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Jaimini Bhagwati: Dynastic politics and development

The country has paid a heavy price for the single-minded ambition of some to promote their progeny

Jaimini Bhagwati 

Jaimini Bhagwati

As one reflects on the Indian political executive's performance over the last 50 years or so, it is clear that the country has paid a heavy price for the single-minded ambition of some to promote their progeny. Although there are notable exceptions, such as the Communist Party of India (Marxist), the Congress and several regional parties including the Akali Dal, the Samajwadi Party, the Rashtriya Janata Dal (RJD), the All India Anna Dravida Munnetra Kazhagam (AIADMK) and Dravida Munnetra Kazhagam (DMK) have often placed the interests of family members above that of the nation or even the party concerned. This article focuses on the behaviour of the Congress leaders as they were in power in Delhi for 54 of the 68 years that we have been independent.

Clearly, the Congress today has no similarity with the Congress of the freedom struggle. And it is galling that this current one-family Congress lays claim to an inheritance made possible by the sacrifice of countless Indians during the freedom struggle. The inevitable question then is - doesn't the Congress realise that it is doing itself a great disservice when it elevates members of only one family to its senior-most positions? The usual half-shrug, disappointing response is that it is the family that holds the party together.

Looking back
It was a few generations of self-selected idealists who were at the forefront of the freedom struggle. It was unfortunate that those born in the 1940s and the 1950s felt that the struggle for nationhood was over. They took up diverse professions and left the political space vacant to be gradually occupied by time-servers, including pretenders in the Congress, as the freedom-struggle generations gradually faded away by the late 1970s.

Commentaries that trace independent India's economic development often use the expression Nehru-(Indira) Gandhi legacy and suggest that the Congress was always synonymous with this family. This does great injustice to the Congress leaders of the freedom struggle who held senior positions in central and state governments post-1947. As for Jawaharlal Nehru, irrespective of what we may now think about central planning, state ownership or export pessimism with the benefit of hindsight, but for the untimely demise of our second prime minister, Lal Bahadur Shastri, the trajectory of Indian politics would have been very different. It is with Indira Gandhi as prime minister that civil servants personally loyal to her became more powerful than central/chief ministers and were rewarded with post-retirement assignments, including positions as governors. Further, the state-level Congress leadership was deliberately weakened to prevent the emergence of local leaders with electoral clout. A counter-argument could be that name recognition is crucial in elections and, hence, the lure of dynastic politics. However, the fact is that new parties, for example, the Aam Aadmi Party (AAP), can and do succeed in elections.

On balance, propulsion of progeny to top-most positions without ground-level-up party elections destroys intra-party competition. This has to be inimical to selection of the fittest. Under such circumstances, rational thinking on development, too, would be at a discount. Families that dominate parties are inherently suspicious of those who are popular and/or knowledgeable and the latter are kept down to quell any political challenge.

The reforms that were initiated by the P V Narasimha Rao government in 1991 could well have been embarked upon by Indira Gandhi in 1971. For instance, industrial delicensing, a pragmatic approach to managing the rupee exchange rate, liberalisation of foreign direct investment (FDI), reforms in issuance of government debt, improvements in banking and capital markets and setting up of a securities regulator. In retrospect, India lost two decades of much faster growth between 1971 and 1991. Incidentally, Chinese economic reforms started in December 1978.

Of course, growth was hampered by the Bangladesh war and Indira Gandhi's decisive role in a difficult international environment is to her great credit. However, her leadership became increasingly populist to drown dissent about her inept handling of the economy. More recently, during the rule of the United Progressive Alliance-I and -II, the separation between government accountability and political power, which remained exclusively with the family, resulted in a number of scams, stalled the reform process and hampered development.

What were a few of the key decisions that set the economy back under Indira Gandhi and Rajiv Gandhi governments? In 1955, just the Imperial Bank of India was nationalised and became the State Bank of India. Under Indira Gandhi's watch, 20 commercial banks were nationalised and around 1973-74 the highest marginal income tax rate was raised to 97.5 per cent. Appointment of joint secretaries as public sector bank board members resulted more in inefficiencies and fraud than higher lending to the under-served segments with no credit history. The 1973 Foreign Exchange Regulation Act was an example of government imposing an extremely inefficient stranglehold over all transactions in foreign exchange, including FDI.

On a positive note, Indira Gandhi's amendment of the Constitution in 1971 to abolish privy purses was widely welcomed. However, the imposition of the Emergency in 1975 with its excesses plus promotion of Sanjay Gandhi led to outrage and widespread anger. This had a pronounced negative impact on economic activity despite superficial discipline such as trains on time. The progressive emasculation of the Congress in the states also left Indira Gandhi without sounding boards around the country.

Post-1984, Rajiv Gandhi should be given credit for fledgling moves towards greater federalism and for supporting telecommunication industries and software businesses. However, he was responsible for ignoring mounting government and external debt that led eventually to the balance of payments crisis in 1991. Rajiv Gandhi invited trouble by allowing the Ayodhya Ram temple to be opened in 1986, although it had been locked up under court orders since 1948. He was also ill-advised in the Shah Bano maintenance case to amend the law to overturn a Supreme Court judgment. Subsequently, his limited understanding about armed interventions abroad was shown up when he sent the Indian Peace Keeping Force (IPKF) into Sri Lanka, which resulted in over 1,600 Indian army casualties without, as could have been anticipated, anything to show for it.

To conclude, the Congress needs to go back to its pre-independence ideals if it is to play a constructive role in national politics and development. One way to help the Congress achieve this outcome is to expose inheritors of political leadership through live public debates. The shallow arrogance of dynasts is apparent when they speak, for example, about land acquisition with little understanding about how to provide alternate employment to farmers as India moves haphazardly towards higher levels of urbanisation.

The writer is the RBI Chair Professor at Icrier. These views are his own

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First Published: Thu, May 14 2015. 21:50 IST