The unfolding of two events involving the executive last week should be cause of worry for the Congress party’s political leadership.
One was the logjam in Parliament following the face-off between a determined Opposition and the executive over the contours of a debate on inflation. The second was the news that an investigation by the Central Vigilance Commission has seemingly confirmed what everyone suspected for long: a potential scam associated with the rapidly escalating bill to fund the Commonwealth Games (CWG) that New Delhi will host in October.
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The first is a pan-India issue that is gaining traction. The second revives associations with corruption, a past bugbear for the Congress; an associated problem is that the build-up to the CWG has been an abject tutorial on how not to prepare for such a big-ticket event. Since the Congress, with 208 members in the Lok Sabha, is the big daddy of the ruling United Progressive Alliance (UPA) coalition and the party at the helm in the state of Delhi, the burden of association will entirely be the party’s.
Spin doctors would argue that inflation has ceased to be such a political issue. They are right, if the period of reference was till the end of the last fiscal; actually the Congress was able to get through the 15th general election in April-May last year unscathed despite food inflation being in double digits. Capital Calculus has dwelled on this inexplicable trend in the past (see “The baffling silence of the masses”, 13 December 2009).
Since then several things have changed. One of them is the lagged impact of bad economic news. Beginning with the global meltdown in 2008, the Indian economy has begun to take a hit in its momentum; something that is not revealed if one looks only at the mere aggregate numbers for growth from year-to-year. The drought of last year following the failed monsoon has only exacerbated this problem. Farm incomes have taken a definite hit.
What has also happened is that the one time step-up in income provided by the big spending under the Mahatma Gandhi National Rural Employment Guarantee Scheme is running its course. It was always going to be a one-off boost to family income—as one individual per family in rural India is entitled to 100 days of employment—and designed as a tool of mitigation during the lean season. What it was doing was supplementing family incomes by the same sum every year. However, if the traditional source of farm incomes take a hit—anecdotally this is obvious, though verifiable data will be available only with a lag—overall resources available to the family will diminish.
In this circumstance, double-digit food inflation will only erode the worth of family incomes further; on the other hand, if food prices continue to accelerate, the family will be able to buy even lesser quantity of food to feed itself. The last six months have seen a gradual spillover of this inflation into non-food products, even while various luminaries in the government and outside have been holding out that the inflation has peaked. The Consumer Price Index, which is a measure of how prices work at the retail level, for industrial workers for June was 13.73%.
Politicians, who always have their ear to the ground, have figured this out. This can explain the fresh wind for the Opposition even as the UPA seems to be on the defensive.
At the same time, the Opposition’s aggression has come at a time when the UPA has witnessed a setback in its majority math in the Lok Sabha and its governance is seeing a perceptible drift. It can no longer take its majority for granted, especially on a politically divisive issue such as inflation—evident from the opportunistic move by the Trinamool Congress, a UPA constituent, to verbally challenge its own government.
While this is worrying in itself, the Congress must be also bracing for what to many is a countdown to disaster: the CWG. More worrying is the cavalier attitude of senior politicians in the Congress party in brushing off concerns on construction deadlines or concerns on oversight.
It would be a mistake to assume that the populace would shrug this off even while they would jest about it as a “chalta hai” phenomenon.
This is not 1982, when India scrambled similarly to close out preparations ahead of the Asian Games hosted in Delhi, when incompetence and sloth could have been acceptable because the country did not know any better.
In 2010, India is a trillion-dollar-plus economy, just years away from its rightful place on the global high table and a youthful nation that has stoked aspirations across the board. Indian companies have demonstrated efficiencies—look how Bharti Airtel Ltd and the Tata group of companies have begun to expand their global footprint—and consumers now only expect world-class services.
Mismanagement of the CWG preparations together with mishandling of food inflation when the country has surplus food stocks (in fact, large amounts have been rotting because there is no offtake, as reported in the Hindustan Times and Mint as part of the Tracking Hunger series), reflects poorly.
The new India would see this only as an abject failure and will hold political parties, in this case the Congress, politically accountable.
Anil Padmanabhan is a deputy managing editor of Mint and writes every week on the intersection of politics and economics.
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