Corporate India defeated the Congress

Winston Churchill had aptly remarked, “If we open a quarrel between past and present we shall find that we have lost the future”. However, there is another adage that states that those who forget history are condemned to repeat it. Therefore, it is both obligatory and imperative to objectively, if not critically, analyse the past 10 years of the Congress-led United Progressive Alliance administration and then try and discern the way forward for it.

The India that the UPA inherited in 2004 was deeply insecure and communally divided as a result of the wider ramifications of the Gujarat pogrom and a growth model which, since the advent of liberalisation, ostensibly delivered for the affluent and the upwardly mobile, but not the poor or the marginalised.
The UPA government, given the complexities of India gauged the pulse of the people correctly when it conceptualised the paradigm of equity with growth.

From 2004 to 2008, an innovative model of socio-economic inclusion was institutionalised that included but was not limited to an ambitious school lunch initiative catering to more than 139 million children daily, guaranteed hundred days of employment to the rural poor, and a holistic loan waiver to the farming community. During these four years, the economy also grew at an impressive rate of 8.5-9 per cent and corporate bottom lines were robust and in the black.

Coupled with this the Indo-US civil nuclear engagement created a feel good excitement across the middle class as a signal went out that two estranged democracies were now engaging with each other across a broad spectrum of issues. It seemed that there was finally utopia in Shangri-La.

However, the apparitions of the global economic meltdown were lurking ominously over the horizon. India was able to surmount the storm as the economic fundamentals were healthy and timely counter-cyclical measures were put in place. All this enabled the Congress and the UPA to increase its tally impressively in 2009.

However, the second term of the UPA government started inopportunely if not inauspiciously. Right in the beginning the unfounded trepidation regarding Prime Minister Manmohan Singh’s Sharm el-Sheikh initiative on Pakistan sent out a signal of confusion and division both within the government and between the party and the government. In 2009, the American surge in Pakistan was under contemplation.

The Taliban had made deep inroads into Pakistan right up to the Swat Valley. Pakistan was perhaps at its most vulnerable and the unnecessary brouhaha about the inclusion of Balochistan in the agenda for future talks, which incidentally would have been to India’s advantage, was totally avoidable. In terms of realpolitik, Sharm el-Sheikh was a golden opportunity that became a casualty of myopic domestic paranoia.

Moving back to the domestic context, while on one hand the government phased out the economic counter-cyclical measures rather prematurely when domestic industry had yet not recovered from the ravages of the economic meltdown, food inflation remained at a stubborn high as a consequence of the change in consumption patterns especially across rural India where the rights-based entitlement programs had started making a qualitative difference to the lives of the people, but more so because of the lackadaisical approach of state governments in checking hoarding and profiteering in commodities.

By 2010, the euphoria of 2009 had started turning to sullenness, especially among middle-class that had overwhelmingly voted for the Congress and now had to bear the brunt of high food prices. Amidst all this, the controversy surrounding the Commonwealth Games commenced and the telecom wars peaked in the form of a Comptroller and Auditor General of India report, which coined a new terminology “presumptive loss” and put a bizarre figure of Rs 1,766.45 billion as loss to the exchequer as a result of the decision to award licence’s on a first-come-first-served basis rather than auctioning them.

This was crunch time, the quintessential inflection moment that dealt a deathblow to the credibility of the government from which it never could recover. After the report came into the public domain, the inability of the government or the parties in the UPA to formulate, enunciate and convincingly put forth facts in the correct perspective only inflamed the already simmering surliness among people who were reeling under the impact of high food prices.

The Joint Parliamentary Committee Report on telecom matters adopted by a majority of 14 to 11 and tabled in Parliament on December 9, 2013, demolished the disingenuity of the “presumptive loss” theory. But by then the damage had been done and a noxious mood against the UPA had already coalesced across the nation. The JPC report sank without a trace.

The Eurozone crisis had kicked in and the Indian economy had started to sputter. From 2009 to 2012, when the focus of the government should have been on revving up the economy by kick-starting the second generation of economic reforms, it harked back to the erstwhile socialist era, the retrospective taxation in the Vodafone case perhaps being the most damaging signal that India could have sent to foreign investors about the fairness of its tax regime and the sacrosanctity of its judicial pronouncements. In many ways, 2009 to 2012 were the locust years of the Indian economy.

