Vajpayee And Reforms Are Both Safe

Doomsters are composing gloomy jeremiads about the death of economic reform, and indeed of the Vajpayee government. Pessimists say it is only a matter of time before the ruling coalition disintegrates. Even if it survives, say others, economic reforms will be put into cold storage.

I disagree. Grave strains affect both the NDA and the reform process. But the fundamental compulsions for both remain strong. Vajpayee will serve out his full term, and carry on with the reform agenda.

The killings in Gujarat are a grim reminder that India is a communal tinder box. The relative communal peace after 1992-93 lulled us into a false sense of security. Yet remember that more people were killed in the communal riots in Gujarat in 1969. The trouble continued for months, yet Gujarat eventually returned to normalcy, and forged ahead economically.

Will history repeat itself? Probably. The key feature of India in the last five decades has not been communal killing but the ability of the country to bounce back after each bout of slaughter. When the killers are on the rampage, all seems black and ruinous. Yet we have recovered again and again.

I myself was in a far blacker mood after the destruction of the Babri Masjid and subsequent Shiv Sena-inspired killings in Mumbai. When Muslim militants retaliated with the serial bomb blasts in Mumbai, I thought the fat was truly in the fire.

I was wrong. What looked like the end of traditional secularism turned out, in fact, to be the beginning of a long period of communal peace. India demonstrated that, at heart, secular forces were stronger than communal ones. The BJP was clobbered in elections in four riot-affected northern states in 1993. I take heart in the fact that it has just been clobbered in the Delhi civic elections. I hope it will be clobbered in the next Gujarat state election.

Maybe Gujarat will take time to return to normal. Quite possibly Muslim militants will retaliate with serial bomb blasts as in Mumbai in 1993. Even so, things will settle down. We have overcome so many horrendous episodes in the last 50 years that we will surely overcome this one too.

What about the impact on the ruling NDA coalition? Many constituents, notably the Telegu Desam Party, are outraged at the BJP’s refusal to sack Gujarat Chief Minister Narendra Modi. Will the NDA break under such strains?

Not a chance. Political parties are driven mainly by realpolitik, not morality. Politics is about constantly allying yourself with people you dislike in order to gain power. In 1998 few thought that secular socialists like George Fernandes could join hands with the BJP, yet today the Samta Party is one of the strongest pillars of the ruling coalition.

Chandrababu Naidu does not want to alienate Muslim voters and so refuses to join the Vajpayee Cabinet. But he needs the BJP to fend of the Congress challenge in his state. He has denounced Modi, yet not dared desert Vajpayee.

Meanwhile, the BJP has decided to swallow its pride in Uttar Pradesh, and support Mayawati as Chief Minister there. Brining her BSP into the NDA will provide Vajpayee an additional 14 votes in the Lok Sabha, and make the support of the TDP irrelevant.

Remember that Vajpayee was actually toppled by one vote in 1999, yet his rivals hated one another so much that they could not cobble together an alternative government. Never before or after in Indian history has the opposition toppled a government and then failed to provide an alternative. Politicians are purchasable, but do not defect in order to go into limbo. The 1999 episode is a warning that defecting to Sonia can be hara-kiri. That is why the strains within the NDA will not translate into a break-up. Potential defectors see no credible alternative they can join.

What will be the impact on economic reforms? Much less than pessimists think. Some reforms require new legislation, which will clearly be more difficult. The NDA lacks a majority in the Rajya Sabha and needs the co-operation of the Congress to pass bills there. After Gujarat, such co-operation will rarely be available. So reforms like tougher Labour laws will go on the back burner.

Yet many other reforms need no legislative changes. Trade liberalisation through lower tariffs and elimination of exemptions will surely continue. Privatisation has never been politically easy, yet it has been launched and its momentum looks unstoppable, if only because of fiscal imperatives. The privatisation of Bharat Petroleum and Hindustan Petroleum can fetch up to Rs 10,000 crore, and no other stratagem can fetch remotely as much money for a fiscally-constrained exchequer. Private competition will surely keep expanding in telecom, ports, oil exploration, coal mining and roads, all of which were once government monopolies.

To try and reverse this, public sector employees went on strike last week. Will a weakened government persevere with reforms in the face of such opposition? Yes, because public support for trade unions and government employees has long vanished. Once seen as the vanguard of the proletariat, they are today viewed as bandits out to feather their own nests. Kerala, Rajasthan and even Uttar Pradesh have stood up to long strikes by government employees. That would have been unthinkable in the past, but is today becoming the rule.

Faint hearts will still caution Vajpayee against purposive action. Why take any risk? Why not do nothing, and so avoid antagonizing anybody?

The answer was given by Vajpayee himself in 1998. He pointed out that if doing nothing was a winning strategy, then Narasimha Rao would not have been thrashed in the 1996 election. We now live in an era of anti-incumbency, when voters generally throw out the ruling party. The only way to combat this is through purposive action, not policy paralysis. So, expect Vajpayee to be far more reforminst in the second half of his term that Narasimha Rao was.

What do you think?