Opinion Secular socialist stagnation
A spectre is haunting the Congress. It is the spectre of Narendra Modi.
A spectre is haunting the Congress. It is the spectre of Narendra Modi. He has been denounced from the rooftops by Congress spokespersons and their helpmeets in the media. But he seems to swell rather than shrink in the public imagination. In its desperation,the Congress does not know whether to ignore him as an insignificant provincial leader,not to be compared with Rahul Gandhi,the next ruler of the Congress and hence by implication of India for ever and ever. Or to shout from the rooftops Fascist,Fascist.
When the BJP chose Modi or rather he thrust himself upon the leadership,the Congress should have been ecstatic. Here was an opponent tailor-made for Congress imagery of the communalist BJP versus the shining secular Congress. Surely game set and match for the Congress. But in poll after poll,a picture is emerging. The Congress lags behind the BJP in vote share and seat projection; Rahul lags behind Modi in popularity. Why this turnaround? Have the people who were so faithful to the Dynasty for its sacrifices turned irrational or just ungrateful?
The answer isIts the Economy Stupid. The Indian economy is in free fall. Inflation has been relentlessly high for nearly four years now and shows no sign of slowing down. The current account deficit is high as is the budget deficit,even at 5 per cent. The rupee displays the symptoms of the fevered economy. It is not just the latest move by the US Federal Reserve which is the cause. Economists including Raghuram Rajan and Duvvuri Subbarao were warning as long ago as March 2012 that we could relive the 1991 crisis. It is inflation which is the killer and has alienated voters against the Congress. With the rupee declining,inflation will get worse.
The wound is self-inflicted. It comes from the Congresss split personality. Its liberal economist wing wants growth,fiscal discipline,low inflation. Its socialist wing wants redistribution,believes inflation is an instrument for securing such redistribution,trashes growth and only wants to promise more entitlements and spend money. The economists live in an emerging yet poor economy. The socialists have decided they are in a Western European dispensation and are in a hurry to build a welfare state.
The socialists also ignored the economists,especially Prime Minister Manmohan Singh,as they knew the Yuvraj was going to dispense with him and take on the crown himself. Thus the early years of UPA II were invested in downsizing the PM and trashing liberalism. The fruits of this folly are now obvious. India has lost its shine and its reputation as a high-growth economy. The rating agencies may not consign it to junk status if we are lucky,but the prospect of a return to a Hindu rate of growth is very high.
Of course none of this is admitted. The socialist wing is rushing ahead with its latest schemethe food security Bill. The socialists want to claim it as the greatest scheme in the world,whereby 800 million people will be fed cheap food grains. The economists are reassuring us that it is a top-up on existing schemes and will cost only Rs 45,000 croreand not three times as much. Which is it? Is it a top-up on existing schemes,some of which in Chhattisgarh,Tamil Nadu and Kerala are much more generous than the Congress scheme,or is it a modest way of egging on Congress state governments?
Whichever it is,it will not help. The other indicators are all negative and the idea that when a deficit of even 5 per cent looks large there is a spending programme which is all that the UPA II cares about will go down like a lead balloon. Much worse may follow. The difficulties of the Indian economy will revive demands from the socialist wing along with their outside Left friends that it is time to reverse the neo-liberal policies and get back to command and control. Capital controls are looming on the horizon,import controls will creep up from gold outwards to all luxuries.
We will have a full-scale secular socialist stagnation. It will be just like the old days when we had a Hindu rate of growth.
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