Coalescing lessons

Time flies. It is getting on to a decade since India began to be governed by coalitions. That is nearly a sixth of the time that the Republic has been in existence. The received wisdom is that coalitions are here to stay. In order to sensibly conduct governance in the future, it is useful to ask what lessons should be drawn from the experience of the last decade.

In the management of coalitions, the mantra quite naturally has to be 'give and take'. And the general rule appears to be that it is incumbent on the senior partner in the coalition to behave with grace and generosity. Ensuring a stable government is its responsibility. As far as this is concerned, both the BJP, which led two NDA coalitions from 1998 to 2004, and the Congress which has led the UPA government since then, have acquitted themselves admirably. A second lesson is that the stability of government is not the same as the stability of politics""or policy. This is especially true in India where political parties are not only based on social identities but also tend to depend on the 'ein Führer' principle. This makes the political system vulnerable to capricious turbulence. Indeed, as the Left has shown, even when a political party does not depend on social identities and a single leader, it can be the cause of severe turbulence.

The third lesson derives from this. Good governance, which is not the same thing as a stable government, will remain at a premium (indeed, it can be argued that it would be at a premium even when a single-party majority exists). Cabinet ministers facing criminal charges cannot be dropped because the coalition will fall; giant hand-outs are offered to states whose dominant regional party is a partner in the coalition, without the usual needs test being applied; and so on. If it is any comfort, India is not alone in experiencing this problem when it comes to coalitions. History shows that practically every other country which has had coalition governments over long periods has had to deal with the turbulence which small parties can cause. Inevitably, good governance has been a frequent casualty, albeit in different degrees. India falls somewhere in the middle of the scale but has to come to grips with the problem.

When talking of governance, which one can define for India as the efficient delivery of public goods, it is useful to look at research on the subject. The point that has been made is that efficient public good provision is most sustainable in small legislatures, and that it always breaks down in large legislatures because cooperation always breaks down in them. (Public good provision in legislatures: The dynamics of enlargements, Centre for Public Economics, University of Cologne, 2003.)

A fifth conclusion that applies to India pertains to the electoral system that best suits a country. Many people, after a prolonged bout of coalitions, say a proportional system is better. But in a study of 50 parliamentary democracies, Torsten Persson, Gerard Roland and Guido Tabellini have shown that this is not true. They argue that "majoritarian elections are associated with smaller government spending, smaller budget deficits and smaller welfare states, compared to proportional elections."

A sixth lesson, perhaps the most important in the Indian context, arises from what is called competitive populism. This is caused by a disproportionate exploitation by political parties of differences between different groups. Does such populism increase or decreased economic welfare? Pranab Bardhan and Tsung-Tao Yang have pointed out that "while political competition can yield allocative benefits for the public, it can also generate aggregate welfare costs by constricting the set of politically feasible public investments." How right they are.