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Two articles in the BUSINESSWEEK and one in the WALL STREET JOURNAL focus mainly
on economic issues:
BUSINESSWEEK ONLINE, May 31, 2004
India: A shocking election upset means India must spend heavily on social needs.
Is this the end of the boom?
http://www.businessweek.com/magazine/conte...22/b3885015.htm
BUSINESSWEEK ONLINE, May 31, 2004
Spreading India's Uneven Wealth: To U.N. economist Santosh Mehrotra, the biggest
challenge for the new ruling party will be lifting 650 million Indians living in
poverty
http://www.businessweek.com/magazine/conte...22/b3885022.htm
THE WALL STREET JOURNAL, May 24, 2004
http://online.wsj.com/article/0,,SB1085363...6519242,00.html
Great Expectations
By JAGDISH BHAGWATI and ARVIND PANAGARIYA
May 24, 2004; Page A14
In India's favorite sport of cricket, fortunes change with startling speed.
Indian elections, too, can be mercurial affairs. The confident Indira Gandhi,
seeking to end her controversial Emergency rule and regain democratic
legitimacy, was roundly defeated in 1977 by a motley crew of opposition parties.
The diffident Sonia Gandhi, the leader of a seemingly lackluster Congress Party,
triumphed over a Bharatiya Janata Party which believed itself to be formidable
-- so formidable, in fact, that its leader called for elections earlier than he
needed to, in the belief that his party's reward for domestic economic
prosperity and international political success would be another term in office.
What the two election surprises -- in 1977 and 2004 -- have in common is the
fierce aspiration of India's masses: political in Indira Gandhi's defeat, and
economic in the victory of her daughter-in-law. If we may hazard a categorical
explanation, Mrs. Gandhi was turned out by the people in 1977 principally
because she had invaded their personal autonomy through the abusive vasectomy
programs that her son, Sanjay, had bamboozled her into promoting. In the 2004
election, the people at the lower end of the income scale were, instead, pushing
principally for an acceleration in the rate of improvement in their economic
conditions.
Democracy is cherished by the poor in India. Whereas economic prosperity reaches
them only slowly -- no matter which policies are put into place -- the political
right to vote has an immediate, even electrifying, effect. Voting empowers the
poor: The election day is their day, when they can vote out those above them,
and richer than them. India's leading political scientist, Yogendra Yadav, has
shown that, indeed, the poor vote massively.
But the 2004 election turned not on political rights but on the economic
aspirations of the masses. And it is important to understand the texture of
these aspirations, since it bears critically on which way the government of
Manmohan Singh, the great architect of India's earliest economic reforms in
1991, should turn.
India's economy had virtually stagnated over a quarter-century until the early
1980s, with autarkic policies on trade and direct foreign investment. The
expansion of the public sector had turned into an epidemic, trespassing into
most areas of industrial activity, and not just utilities; and the licensing
system had become a maze of irrational restrictions. With growth at 3.5% and
population increasing at 2.2% annually, per capita income grew at a snail's pace
(the infamous "Hindu rate of growth"). It therefore failed to pull the mass of
people out of poverty and into gainful, sustained employment. We should then
have expected a "revolution of falling expectations": The poor could have risen
in revolt, bundling the ruling Congress Party out of power because there was no
hope of improvement.
Yet this did not happen. Perhaps, when little progress takes place all around,
the centuries-old Indian fatalism takes over. But when the poor begin improving,
then the "revolution of rising expectations" is likely to arise. This is a
direct result of the perception of real possibilities. Indeed, one of the finest
members of the ousted BJP government, former Finance Minister Yashwant Sinha,
remarked on how difficult it was getting to find the resources to fulfill the
demands that he found in his parliamentary constituency for greater financial
allocations. This is also the view of people who work at the ground level: The
young of India, including children from the lowest classes and castes, have
enhanced expectations from life; and so do their parents, who vote. And this
phenomenon -- of expectations aroused but unfulfilled -- has cut across the much
exaggerated rural-urban divide.
One should note that the ratio of the poor to the overall population in India
has declined dramatically over the period 1987-2000, in both rural and urban
areas. If one goes by the official estimates, the decline has been to 26.8% from
39.4% in rural areas and to 24.1% from 39.1% in the cities. If we go by the
alternative calculations done by Princeton economist Angus Deaton, the rural
poverty ratio fell to 26.3% from 39.4% , and the urban to 12.0% from 22.5%. What
these estimates show is that the standard explanation, so dear to the Indian
novelists writing opeds on the subject -- that the rural areas have been
neglected by India's economic reforms and the ensuing development -- is contrary
to the facts. (But these writers do specialize in fiction.)
True, the BJP also lost ground in some states because the minorities -- and no
doubt many of the Hindu majority -- rejected its professions of secularism in
light of the slaughter of Muslims in Gujarat, and also because of the BJP's
at-best ambiguous position regarding dalit, or lower caste, rights (as
documented beautifully by Stéphanie Giry in The New Republic recently).
* * *
But the key to understanding the 2004 elections is the phenomenon of rising
aspirations. In this context, we need also to bear in mind that the Indian scene
is increasingly populated by non-governmental organizations that work
ceaselessly to energize the poor, reinforcing their ambitions and helping them
to translate their new needs into effective demands in the polling booth and in
local government. In the year 2000, there were an estimated two million NGOs in
India! They grow daily, with educated women often forming these groups, when it
was their fathers and grandfathers who led the reform movements in India
earlier. And so, as Manmohan Singh squares up to his challenges, it is important
that he remember that the reforms he initiated -- with the ensuing revolution in
material possibilities -- is what propelled the Congress into power.
But, if the Congress Party backslides on reforms, or pushes them forward much
too slowly -- so that, like Oliver Twist, the masses find that they ask for more
and get less instead -- then retribution will be swift. It is hard to imagine
that Prime Minister Singh, who led India forcefully into the reforms for which
he has become a national icon, will not appreciate this. Only by pushing reforms
still further, so that more of the poor are pulled up into sustained employment,
income and consumption, can he take India ahead in its historic war on poverty
-- and on its more recent path of impressive economic growth.
Mr. Bhagwati, a University Professor at Columbia and senior fellow at the
Council on Foreign Relations, is the author, most recently, of "In Defense of
Globalization," just published by Oxford. Mr. Panagariya is the Bhagwati
professor of Indian political economy at Columbia.
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