Two years of the UPA

Dr Manmohan Singh's government has completed two years. In many ways these have been the best years India has enjoyed, and both Dr. Singh and the Congress president Sonia Gandhi can take much of the credit for it. But despite that the government's record is mixed. It is mixed not because of what it has done, but what it has not been able to do. These failures have begun to weigh upon it and push it towards populist measures that could easily undo much of the good that he last two years have done.

The UPA government broke new ground in two crucial respects. It was the first Congress-led government since 1969, in which the prime minister of India did not also have to double as the president of the party. The merging of these roles had not only left Dr. Manmohan Singh's predecessors with far less time to actually govern the country, but since, as Congress president, they had the onerous task of 'managing' relations with other political parties and raising the funds needed to run the party machine, it had rapidly eroded peoples' belief in their honesty and dedication to the nation's well being.

By taking over this thankless task, Mrs Gandhi did not only leave Dr Singh free to run the government, but what is more important, shielded the reputation for honesty and integrity with which he came to the job. This is perhaps the main reason why, even two years after the UPA came to power there is still no sign of an anti-incumbency wave in the country. On the contrary the growing support for it was visible in the Congress' victory in Maharashtra last year and in the thundering success of some of its constituents and of the Left in the state elections that have just ended.

The second way in which the UPA broke new ground has even more important implications for the future of the country. Dr Singh's is perhaps the first non-socialist government in the world to not merely concede, but frame all of its economic policies around, a frank and unabashed admission that although the market mechanism can yield efficiency in production, it is innately blind to issue of equity in distribution. Thus, in a democracy, economic growth cannot be sustained without a strong and purposeful intervention by the state to ensure that the fruits of greater efficiency are as equitably distributed as possible.

This belief, which was strongly reinforced by its partnership with the Left, was enshrined in the national common minimum programme (NCMP). The NCMP made the people believe that they would not be forgotten in the rush to the market. This belief was bolstered by the government's commitment to increase allocations for health, education and, perhaps most notably, for a National Rural Employment Programme.

But today, two years after the NCMP was adopted, it is clear that these initiatives have not sufficed to reverse the growth of inequality that the increasing market-isation of the Indian economy has fostered.

Take education, for example. The last two years have seen an increase in allocations of more than Rs5,000 crores, almost entirely for primary education. But as education is a state subject, and the states have firmly refuse to allow their performance to be vetted, no one knows what impact this additional outlay is actually having. The same goes for the increased outlays on health.

Preparations for the NREGP began within days of the government coming to power but it has taken two years for the first enrolments of poor people looking for jobs to take place. As yet no one knows how many will be accepted as genuine beneficiaries, and, more important, to what extent this scheme too will be perverted into another cash cow for the dominant intermediate classes in the countryside.

Against this, the impact of the relentless forces of the market is visible everywhere. The elimination of import controls led to a 30 per cent fall in the procurement price for cotton over the past four years. This has made its cultivation so precarious that farmers need only the slightest of setbacks to go helplessly into debt. The government has done nothing for them so far so this year by the end of April 400 farmers had already committed suicide in Vidarbha alone.

At the other end of the scale, although managerial salary scales are no longer rising by 30 per cent a year as they were a few years ago, they still rose by eleven per cent last year - a real increase of eight per cent after allowing for inflation. The dizzy rise of the share market has doubled and even trebled the wealth of around five per cent of the country's population in the last three years. No one can grudge them that, but it has bred insensitivity to the worsening plight of the poor that is new to post-independence Indian society. This is reflected in the sudden invasion of the Indian market by foreign purveyors of luxury goods.

The widening gap between rich and poor and the growing insecurity of the lives of the latter, are beginning to sow the first seeds of disenchantment. This may be why the government has all of a sudden committed itself to reserving seats for the Other Backward Classes in all higher educational institutions. The protest against it has claimed its first victim — Subhas Shrivastava, a medical student at the All India Institute of Medical Sciences, died while on a hunger strike on Monday May 22. What his death will do to the gathering movement against reservation is anybody's guess.

The government's move is fuelled by a rising awareness that its attempt to fuse growth with equity is failing. But the rank populism of this move is fuelled by something far, far more crass. It can hardly not know that reservation will not remove the disadvantages of the OBCs as it did not remove those of the SC / STs. That can only be done by a first-class educational system created specially for the lower castes.

In 56 years after the Constitution came into effect, no government has bothered to create such a school system. All that reservation will do is enable the current crop of political leaders from the backward castes to grab a proportion of the seats in elite educational institutions for their children.
The truth is that Manmohan Singh's government too is about to miss the boat. In two years it has created no crop insurance scheme, no unemployment insurance scheme, and no meaningful old age pension scheme for the unorganised poor. It has done nothing to reform the judiciary or the police; or to eliminate the scope for corruption and extortion by the petty bureaucracy.

Above all it has done nothing to make the millions who are losing their only possession, their land, to infrastructure projects partners in the fruits of these projects instead of its victims. The plain truth is that the Congress is in power but does not know what to do with it.

* The author, a noted analyst and commentator, is a former editor of the Hindustan Times, The Economic Times and The Financial Express, and a former information adviser to the prime minister of India. He is the author of several books including, The Perilous Road to the Market: The Political Economy of Reform in Russia, India and China, and Kashmir 1947: The Origins of a Dispute, and a regular columnist with several leading publications.