The reformers' dilemma

The calling off of the privatisation of 13 profit-making public enterprises through strategic sale of equity, and the UPA's decision to halt even the 10 per cent divestment in BHEL, together with the veto on any reform of the colonial labour laws, makes it clear that it is the Left which is now calling the economic shots.

The fabled dream team of economic reformers has clearly been checkmated. Whilst it is impossible for an outsider to know the inner workings of the relationship between the Prime Minister and the Congress president, who is responsible for managing the UPA's allies, the obvious question which arises is: what can the reformers do to overcome the Left's veto on the necessary reforms, which alone can allow India to compete with the looming Chinese dragon? This is the issue I will attempt to discuss in this column.

As Surjit Bhalla has been loudly proclaiming in these pages, where the Communists are in power -- as in West Bengal -- the imperatives of government have led them to embrace the very reforms, which their ideologues supporting the UPA from outside oppose.

As exercising power without responsibility is the worse form of abuse of power, one possible way out might be for the reformers to insist that the Left parties be brought formally into the government, with, say, Buddhadev Bhattacharya, or Ashim Dasgupta being inducted into the Cabinet as a minister for economic reform!

If the Left parties demur, it would be sensible to call their bluff and say that the process of economic reform would continue despite their objections. If they refused to support the government, it would be willing to call fresh elections.

If the NDA won, which it well might given the negative incumbency factor in recent elections, the Left would be even worse off than if they joined the government and allowed reforms to proceed.

This option would of course depend upon the Congress president's agreement. How likely is that? This depends upon what her long-term aims are. Clearly she would like the Congress to remain in power. But, at any cost? Does she really believe in the necessary economic reforms, which her dream team of reformers wishes to implement?

Or does she in fact sympathise with the ideologues of the Left? After all her mother-in-law, though not necessarily her husband, did. Is she, like her mother-in-law, primarily concerned with making India great, whilst of course preserving dynastic power?

Or is she keen at all cost to see one of her children maintain the dynastic hold over the Congress, and wants to stay in power by any means as long as is necessary for them to have served their suitable apprenticeship? We do not know the answers to these questions.

I suspect neither do the reformers. This leaves the reformers in a dilemma about advocating the option just considered, as it could lead to the UPA losing power.

This leads to another option -- what may be termed the German option: a grand coalition between the UPA and the NDA with the Left parties left out in the cold. As has now transpired with the virtually hung parliament the latest German elections delivered, both the major parties -- the SPD and CDU -- were agreed that, despite their ideological differences, they would keep the Left party (of the old style Communists and the leftist defectors from the SPD) out of power.

As the SPD in its "Agenda 2010" had advocated some economic reforms, there was enough of a common agenda -- though not enough to remove all the impediments to labour market flexibility -- for a grand coalition to be formed, with the CDU, the party with a slim majority, getting the chancellorship.

Even though the BJP seems currently to be in the throes of a nervous breakdown, it might be willing, like the SPD, to join the UPA in a grand coalition whose agenda would embrace the economic reforms it itself had espoused, but which put a lid on its Hindutva agenda, with which quite rightly the UPA would not concur.

Also as it initiated the moves leading to the strategic alliance with the US, which the Left bitterly opposes, as well as the rapprochement with Pakistan, there is common ground on foreign policy. Such a grand coalition has the advantage that the Congress would still be in power. So whatever its president's personal agenda, it would not be derailed.

Furthermore, given the coming state elections in West Bengal and Kerala, where the Congress is to do battle with the Communist parties, this alternative would also let it off the possibly disabling hook of having and continuing to bow to the wishes of its Left allies at the Centre.

What if this alternative also is not acceptable to the Congress president? A last hope the reformers might entertain is that, as in 1991, a crisis would force the necessary reforms. One of the great ironies is that, largely because of the reforms they then initiated and which were not reversed and in some ways furthered by the succeeding coalition governments, the dangers of a crisis today are remote.

But, the failure to implement the next series of reform of the labour market and the privatisation of the public sector means that India will be growing well below its potential, with all the attendant consequences for the future of its poorest labouring millions. This makes it a moral imperative to call the Left ideologues' bluff.

As the reformers do not have their own independent constituencies, they cannot threaten to organise an alternative political coalition if the Left's veto on further reforms is not rescinded. No doubt there are many others within their party just waiting to take over the reins of power.

But if their party does not work to remove the Left's veto on reforms, instead of limping along neutered in power for the next 3-4 years, they might consider that in the interests of preserving their deserved reforming reputation, the most honourable course could be to resign from the government.

After all none of them is any longer young, and as Chinese emperors and mandarins have always realised, the only verdict, which matters for posterity is that of the historian.