Voters have not Heard of Economic Reforms

I am amused by the spate of post-election articles, some in The Times of India, denouncing the United Front for continuing with the liberalisation (which I regard as half-baked) of the preceding Congress regime. Some writers even claim that the election result was a vote against liberalisation, and accuse the UF of going against the mandate of voters. Really? What is evidence for such a claim?

The popular vote of the Congress fell by around one-fifth (from 36 per cent to 29 per cent). But the popular vote of the Left Front also declined by around one-tenth (from 9.7 per cent to 8.7 per cent). Yet you will find these writers pretending that the election result was a mandate for shifting to the left. They are fooling none but themselves. In fact the election was mainly about sectarian issues, not economic reform.

A multitude of issues figure in any election. But the overriding trend in the 1996 election was a swing towards parties based on religion, caste and region. The parties which improved their share in the vote were the BJP and its allies, the Bahujan Samaj Party, Telugu Desam Party, DMK, Tamil Maanila Congress, Akali Dal, Asom Gana Parishad. Every one of these represented sectarian interests of one sort or another. The non-sectarian parties appealing to all sections – Congress, CPM, CPI – all suffered an erosion in their popular vote.

Many people have offered narrower interpretations of the election result. Some claim it was a vote for Hindu nationalism (the biggest gain was made by the BJP and its allies). Some claim it was a vote for federalism (regional parties did well). Some say it was a vote for empowering the backwards castes and dalits (look at the rise of the BSP and Deve Gowda). There is some truth in all these contentions. But look at all three together, and you will see it can be summed up as a vote for sectarianism.

There is, however, no evidence at all that the election result was a vote against economic reform. The BJP the original liberaliser, has long complained that the Congress has stolen its economic programme, and the BJP and its allies made the biggest gains in the election. The Telegu Desam Partyarted privatising public sector undertakings in NTR’s previous spell in power in 1984-89. Mr Mulayam Singh Yadav did the same when he ruled UP in 1990.

Mr Deve Gowda, who thrashed Congress in the 1993 stale election soon showed himself to be a more aggressive liberaliser than his Congress predecessor, and voters in the state voiced their approval in the 1996 general election. In Tamil Nadu people voted massively for the Tamil Maanila Congress whose star Minister Mr P. Chidambaram is one of the most prominent liberalisers in India.

It is not my contention that this represented a vote for liberalisation. I repeat, it was a vote for parochialism. What I wish to emphasise is that it was certainly not a vote against economic reform.

I toured the north-western states during the election campaign, and spoke to colleagues touring other areas. We all found that, overwhelmingly voters were concerned with local issues, not all-India ones. The corruption they complained about was that of local satraps, not the hawala case or telecom licences. Apart from the commercial classes and graduates few people had heard of or cared about economic reform: this was simply not an issue.

Proof of this now comes from the biggest survey ever conducted in India, covering a sample of 9,457 people in 180 constituencies. It was supervised by the Centre for Studies in Developing Societies and Indian Council of Social Science Research. It shows that:

  1. Only 19 per cent of people have heard of the new economic policy, of whom 10 per cent approve (implying 9 per cent do not).
  2. In rural areas, only 14 per cent have heard of the reforms, of whom half approve.
  3. Among graduates, 66 per cent are aware of the issue and 44 per cent approve.
  4. Only 7 per cent of the very poor have heard of the reforms, of whom 3 per cent approve (implying that 4 per cent do not).

Some enthusiasts in the finance ministry may interpret this as majority support for the reforms. Left ideologues may interpret this as meaning most poor people are against reform. Both contentions are ludicrous. What the survey really shows is that economic reform is largely a non-issue, especially for the poor.

I think this is unfortunate. I think we need greater awareness of the pros and cons of a liberal regime. But our liberalisation so far has been so half-baked, and so overshadowed by the worsening morality and callousness of the state, that it simply does not interest people as much as sectarian issues.

While voters are not interested in reform, they are certainly interested in inflation and corruption. They have, rightly, associated both with the Congress Party. But they have not associated these issues with liberalisation-just look at their positive vote for liberalisers of the non-Congress sort.

The low public awareness of economic reform should surprise nobody. The half-baked liberalisation to date has mainly taken the form of delicensing industry, liberalising imports, recapitalising and deregulating banks. None of this has any direct effect on the bulk of the population, especially rural folk.

The indirect results are positive – it has spurred more investment, employment and production, and has eased the balance of payments. For the first time since independence, neither food nor foreign exchange is a constraint on growth. But the state is seen as so corrupt and callous that voters believe that any improvement is in spite of, not because of, the government.

The face of the government most visible to voters is that of the local police and petty bureaucracy, who remain as unreformed as ever. This is where reforms are most urgently needed. Alas, the United Front has so far shown as little interest as the Congress in bringing about grassroots change.

What do you think?