Second, the election has driven home a hard lesson to the political class. Until now, that class has mainly served well-organized groups and dealt with the masses through modest improvements accompanied by exaggerated slogans and identity politics. The National Democratic Alliance (NDA) avoided hard reforms in tax collection and employment, discouraging labor laws for six years despite promises made at the start. They feared such reforms would offend well-networked or well-organized groups such as rich tax cheats and trade unions. The result was low spending on social welfare and deficient public investment, as well as mass unemployment in an era of industrial growth. Other parties had worked similarly earlier. The sharp rejection of the “India Shining” campaign, despite significant achievements of the NDA government, suggests the old strategy is not working anymore. This might mean that politicians will feel pressure to sacrifice vested interests for broad public interests.
What the NDA failed to do, the United Progressive Alliance (UPA) now needs to do. The actions of the UPA coalition are in the right direction, but very limited so far. Sonia Gandhi’s decision to let Manmohan Singh become prime minister was precedent-setting. Future party leaders will be judged against Gandhi’s standard. There will indeed be two power centers. There is nothing inherently wrong with that. The real question is what the division of labor will be. If Gandhi will handle politics and Singh policy, as they seem to intend, then the arrangement will work. Of course, there will be clashes of short-term electoral politics and party politics against long-term policy goals. But no previous arrangement has handled such clashes well.
The first UPA budget is a step in the right direction. It taxes the wealthy a bit more and serves the rural poor a little more. Finance Minister Chidambaram has hinted at tougher tax enforcement. The hard steps, though, are still in the future.
The UPA government is dependent on the support of the left. The communists will strongly oppose labor law reform. They have advocated tougher tax law enforcement. Hopefully, Singh can work a compromise with the left that would permit both labor law reform and tax law enforcement to proceed. However, the Indian left represents the unionized employees in the private and public sectors more faithfully than it represents anyone else. This group forms a tiny portion of the Indian labor force. Tax law enforcement would only benefit the broad masses while labor law reform would threaten the work styles and lifestyles of the core left constituencies. The left will fight hard against that threat. At that point, the UPA will have to decide whether it wishes to betray its promises on employment generation, which are central to its Common Minimum Programme, or force a confrontation with the left on the floor of the parliament. The choices for the left would be made stark by the new bipolar political order. It would either have to sacrifice the job security of the privileged strata of workers, or risk the restoration of the NDA to power.
The United States and India have been distracted away from each other since the Indian election. Nonetheless, there are grounds for optimism for that relationship. The American disappointment in Iraq should discourage Washington from further ventures of that kind, regardless of who occupies the White House. That should make it easier for the two countries to agree on the necessity of a more multilateral world order. Within such an understanding, the United States will have a vested interest in promoting India as one of the sides of the multilateral order.
The new government has resumed the negotiations with Pakistan through the erratic foreign minister Natwar Singh. The swing factor in India-Pakistan relations has been and remains domestic politics of Pakistan. The future of those relations rests not on any diplomatic settlement between the two governments, but on political struggles within Pakistan. As the jihadi desire to kill Musharraf has intensified, his enthusiasm for the Kashmir jihad has declined. Any treaty or agreement with Musharraf can be torn up by the next coup leader. The Simla Agreement was abandoned for years, until it was gradually revived due to changes in Pakistani politics. The talks on Kashmir are a smokescreen, regardless of what Natwar Singh might think.
India’s long stagnation since independence has been the result of structural obstacles in the political system. It has not been due to the failings of a few persons or due to a rigid culture. The political system is evolving. It remains to be seen whether it has finally overcome the obstacles within.
Sanjoy Banerjee teaches international relations at San Francisco State University. He writes about India, America, and the world.