will inevitably change if the government loses this round. India-China comparisons almost always start with the contrast between airports at Beijing/Shanghai and Delhi/Mumbai. The anecdotes will get nastier 8212; understandably so 8212; if Delhi and Mumbai don8217;t start catching up. That could be the beginning of the end of global investors8217; current honeymoon with India. Right now, everyone is politely ignoring the government8217;s failure to reform anything substantive. If airport modernisation happens, it will be the UPA8217;s first, big although not big as it should have been; AAI still has too large a role rollback of the state from economic activity. If it doesn8217;t, everything else that should be done but is not being done will be brought to bear on the India story. The result won8217;t be pretty.

So, first, winning airport bids should be announced as scheduled. Second, if AAI unions try to shut down airports, they must be defeated. Every solution, including drafting technical personnel from the armed forces, must be considered. Third, penalties for disrupters should be threatened and, if necessary, applied. Will the Left understand the costs of succumbing to labour militancy? If it doesn8217;t, will the government firmly explain to its allies why it has no other choice but confrontation? If the UPA doesn8217;t pass this test, India risks failing a much bigger one.