An Economic Constituency

Likewise, domestic public reaction to the crises in several of the highly successful East Asian economies appeared to be one of intense disappointment and betrayal. Disappointment, because of the perception that their economic success had provided a huge boost to these countries images and standing in the world, which they now felt would be hugely eroded by the sudden turn of events, and would probably take much longer to recover than the economies themselves. Betrayal, because they pinned the responsibility for the events on self-serving and short-sighted leadership. In all the countries touched by the crisis, the political process has been deeply affected by it.

 

The point conveyed by these two contemporary situations is that of a close relationship between economic performance and political outcomes in different parts of the world. Leaders and governments stand or fall more as a result of the economic performance associated with their regimes than for any other reason. In India, however, we appear to be charting a somewhat different course for ourselves. A government that had overseen two consecutive years of unprecedented GDP growth was voted out. The most unstable and insecure government we have ever had also turned in our highest one-year growth rate, in excess of 7 per cent. And now, in an election which should be about consolidating and reinforcing these growth impulses, the main event is the participation of Ms Sonia Gandhi and her unanticipated impact on the prospects of the Congress party.

Why is economics apparently taking a back seat during Indian elections? All the parties have, no doubt, articulated their approach to economic policy, and the striking thing about these alternatives is how close they are to each other. There are obvious and much emphasised differences with respect to the role of foreign capital, but the bottomline is that no party appears to have a vision of policy and policy-making that fundamentally challenges the status quo. All the alternative parties offer the same uncountable number of ministries, and other oppressive and dysfunctional government agencies. All this simply reinforces the cynicism of the average voter towards government, even more so because, for the first time, he faces a choice among three configurations who have each had a chance (however short-lived) to run the government. No longer is there the innocent appeal of the untested opposition party. So, one possible explanation is that economics is in the back seat because there is no real choice offered.

In such a vacuum, given that a choice must be made, it is often the result of whimsy.

I think, however, that there is a deeper reason for this apparent indifference. This has less to do with the policy positions of alternative parties and more to do with the pattern of our economic performance over the 50 years. Until about a decade ago, growth did not matter. While there was always a notional growth target in the plans, the governments perceptions about its own performance put a far greater weight on incremental gains in tangible public goods food, health services, roads, electricity, post offices, bank branches, etc. To the voter, positive performance had more to do with the absolute increment in the supply of these goods than with the question of whether he could have done better in some alternative regime.

It is only when the resource constraints made this incrementalist strategy unsustainable that the government was forced to emphasise growth as an objective in the sense that it alone could facilitate the continued provision of public goods. As a result, we have had some segments of the population, spread over parts of the country experiencing sudden surges in their earnings. By providing them a surplus over subsistence, it has given them the potential to evaluate their well-being not just in terms of the availability of public goods, but in terms of the private consumption goods which their surplus gives them access to.

We, therefore, have the beginnings of a constituency that will give a high weightage to their opportunities for private consumption. The origins of this constituency lie in the mid-1980s, when growth became associated with an increase in the availability of consumer goods, a relationship that had been frowned upon by the earlier strategies. As a result, it has had just about a decade to develop. It is, as yet, highly unbalanced on a variety of criteria region, caste, education and so on, and as such, does not have the clout to influence the electoral process. Until now, parties in government have never really been held accountable for low growth as long as the minimum incremental provision of public goods was maintained. With the emergence of this constituency, the calculations will change. This is not to imply that public goods will no longer figure in voters calculations. Rather, it is to say that a government which fails to account for these changing priorities in its policy decisions will inevitably reduce its prospects for re-election.

In other words, the emergence of this constituency means that governments will be held accountable for their relative economic performance, in terms of the availability of both private and public goods. Every episode of high growth gives more people access to expanded consumption opportunities. Every time this access is threatened by wrong policies or ineffective implementation, more people are motivated to change the direction of the government, failing which, the government itself. As long as growth remains the facilitator of increased consumption opportunities, governments will be judged on their growth record.

Clearly, this time around it didnt happen, but one hopes that very soon, parties will no longer be in a position to anchor winning strategies on statements like vote for me because I have links with the Gandhi family or vote for me because Ill build you a temple. Rather, theyll be saying (in appropriate language, of course), among other things, vote for me because over the last five years your consumption choices have increased substantially, or vote for me because, even if you were born in poverty, my policies will give you a damn good chance of not dying in it.