Meanwhile, the government continued to push its rights-based entitlement programmes with free and compulsory education, food security and land acquisition being added to the welfare architecture. Time will vindicate that these were steps in the right direction, but to a corporate India, whose bottomlines were bleeding, overdue loan repayments had turned accounts into non-performing assets; it was like showing a red rag to a bull.

The intricate balance between equity and growth that characterised the first term of the UPA was lost somewhere along the way. Corporate India individually and collectively started feeling that the emphasis, whether in terms of incentives, concessions or palliatives, should have been on the industry rather than the disempowered, the marginalised and the poor.

What the UPA failed to discern was that the balance of power had shifted from government to corporate India. The first economic power shift that commenced with liberalisation in 1991 had fructified by the second decade of the 21st century. More than 75 per cent of the Rs 2 trillion Indian economy was now privately controlled. Coupled with this the instruments of information dissemination were also now corporate controlled.

The print media had historically been owned by corporate barons, but from 1991 to 2014, they collectively acquired control over 415 news and current affairs channels which were streaming 24x7 into people’s drawing rooms and bedrooms. The middle class had got empowered by the new media, with social media platforms giving people the ability to put their most vitriolic thoughts in public space, at times without restraint or responsibility. This was perhaps the most critical misjudgment that the UPA made about the power of corporate India and the newfound muscle of the middle class.

In the midst of all this the chief minister of Gujarat won a third term in December 2012. Corporate India thought they had discovered their nemesis. While the facts are still hazy and will emerge over time, perhaps a spoken or unspoken consensus emerged across influential sections of corporate India that a second power shift must take place. It was Bombay Club version 2.0 at play.

After acquiring the levers of economic power they made a decisive bid for political power. It was the Rockefeller moment of Indian politics. They put their bets not on a party but on an individual. An across the board effort was unleashed to successfully bring a second power shift to fruition. An irate middle class was the veritable canon fodder available to successfully execute this project. Sadly for India and democracy, they succeeded. Corporate India defeated the Congress Party.

The politico-economic history of myriad nations testifies to the corrosive effect of malevolent corporate influence on public policy and political processes. The long-term implications are portentous for India.

What is the way forward for the Congress? While the introspection process would meander along at its own pace what needs to be evaluated is why those sections of society for whom the entire rights-based architecture was created did not vote for the Congress? In 2005, the population living in poverty was as high as 37.2 per cent. By 2014, this number had dropped to 21.3 per cent. The UPA government was successful in bringing about a drop of 15.9 per cent in just one decade. In the past 10 years 190 million people were lifted out of poverty irrespective of the criterion or benchmark that you apply.

The alienation of the middle class is understandable, but why the party fared badly across rural India is not clear. Had it missed a fundamental change that India had moved from a welfare ethos howsoever it be packaged, to an aspirational one? The children of MGNREGA no longer sought subsistence but were itching to claim their place in middle- class India, interring the tendency to slot them into religious or caste denominations. This fact alone if properly evaluated without ideological biases would be the most important determinant in the course-correction exercise.

An argument has been put forth that the reverses were due to the inability to convey policies, programmes and achievements to the people. It must be remembered that perception is the alter ego of reality and if the underlying conditions are unfavourable facts cannot be spun beyond a point. Such naive assessments tantamount to shooting the messenger rather than decoding the message. It was a crisis of credibility and not of communication.

In conclusion, a few words about the diarchy of power between Dr Singh and Congress president Sonia Gandhi: Time will judge it to be a wise arrangement and history will vindicate its astuteness. While Mrs Gandhi managed the party and the politics of the UPA, she left the Prime Minister free to concentrate on governance. For 10 years it was the raison d’être of the UPA. Yes, the UPA lost rather badly but as Winston Churchill had said, “Success is not final, failure is not fatal: It is the courage to continue that counts”.

The writer is a lawyer and a former Union minister. The views expressed are personal. Twitter handle @manishtewari