The Kiss of Socialism

by Surjit S Bhalla 

There is no reformer, or reform-oriented policy, that has not been negatively touched by the policies and leadership of Sonia Gandhi. Given the considerable influence she has over Indian policies, her Teflon-coated persona needs to be objectively assessed.

There was a time, especially at the time of the 2009 elections, when Manmohan Singh, was hailed as an economic reformer. He was forgiven for not initiating any reforms during his tenure as prime minister in UPA 1 because the economy was booming, helped by global liquidity and a sharp increase in domestic investment. Recall that the strains and the slowdown in the economy was well in evidence before the Lehman crisis. Industrial growth had crawled to a halt by August 2008. Populism was reigning supreme, especially in the form of ballooning welfare expenditures and high procurement prices for farmers. Most of us missed this leading signal of populism gone waste, and most of us believed it couldn’t be, because the PM was an economic reformer. It was most likely the beginning of the possible end of the India Shining story.

The Congress slogan in the 2004 election was that India was not shining. Through no effort on their part, India did begin to shine. The populists led by Sonia Gandhi felt that this was not right — how could they be so wrong? So why not ensure that India was not really shining? Which is what Sonia Gandhi has succeeded in enforcing. Indian growth, even before the drought, had slowed to a crawl. Each month, records are being broken — both for the longest period of high inflation and the longest period for sub-par growth. Most analysts have the Indian economy growing less than 6 per cent. My own estimate is that unless fiscal slippage is controlled and real interest rates decline, India will find it difficult to grow at more than 5.5 per cent in 2012-13.

Who or what is to blame for this depressing state of affairs? We can talk about Europe, or policy paralysis, or high interest rates, or a government consumed by its own indifference. The fact remains that a large part of India’s economic problems are man-made. Who is really making both the economic and political decisions within the Congress party? Of course, it is the leadership exercised by Sonia Gandhi. And this leadership has helped reduce the Indian economy to a fragment of its former self. The lights in India started to go out about three years ago, not coincidentally the same time as when India voted with its hopes and aspirations for the Congress, for Manmohan Singh and for the Sonia Gandhi-led Congress party. Never again, say many.

The prevailing fashionable wisdom is to blame Manmohan Singh for the economic ills and to coat Sonia Gandhi with Teflon, the non-stick utensil we all so love. There are two explanations for the PM’s actions — the most popular is that he is a Congress and Sonia Gandhi loyalist, and therefore will not do anything against her wishes — even if the irresponsibly socialist economic policies she recommends or supports are patently destructive. If this were the case, he should have resigned a long, long time ago. The other explanation is that Manmohan Singh implicitly supports these policies, and which is why the self-destruction has been allowed to continue. Either way, Manmohan Singh is to blame for India’s ills; yet the question remains, is Sonia Gandhi to be blamed more ?

Look at the recent articles about the government, especially after the blackout. The commentary was universally critical, as it should have been. Manmohan Singh was severely criticised for the utter lack of direction and complete lack of leadership. But somehow Sonia Gandhi was conspicuous by the absence of her name in most learned and public discourses. The most common apology is that she is not the decision-maker, the PM is.

One illustration of Teflon is contained in the brilliant summary of the Indian predicament, the killing of the Indian growth story, by Jonathan Shainin, senior editor at Caravan. On the New Yorker’s website, he eloquently writes about the corruption, the inefficiency, the decline, and the pitiful state that India finds itself in. All the right notes are hit, Manmohan Singh is explicitly mentioned and criticised, there is a reference to the dynastic rule of the Gandhi family (but only with regard to the arrogant Shinde appointment as home minister). But no mention whatsoever of a certain Sonia Gandhi. An article on the decline of India, and no reference to even the name of Sonia Gandhi, let alone her bad political and economic leadership — that is Teflon.

It is a given among the glitterati that one does not criticise the glamorous Gandhi family. Why this is the case is for sociologists and celebrity psychologists to ponder, but it has been a fact of Indian political life for most of the last century. No matter what the Congress party does, there is a host of apologists and apologies; others are treated like humans. And there is a coattails effect — witness the Teflon on Pranab Mukherjee. Well after the presentation of the worst ever budget, many serious commentators were openly shouting that he would be a far better prime minister than Manmohan Singh ever was, or ever would be.

The most effective administrator and economic reformer within the Congress party, P. Chidambaram, has taken over as finance minister. When his appointment was announced, most people welcomed it. However, not surprisingly, many were sceptical of Chidambaram being able to bring about any reforms. Most reasoned that since Sonia Gandhi was still in control, why would any reforms occur? If Manmohan Singh, who had a considerable legacy as a reformer, was not able to contain Sonia Gandhi’s impulses, why would Chidambaram do any better? It is likely that like other reformers before him, Chidambaram would also be made to drink from the poisoned chalice.

I do hope I am wrong, even though my quota of hope from the Congress was exhausted a long time ago. India needs to move towards a higher than the dismal 5 to 6 per cent growth path it has been trapped in. India does need economic reforms that help all, rather than ill reforms that only benefit a few. India does need to eliminate the adventuresome subsidies for the middle class and the rich (such as diesel). India does need accountability from its political leaders, and India does need the beginnings of a not-the-worst-administration-in-history. And commentators on India need to be more honest in their assessments of not just what ails India, but also who and whose policies have made the lights go out.

The writer is chairman of Oxus Investments, an emerging market advisory firm. Visit thirdpartyofindia.wordpress.com for an open forum on India’s politics

The views expressed by the author are his own and left to public to judge and rationalise for themselves.  

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