Business Standard

Mihir S Sharma: Farewell, a golden age

The unsurprising descent of India's most successful government

Mihir S Sharma
More Columns by Mihir S Sharma

The United Progressive Alliance (UPA) has collapsed amid recrimination and hostility and contempt. is widely despised for speaking too little and acting too late; Sonia Gandhi's party is believed to be heading for one of its worst defeats in history.

This is so much a part of our mental baggage that we usually seek to validate it by declaring the itself a disaster. And, certainly, it has often been both lazy and incompetent. One of the first things that Dr Singh promised when he became in 2004 was administrative reform; that has not even been touched in these 10 years and is the primary reason for much of the trouble we're facing today.

But the simple truth is that unless you are seeking to justify hazy anger at the UPA's leadership - which, sadly, is the purpose of much analysis, for reasons I'll get to later - this government's record is not just defensible, it is admirable.

That nobody in the government defends it, and nobody out of the government admires it, is quite a different matter.

Ignore growth. Look instead at other troublesome indicators. The fiscal deficit, for example: unconscionably high under the UPA since 2008, certainly, close to or above five per cent of gross domestic product (GDP). But wait: the average under the National Democratic Alliance (NDA) was also 5.5 per cent of GDP. OK, so what about inflation? True, was an average of (only) two percentage points higher under the UPA than under the NDA. But, in end 2004, oil cost $30 a barrel; today, it costs $100 a barrel. That fact can't be blamed on Manmohan Singh. There has certainly been mismanagement; but only if we abandon all sense of perspective is the scale of this mismanagement close to what is being claimed.

Most importantly, there has been an enormous expansion of well-being. Poverty declined two-and-a-half times faster than under the - far faster than at any time in India's history. Partly, that's because of welfarism; and partly because agriculture grew at 2.2 per cent a year under the NDA but at 3.6 per cent a year under UPA-II. Really, this should be all that one needed to say to settle the question of the UPA's place in history, in any halfway moral universe.

But, since this is not a moral but a middle-class universe, here are some other facts. Private consumption - what we eat and spend - grew 40 per cent faster a year under the UPA than under the NDA. Private disposable income - our money, not the government's - grew 8.3 per cent a year under the NDA; it grew a startling 20 per cent a year under the UPA. Assuming five per cent inflation under the NDA and seven per cent afterwards, the NDA delivered real disposable income of three per cent a year, and the UPA of 13 per cent a year - 10 percentage points faster. And this growth has not stopped, even as the economy slowed.

Ronald Reagan, campaigning in 1980, asked a simple question: "Are you better off than you were four years ago?" By any standard, both UPA terms have passed the Reagan test. The UPA has in fact delivered a greater increase in living standards than any in India's history.

Some would claim that this is because the UPA inherited the NDA's growth-affirming reform. A claim that is always made without any specific substantiation. Naturally. Because there can't be any. What reform did the UPA supposedly benefit from? Telecom, perhaps - a marginal increase in consumption growth, at best, from that. What else? The absence of any detail about this claim reveals exactly how vacuous it is.

The same vacuity attends claims that the UPA created no but the NDA did - well, how come "unemployment" numbers appeared much higher under the NDA, then? The answer is that "job" numbers are meaningless when many people choose to leave subsistence employment the moment they can afford it - to raise children or go to school. That's what happened under the UPA.

Underlying these basic errors of analysis is a dilemma: analysts desperately trying to explain apparent middle-class dissatisfaction in macroeconomic or pocket-book terms. If it turned out that popular anger at the UPA had causes that aren't economic, but social and political, then all the devotees of the "good-governance-is-good-politics-now" mantra would need to find another cult. Which is why, for example, we have other slippery evasions: sure, people have done spectacularly well. But their expectations are so high that the UPA is still a failure! Of course, the great advantage of "expectations" is that they can be tweaked without evidence into implying anything you like. A bar can be set that any government would fail to cross.

Truthfully, much of the UPA's good fortune was precisely that - pleasant global headwinds, cheap global capital. To this it added the growth spurt born of inputs - like spectrum, coal and land - being below market price. That boosted those sectors of the economy that used them, and increased access to whatever output those inputs became. Today, global capital is more cautious. And spectrum, coal and land will not be handed out free again.

So what are we left with? Why, in fact, if the UPA presided over what is the closest this unfortunate country has ever come to a golden age, is it leaving office so reviled? Abandon the economic explanations. They don't stack up; they are tendentious explanations after the fact, nothing more. As the economist and collaborators concluded after carefully evaluating the UPA's numbers: "This manufactured reality [UPA-as-disaster] will no doubt marvel future historians when they look at the actual records."

The reason is that the UPA's leadership no longer meets our expectations of what leaders should be. In 2009, I was astounded at the hope surrounding the re-election of the government; today, I am astounded at the hate as it leaves. Ridiculously overdone, both. "Dr Singh is too quiet, too reserved, too diffident," we are told. He doesn't push his own preferences on his Cabinet members - apparently, prime ministers are supposed to do that, though I'm yet to find it in our Constitution or anywhere except the nastier bits of our history. He gives a few speeches a week about tiresome things like regulatory reform and so on, but he doesn't respond to the issue of the day in time for prime-time television - and that's not OK, either. We want, apparently, decisiveness; like at other doomed moments through the ages we don't really seem to care what the decisions in question are. We sense the UPA is not "our own". It imagines it answers not to "us", in the cities, but some inchoate notion of India's poor, out there. This drives us insane with fury. No matter how successful a government at reducing poverty, if it says it does so for poor people, it will grow unpopular among the affluent.

And since we're talking social, even psychological, reasons for why the UPA is so widely despised among the louder talkers in India, let me just say this: the quietness and diffidence of a leader is part of what makes, for me, a golden age. An unwillingness to make spectacular errors. A lack of desire to give into the weird macho neediness that pervades urban Indian culture. By the numbers, this has been a golden age. But that is not what I, at least, will remember with gratitude.

Read more on:   
|
|
|
|
|
|
|
|
|
|
|
|

Read More

Premvir Das: The three big reforms for defence

The chiefs consider themselves sole proprietors of their respective services, and anything which even remotely impinges on that ethos is rejected

Most Popular Columns

Arvind Panagariya

Arvind Panagariya: MSMEs - separating wheat from chaff
Arvind Panagariya

Do not look for easy interventions to help small-scale enterprises - carry out the reforms that will let them grow big

Aditi Phadnis

Aditi Phadnis: Shiv Sena needs to go the 'rural' mile
Aditi Phadnis

If Uddhav Thackeray and the Shiv Sena want to hold on to their new base, they will have to listen to the voices coming from rural Maharashtra much more carefully

T N Ninan

T N Ninan: Convenient 'truth-telling'
T N Ninan

In the run-up to the Lok Sabha elections, Narendra Modi talked of a "Jayanthi tax". He was taken to be referring to Jayanthi Natarajan, the ...

Advertisement

Columnists

Hemant Krishan Singh

Hemant Krishan Singh: Different kinds of partnership
Hemant Krishan Singh

The quality and bandwidth of India's strategic ties with Japan, the United States, and China are not the same

B Dasarath Reddy

B Dasarath Reddy: Andhra yet to solve the land puzzle for new capital
B Dasarath Reddy

Govt has invited bids to choose a consultant to develop the new capital but there's no clarity on the location and source of funds

Steven Johnson

Steven Johnson: Ebola's information paradox
Steven Johnson

Modern society is vulnerable to the threat of a pandemic because of the global connectedness of air travel; yet, we can alert the world to ...

Back to Top