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UPA-II: Desperate for fresh momentum

UPA-II: Desperate for fresh momentum
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First Published: Sun, May 16 2010. 10 05 PM IST

Updated: Mon, May 17 2010. 09 59 AM IST
In less than a week from now, the Congress-led United Progressive Alliance (UPA) will celebrate the first anniversary of its second consecutive term in office. No mean achievement, given the uncertainties of coalition politics and gradual crumbling of traditional vote banks that guaranteed outcomes.
Ironically, it is precisely in this context of very high expectations that the UPA government under Prime Minister Manmohan Singh will be judged. Accordingly, even after recognizing the fact that a year is too short a time, the UPA’s one-year record appears to be a case of belied hopes.
What has been disappointing is not so much the misses in policy, but the image it has acquired of a government that has lost momentum and direction at a time when the country is facing one of its gravest external/internal security threats and battling an increasingly uncertain global economic environment.
It has undone all the good work in first winning the general election and then having moved the ball on serious economic reform initiatives—such as the move to a single-rate goods and services tax (GST), the direct tax code (DTC) and a new road map for fiscal federalism as defined by the 13th Finance Commission (TFC)—and political reform initiatives such as providing for mandatory reservation of one-third of the seats in the Lok Sabha and state assemblies for women.
A year ago, the Congress surprised everyone with its performance in the general election that gave it 207 seats in the Lok Sabha—the first time any party crossed the 200 mark in two decades. It had the additional advantage of being within striking distance of a majority with its existing coalition members and more importantly, without the support of the Left parties it had blamed for missing out on key reform initiatives during its first term in office.
Further, the principal opposition party, the Bharatiya Janata Party (BJP), was in a veritable mess after having turned in a disappointing performance by coming up a distant second to the Congress. It was, given the uncertain times, a dream win.
Yet almost from the word go, the UPA stumbled. The first initiative it undertook was to mend relations with Pakistan—an imperative if India is to realize its potential. However, the clumsy handling of the Sharm el-Sheikh encounter with Pakistan not only put the clock back in relations between the two countries, it dramatically raised the stakes for a rapprochement.
Alongside, the very apparent differences between the government and the Congress party also conveyed an impression that the understanding which had been taken for granted in the UPA’s first term was missing more than just a tick in its second.
Meanwhile, it failed to get a handle on surging food inflation, which scaled a 11-year high on 28 November with the annual increase in food prices measured at 19.05%. Commodity-wise, for staples, the annual inflation was 42% (10% at the same time in 2008) for pulses, 102% (decline of 10%) for potatoes, 23% (6%) for onions, 13% (14%) for fruit and 31% (21%) for vegetables. Worse, the price spiral led to a blame game in the coalition with the Congress and the Nationalist Congress Party, led by food and agriculture minister Sharad Pawar, trading charges.
Similarly, on the key issue of internal security, the UPA sounded like a house divided with coalition members failing to agree whether to take a “soft” or a “hard” line against Naxalites, or Maoist rebels. The killing of at least 70 policemen by Naxalites in Dantewada, Chhattisgarh, further dented the UPA’s image. The exit of junior foreign affairs minister Shashi Tharoor over a controversy related to his association with the new Kochi team in the Indian Premier League only further roiled the image of the coalition. In the process, the UPA created space for its political adversaries; the fact that it has not translated into political capital is only because the Opposition is still struggling in the aftermath of the defeat it suffered in the 15th general election.
All of this has taken the sheen away from the substantive initiatives taken by the government, including a welcome image makeover for the country. It is to the credit of the UPA that it has managed to reinvent the country’s image at the global high table from that of an obstructionist to a proactive deal maker. And it is more admirable since it did so by managing a parliamentary consensus ahead of the climate change negotiations in Copenhagen last year (as mentioned in Capital Calculus on 7 December).
Similarly, by accepting TFC’s recommendations, the UPA has set the stage for a dramatic change in the fiscal federalism norms since it entails economic empowerment of the third tier of government—panchayats (village councils) and urban local bodies such as municipalities—by guaranteeing them a share in the divisible pool of national taxes. Tag this with the GST and the proposed DTC, it is apparent that the UPA has moved the ball substantially with respect to economic reforms.
In the final analysis, it is apparent that the shortcomings of the government are dominating perception of the UPA’s performance in the last one year—a case of half empty rather than half full. Frankly, the government has only itself to blame.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com
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First Published: Sun, May 16 2010. 10 05 PM IST
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