Are India’s Domestic Politics Stifling Growth? – Analysis

By Amulya Ganguli*

There is sad irony in the fact that the Congress, which unshackled the Indian economy in 1991 and set it on the path of uninhibited growth, is now trying to hinder any further progress by determinedly opposing Narendra Modi’s development agenda by blocking vital bills.

There is little doubt that the effort to undermine the prime minister’s pro-market policies is the handiwork of Congress president Sonia Gandhi, who appears to have been an able pupil of her imperious mother-in-law, Indira Gandhi’s flawed policies.

As a young bride in the latter’s household, Sonia seemingly imbibed two of Indira’s unfortunate traits – her phony socialism and unabashed cynicism. That Sonia’s average educational background made her susceptible to whatever she heard and saw is also a factor behind her present blinkered outlook.

The cornerstone of Indira’s “socialism” was the phrase, garibi hatao (remove poverty), which enabled her to score a remarkable electoral victory in 1971. However, 20 years later, the then finance minister, Manmohan Singh, started removing the left-of-centre constraints on economic growth – an initiative which he pursued as prime minister from 2004 onwards.

But, just when the economy was taking off, the dead hand of socialism re-established its grip via a slew of Sonia’s populist measures, of which the centre-piece was a new law for acquiring land. True, the existing1894 law needed modification since it invested far too much power in the government’s hand, and was certainly antedated. The unsuitability of this colonial law was evident in the dramatic events in Singur, West Bengal, where the acquisition of fertile farm land by the communist government of the state for the small car factory of the Tatas in 2006 evoked widespread protests because of inadequate compensation in the opinion of the farmers.

The angry demonstrations orchestrated by the Trinamool Congress leader, Mamata Banerjee, forced the Tatas to move their factory out of West Bengal in 2008 and also led to the fall of the Left Front government in 2011 after three decades in power. Mamata is now the chief minister. Singur was one of the triggers for the new law. But, in an attempt to reverse the pro-government tilt of the old law, the Manmohan Singh government erred on the other side by leaning too heavily in favour of the cultivators. Left to himself, Manmohan Singh might have been able to formulate a law which would have balanced the needs of the buyers with the wishes of the sellers. But, as is known, the prime minister of the Congress-led ruling alliance was not allowed to be the master of his domain.

This position was held by Sonia, who had apparently been persuaded by the left-leaning members of the National Advisory Council (NAC) chaired by her to believe that the Manmohan Singh government’s “neo-liberal” policies (a favourite word of the communists in economics) were alienating the poor. As one of the NAC members, Aruna Roy, said, the government was placing too much emphasis on growth. It was to turn the focus away from growth to populism that the new land law was framed under Sonia’s aegis. That there were doubts about its efficacy from the start was evident from the observations of one of the cabinet ministers of the time, Anand Sharma, who said that the “insistence on the consent of 80 per cent of the affected families will seriously delay land acquisition and in many cases halt essential infrastructure projects”.

Notwithstanding this caveat about the hurdles before industrial and infrastructure development, the new law was enacted. What is more, it wasn’t only the Congress which supported it, but the entire opposition including the BJP. This pro-farmer stance of virtually the entire political class would not have surprised anyone familiar with the Indian social and political scene where there is an ingrained prejudice against the so-called moneybags and a pronounced bias in favour of the poor, who, in this case, is represented by the landowning farmers who may not really be poor at all.

For decades, this outlook has found place in Indian films such as the prize-winning (including at Cannes) Do Bigha Zameen which has a curious parallel with the Singur episode since a rich businessman in the film wants to buy a poor peasant’s land to build a mill.

It would have taken enormous political courage for any politician to echo Sharma’s views because none among them wanted to sound pro-corporate sector. Modi recently regretted the BJP’s support for the law in 2013, but he was not in parliament then. Even if he had been an M.P., it is unlikely that he would have gone against his party’s collective decision if only because he wasn’t as domineering at the national level at the time as at present.
Having become the PM, he now wants to amend the law in order to make it easy for investors to acquire land. His plan of turning India into a manufacturing hub of the world with his “make in India” objective is based on industrial growth.

But, the Congress evidently does not want its arch rival to make any political gains by pursuing such job-oriented policies. It also does not seem to mind acquiring an anti-industry image by blocking them, for Indian politicians are interested mostly in immediate advantages and the Congress thinks it can do so by posing as champions of the poor.

Its objective, therefore, is somehow to stop the Modi juggernaut even if it harms the overall national interest by making it extremely difficult for the corporate sector to buy land, thereby stalling industrial projects. The Congress does not seem to care that its supposedly pro-farmer policy is actually anti-farmer since keeping the cultivators confined to their plots of land will lead to their division among the children and grandchildren, resulting in a decline in productivity and growing destitution.

But Modi may suffer electoral reverses in the meantime because of his failure to keep his poll promises, including providing greater employment opportunities. That’s all that the Congress may want, even if it comes at the cost of the county’s growth.

*Amulya Ganguli is a writer on current affairs. He can be reached at [email protected]