Opinion One last chance for Congress
I was seldom able to see an opportunity until it had ceased to be one Mark Twain
I was seldom able to see an opportunity until it had ceased to be one Mark Twain
Halfway through the announcement of the results on election Tuesday,BJP leader Sushma Swaraj opined that she thought mid-term polls were in the offing and boldly stated,We are ready for it. Experts,political,economic and investment bank types have also chimed in with the proposition that it is highly unlikely that Indias budget will be good. Muddle government and muddle budget is the conventional wisdom. Hence,mid-term polls are more likely than not and Swaraj was prescient in her early pronouncement.
We obviously will know for sure next Friday,but I want to outline several reasons why the conventional wisdom is likely to be wrong on mid-term polls,and on the budget.
Just exactly in whose interest is it to have the polls now? Even though it is difficult to comprehend,for all of Swarajs bravado,the BJP actually performed worse than the Congress. It lost four seats in UP compared to a gain of 6 seats for the Congress. In Punjab,the BJPs record was no better lost 7 seats versus the Congress gain of two seats. Uttarakhand,more of the same the BJP lost 3 and the Congress gained 11. And does the BJP think that given this miserable performance and severe leadership vacuum,possibly worse than the Congress,that any party is going to run to them and support mid-term polls? Would you buy a used rath from the BJP? My guess for the BJP bravado: they want to scare the Congress into thinking that they are absolutely impotent,and that they bring forth a condemnable rather than a commendable budget,and that ensures mid-term polls,and perhaps a mild resurgence for the BJP!
What about Mamata Banerjee? Couldnt she cause problems at the Centre and combine forces with a losing BJP? I have a confession to make I never thought it would ever come to pass,but if voting were held today in that sad state,I would actually vote for the CPM. Of course,my vote or opinion is immaterial,but I would think that after her tornado-like destructive behavior,West Bengal is already thinking poribartan from Mamata.
Though too early to tell,but not too soon to speculate,I think it is unlikely that the Samajwadi party will not play ball. The party got a thumping majority with only a 4 per cent increase in the vote share. It got in with the promise,and hope,of economic growth. Surely,better governance does not mean you refuse to co-operate with the Centre,and somebody who is much more your ally than the BJP. If anything,they are likely to surprise by being most co-operative with the Centre and even coming around to supporting the multi-brand retail decision.
Besides the prospect for mid-term polls,one other related expectation is that the Congress is in too fragile a shape to continue with even mild economic reforms. Indeed,many are arguing that the Congress will go in for a populist budget. They may indeed do so,but I fail to understand the logic. Since its unexpected victory in 2004,the Congress has behaved in a manner suggesting arrogance,wishful thinking and can-do-no-wrong attitude. Its populism and pronouncements have been of a nature to make Hugo Chavez of Venezuela and Mahmoud Ahmadinejad of Iran equally proud. It won in 2009 because of a large increase in Indias GDP growth to which its own policy contribution was zilch,if not negative.
The last three years has seen the Congress popularity fall faster than a plunging knife. Populism and crony capitalism are Siamese twins. The voter has answered – she does not care for either; she wants growth,not in the name of the poor handouts to political workers. So given all this bad populism blood,how can one expect the Congress party not to start thinking for a change? Surely populism lost it votes and credibility,so how will more of the same help? The Congress attitude should and must be that it has nothing to lose. Is the thinking that if the Congress does a populist budget it will not lose Bihar,or UP,or Gujarat in November? Much better for the Congress to show that it has sense and sensibility rather than pride and prejudiced populism.
Hence,Budget 2012 is literally the last chance for the Congress to show it has some life left. A bad budget only helps the opposition. A good budget can begin to renew faith. Let the opposition not pass a good budget. Indeed,if that happens,the Congress can begin to see prospects for renewal. A bad budget will begin to seal its fate. So expect nothing less than a budget the economy can be proud of.
Finally,I want to comment on a strange coincidence. Perusal of reports and comments suggests the following links. The self-styled inflation hawks have been forecasting a down stock market for India for many months now. The fall in inflation has exceeded most assessments. The stock market has rallied against all odds. The bears have made their listeners lose money. What better way to save their souls than for there to be a bad budget and/or mid-term polls. The India bears would be right for the wrong reasons,but at least they would be right! Unfortunately,the markets,and even Congress politicians,are rarely that obliging.
Surjit S. Bhalla is Chairman of Oxus Investments,an emerging market advisory firm
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