Unstable Governments do better

The Inder Gujral regime lasted seven months, the Deve Gowda regime ten months. Some people bemoan unstable coalition governments as a curse.

I disagree. The 17 months of the United Front produced lots of quarrels and no great feats, yet yielded significantly more than the last 17 months of Mr Narasimha’s Rao’s term. Consider the facts.

  • Businessmen say the UF, though no angel, has been far less corrupt than Congress. Bureaucrats in, many ministries say they suffered less ministerial interference Sad pressure under the UF.
  • Foreign policy received a boost under the Gujral Doctrine. It made possible the Ganga Waters Treaty with and transit facilities through Bangladesh, and has made politically possible the sale of Bangladeshi natural gas to India. Nepal, too, is now poised to set up hydroelectric projects to meet Indian needs after signing the Mahakali Treaty. Mr Rao, however, deserves credit for preparing the ground for this treaty.
  • Inflation has come down to 3.2 per cent, the lowest for two decades. It was 10.2 per cent and 4.4 per cent, respectively, in Mr Rao’s last two years. Low inflation is especially good for poverty reduction.
  • The Rao government funked raising administered prices in its last two years in office. So subsidies for food, petroleum products and sugar shot up. The United Front had the guts to raise the controlled price of these items. Many within the UF (notably the CPM) opposed this as politically risky. But Mr Deve Gowda showed admirable vision in saying that if elections could be won by avoiding administered price hikes, then Congress would have won the last one.
  • The UF announced a phased programme to link petroleum product prices with global prices, ending the politicisation of pricing. Mr Rao lacked such courage. Political pricing for oil led eventually to l pool deficit-representing subsidies on consumption of a mammoth Rs 18,000 crore. Other countries tax oil since it is non-renewable and has to be imported, yet our politicians have long subsidised it.
  • The UF finally accepted that systemic change was needed to make the pricing of oil commercial, not political.
  • Oil sector reforms by the UF have spurred fresh private investment in oil exploration and refining, and ended cost-plus pricing (which encouraged the inflation of project costs).
  • The trade liberalisation and tax cuts initiated by Mr Rao have been taken further by the UF. The reform process was neither reversed nor paralysed.
  • Five more industries were deli-censed by the UF, and foreign investment was liberalised in areas like coal mining, coal-bed methane and mineral exploration. Foreign direct investment looks like touching $ 3.2 billion in 1997-98, up from $ 2.2 billion in Rao’s last year (1995-96).
  • Glitches in infrastructure have in some cases been overcome. Private investment in basic telephony has commenced in four states, and VSAT and Internet have been liberalised Foreign investment in new ports has commenced. Some procedural progress has taken place in power, but the financial closure of most projects has yet to be achieved.
  • An autonomous Prasar Bharati Corporation has been set up to take over the government’s radio and broadcasting services, which were earlier mouthpieces of the ruling party. It looks like taking a non-partisan stance for the first time in history in the coming election campaign.
  • Capital markets have been reformed by the creation of depositories, a takeover code, and fewer curbs on foreign portfolio investment. Foreign borrowing limits for Indian companies have been raised.

I do not wish to bore readers with the full list of UF achievements being circulated by the Press Information Bureau. I must also add that many things went wrong under the UF. The government surrendered ignominiously to the demand of its employees for a fancy wage hike, and this diversion of scarce funds means less money for development, especially in the states. The scheme for giving grain at half-price to the poor has suffered from many shortcomings. Industry and exports have slowed down despite a dream budget. The fiscal deficit remains high. Infrastructure remains in trouble.

Yet, on balance, there has been a sense of purpose in the UF which was missing in the last two years of the Rao government. Dr Manmohan Singh used to say frankly that he had much more power in his first two years, when India was in a financial crisis, than in his last two.

Here then is the paradox. As long as Mr Rao headed a minority government in his first two years, he was a dynamic, radical leader. But when he garnered a majority through defections, he went into deep slumber. The succeeding Gowda and Gujral regimes were unstable minority coalition regimes, yet both took policy forward again. Contrary to conventional wisdom, stable majority governments have proved more somnolent for decades produce woefully little change in India, despite widespread evidence that other Asian countries were growing much faster.

What explains the paradox ? There are many reasons, but the most important is that change in India has typically been driven by crisis rather than ideology. When Mr Rao came to power, few expected his minority government to last even 18 months. So he aimed for a place in history by transforming India in a hurry. But the moment he got a majority, he ceased to think about making history and began worrying about winning the next election. That led to policy paralysis, and eventual defeat.

A majority government is typically reluctant to rock the boat, as this disturbs ensconced interests. Indira Gandhi was more radical when struggling to establish her supremacy in the Congress Party in 1967-70 than when she became well established.

Unstable governments are not necessarily more radical. The VP Singh government of 1989-90 waffled ineffectually. Yet there is an inbuilt incentive for unstable governments to do something in the limited time available. Stable governments tend to believe they will be re-elected if they do nothing much. But parties in an unstable coalition know they must perform quickly if they are to be re-elected.

Some Congressmen (like Vasant Sathe) sneer at this. ‘You really think you can fire more accurately with an unsteady hand than a steady one?’ they ask. No, I am saying something different: that the man with a steady hand often believes he need not fire at all.

The bottom line is that we should not despair of political instability or coalitions. These are likely to achieve as much if not more than stable majority governments. Do not get misled by loud quarrels within a coalition. Noise does not equal inaction, no silence action.

What do you think?