BanglaBhoot
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Indian voters head to parliamentary polls today, kicking off the world's largest exercise in representative democracy. The ruling Congress Party promises "inclusiveness" while the opposition Bharatiya Janata Party touts "stability." Neither has outlined the one thing that would achieve those goals: an economic development agenda.
This isn't a surprise coming from Congress, which, in its five years in power, inched India back to its Fabian socialist roots under Prime Minister Manmohan Singh. Pushed by party leader Sonia Gandhi to aid the "common man," Mr. Singh's government passed damaging rural employment and affirmative action schemes that inhibit the private sector's ability to innovate and grow. On the campaign trail, Mrs. Gandhi promised more of the same.
The BJP, a Hindu nationalist party that started to understand the benefits of economic liberalization in the 1990s, now sounds like a Congress echo chamber. Its leader, 81-year-old L.K. Advani, wants to outdo Mrs. Gandhi's populism by throwing money and cheap loans at India's agricultural sector, a huge voter base. The BJP also wants to ban foreign investment in retail, build roads and cities and prop up the diamond industry. Its one good idea is to simplify the tax code, but good luck getting that done in a fractious, coalition-run parliament.
Both parties say they will be tough on the other big issue in the campaign: terrorism. November's 60-hour siege of Mumbai was only one in a recent string of attacks that reached from Delhi to Bangalore to Jaipur. The terrorists failed to ignite violence between the Hindu majority and Muslim minority -- a tribute to India's tolerance. But they exposed the weakness of antiterror defenses under a Congress-led coalition that, for a long stretch, had a BJP home minister, Mr. Advani.
Faced with this choice, voters are doing what they have done ever since Indira Gandhi's Emergency broke the grip of the Congress Party on India politics -- they are turning to local and regional parties. The trend is so strong that for the first time in more than a decade, a grouping of these parties, known as the Third Front, may win enough votes to wield real influence over government, or perhaps even run it. Kumari Mayawati's Bahujan Samaj Party in the populous state of Uttar Pradesh is also a strong contender.
Predicting election outcomes in Indian politics is a mug's game, but a leftist government of any combination would spell sure disaster. Among other things, Ms. Mayawati advocates a huge expansion of affirmative action -- including to the judiciary -- that presumably would be paid for with massive tax hikes or debt issuance. It's hard to have a strong antiterror defense with no money.
The best way for India to achieve sustainable, inclusive growth is not to increase government's stranglehold over the private sector, but to release it. India has weak property rights, an aversion to foreign investment and a reliance on state-run banks. Imagine how fast it could grow if those bonds were loosened.
Deteriorating finances may be the one limiting factor on the rush toward economic populism. India is projected to grow at 5% this year, but that will slow alongside the rest of the world. Public debt-to-GDP is hovering around 80%, while the fiscal deficit is about 7%. Delhi can't afford to spend money willy-nilly while sucking the life out of the job-creating private sector, hard as policy makers may try.
Which brings us back to India's ultimate advantage over other developing countries in Asia: Its voters kick nonperforming leaders out of office. They did so in 1989, when they ejected Rajiv Gandhi for abandoning his reform agenda. Increasingly, they are also keeping competent leaders in power, too. The polling process continues until May 13, and the new government will take over on June 2. If it doesn't perform, chances are its leaders won't be in power for long.
Indian Echo Chamber - WSJ.com
This isn't a surprise coming from Congress, which, in its five years in power, inched India back to its Fabian socialist roots under Prime Minister Manmohan Singh. Pushed by party leader Sonia Gandhi to aid the "common man," Mr. Singh's government passed damaging rural employment and affirmative action schemes that inhibit the private sector's ability to innovate and grow. On the campaign trail, Mrs. Gandhi promised more of the same.
The BJP, a Hindu nationalist party that started to understand the benefits of economic liberalization in the 1990s, now sounds like a Congress echo chamber. Its leader, 81-year-old L.K. Advani, wants to outdo Mrs. Gandhi's populism by throwing money and cheap loans at India's agricultural sector, a huge voter base. The BJP also wants to ban foreign investment in retail, build roads and cities and prop up the diamond industry. Its one good idea is to simplify the tax code, but good luck getting that done in a fractious, coalition-run parliament.
Both parties say they will be tough on the other big issue in the campaign: terrorism. November's 60-hour siege of Mumbai was only one in a recent string of attacks that reached from Delhi to Bangalore to Jaipur. The terrorists failed to ignite violence between the Hindu majority and Muslim minority -- a tribute to India's tolerance. But they exposed the weakness of antiterror defenses under a Congress-led coalition that, for a long stretch, had a BJP home minister, Mr. Advani.
Faced with this choice, voters are doing what they have done ever since Indira Gandhi's Emergency broke the grip of the Congress Party on India politics -- they are turning to local and regional parties. The trend is so strong that for the first time in more than a decade, a grouping of these parties, known as the Third Front, may win enough votes to wield real influence over government, or perhaps even run it. Kumari Mayawati's Bahujan Samaj Party in the populous state of Uttar Pradesh is also a strong contender.
Predicting election outcomes in Indian politics is a mug's game, but a leftist government of any combination would spell sure disaster. Among other things, Ms. Mayawati advocates a huge expansion of affirmative action -- including to the judiciary -- that presumably would be paid for with massive tax hikes or debt issuance. It's hard to have a strong antiterror defense with no money.
The best way for India to achieve sustainable, inclusive growth is not to increase government's stranglehold over the private sector, but to release it. India has weak property rights, an aversion to foreign investment and a reliance on state-run banks. Imagine how fast it could grow if those bonds were loosened.
Deteriorating finances may be the one limiting factor on the rush toward economic populism. India is projected to grow at 5% this year, but that will slow alongside the rest of the world. Public debt-to-GDP is hovering around 80%, while the fiscal deficit is about 7%. Delhi can't afford to spend money willy-nilly while sucking the life out of the job-creating private sector, hard as policy makers may try.
Which brings us back to India's ultimate advantage over other developing countries in Asia: Its voters kick nonperforming leaders out of office. They did so in 1989, when they ejected Rajiv Gandhi for abandoning his reform agenda. Increasingly, they are also keeping competent leaders in power, too. The polling process continues until May 13, and the new government will take over on June 2. If it doesn't perform, chances are its leaders won't be in power for long.
Indian Echo Chamber - WSJ.com
