Standard & Poor’s – the global credit rating agency – has threatened to downgrade India to a junk investment grade status. Should this happen, India’s reputation will take a big hit. The first fallen angel amongst the BRIC nations as the papers have been screaming. India will struggle to raises foreign capital to fuel its ambitious growth agenda if this happens. But can one really blame S&P for its statement. Is it off the mark when it says that the politics is the real culprit in India?
A lot of people have complained about the UPA-2’s non-performance. Many have said that the problems come from within the UPA, not outside. What this statement really means is that Mamata Banerjee is really an opposition leader who pretends to be part of the UPA. It’s perhaps only because she sees the Central government as a sort of piggy bank which she can withdraw money from all the time that she continues to be counted as a leader of the UPA. Take Mamata out, and the UPA struggles to hit the majority 272 mark in the Lok Sabha. Even with Mamata in its fold, the coalition suffers from a lack of majority in the Rajya Sabha. So those who blame the UPA for all the ills may want to keep this statistical equation in mind. In a situation of such imbalance, only the lowest common denominator – policy decisions that no one can fault (read the most populist policies) – go through. The latest proof of this is that after widespread consultations (and no one can blame the Congress for once), there is no agreement (forget consensus) amongst the UPA allies and outside friends on the Presidential nominee. It’s easy for the SP to oppose Ansari and for Mamata Pranab Mukherjee. It’s no longer even a shame for Mamata to openly threaten the UPA. Give me the loan waiver or I won’t support Pranab. There is not even a pretence of an ideological point of view on this subject or a care for the national good; it’s like the threat of a kidnapper who has taken someone hostage.
But wait a second. Surely the S&P hasn’t rated India poorly only because of the present state of politics? Surely, it must have cast its eyes a little further – beyond 2014. What it would have seen would have truly thrown it off its feet. For the picture beyond 2014 is worse than the picture that you see today.
Beyond 2014, the Congress will surely struggle to reach its present 206 count. The UPA is clearly in trouble, unlikely to return to power unless it turns things around real quick. But what about the BJP and the NDA? Surely, the two are looking like squeaky clean and ready to lead strongly in comparison?
In reality, if there is anything even more certain than that the UPA is in trouble, it is that the BJP and NDA is in even more trouble. The BJP gets hardly 32 seats out of 289 seats in the top 6 states that contribute more than 53% to the Lok Sabha (UP, Maharashtra, WB, AP, Bihar and TN). Has this changed? Not one bit. The BJP’s favorite states – Gujarat, MP, Chhatisgarh and Rajasthan (off and on) – don’t matter politically as much. Karnataka is all but gone, and the Bihar coalition is in deep trouble.
So in 2014, it is safe to assume that even if the BJP becomes a larger party than the Congress, it will have fewer seats than 206. Its highest tally ever has been 182, and let’s not forget that those were heady days. Those were days when a large part of the Hindu mass forgot its caste-based divisions for a moment, and came out in defence of a perceived threat to its religion. Those moments have long passed. India’s Hindus are back to their divided self. What’s worse is that even the OBCs have been further divided into the Most Backwards and the Mahadalits. There is nothing left which can be united under a Hindu agenda. There is no Hindu agenda left for the BJP to exploit.
So when S&P looks beyond 2014, it sees an India with an even weaker center. The leader of the UPA doesn’t have a place in the cabinet; the PM is an appointed leader. This is indeed a problem. Does the BJP offer anything better? Its party leader – elected for a 2nd time – and the earlier ones (Bangaru Laxman, Rajnath Singh, Venkaiah Naidu) – have traditionally been weaklings. So the BJP has no grounds to snipe at Sonia. Now consider its PM candidates. Most of the leaders are regional satraps, not national leaders; Modi the foremost of them all (the Modi economic myth has been busted yet again in today’s story in TOI – Gujarat: Myth and Reality). Sushma Swaraj is hardly known outside her North Indian belt; The other strong leaders – Vasundhara Raje Scindia, Raman Singh, Shivraj Singh Chouhan, even Rajnath Singh are all regional small fries. That leaves Arun Jaitley – in my mind the best of all BJP leaders to become PM – again a largely non-political figure; a Rajya Sabha member who has never won a Lok Sabha election. So much for the BJP’s attacks on the PM.
Surely, S&P has considered all this before issuing the warning it did. Rather than fret about this warning, it is important we make amends. For starters, we need political reforms. Essentially, a Mamata should not be able to threaten the downfall of the UPA (or a Jayalalitha of the NDA when it ruled). A German style formula – where a ruling government cannot be “felled” unless an alternative coalition is put together first – should be actively considered. Mamata won’t be allowed to pull out unless she helps make an alternate formulation at the Center – a near impossibility. Alternatively, a rule that alliance partners cannot split mid-way through a Lok Sabha tenure. Such reforms will give us stability, while retaining the essential flavor of democracy and choice intact.
A government that knows its stability is not threatened for five years will still be kept under check by the various signals it will get from time to time. State elections will keep happening and the news there will indicate whether the ruling coalition is doing well or not.
Hopefully, stability will bring better decision making and governance to the fore. The political establishment will be able to pursue goals without worrying about some or the other partner pulling out. It will be able to take tough decisions that are in the country’s interests rather than worrying about allies all the time. This is the larger message from the S&P warning.
The real truth is that Indian politics stinks. We’ve entered a fundamentally unstable era – even by coalition standards. In a normal coalition, political parties maintain a certain decency. What we are seeing now is insouciant vulgarity. The one who wields the sticks threatens everyone else. If this continues, India will truly deserve the junk status from S&P…..
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