The Year that Was: She Gets Her Way, Finally

For the first three decades after Independence, the Congress steadfastly followed a Nehruvian socialistic economic policy — arguably with little success. When Indira Gandhi came back to power in 1980, she was convinced that the thinking had to change. Politically, however, it was difficult to move away from its left-of-centre positioning overnight. The economic re-orientation was apparent, as, by the early Eighties, Indira Gandhi had replaced her leftist advisors with more liberal advisors. This was perhaps also the time when businessmen managed to get a foot in the door of policymaking.

Under Rajiv Gandhi, the shift away from socialism to liberalism was decisive. But Gandhi had underestimated the opposition it would have from his own partymen. The Congress’ defeat in the next general elections proved that the Rajiv Gandhi government failed to understand and mitigate the political impact of radical change.

Narasimha Rao became prime minister in 1991 almost by accident. Using the balance of payments crisis of 1991, Rao pushed his finance minister Manmohan Singh to break out of socialist shackles.

While the first Manmohan Singh government of 2004-2009 was somewhat weighed down by the capricious support of the Left parties, it still managed to hang on to many of its open-door policies.

The Congress party has now gone back to its socialist roots though UPA leaders know they have to push ahead with reform for economic growth. They also know that chances of liberalisation bypassing a large section of voters are high. “It’s a dance between those two realities,” Edward Luce, Financial Times Washington bureau chief, says about balancing fiscal prudence with social investments. The sustainability of the Congress balancing act will really be tested only in the next few years.

- This article was earlier published in Forbes India magazine dated July 17, 2009

WHY DID WE DO THE STORY
Forbes India was just three issues old when the United Progressive Alliance government presented its first budget after returning to power. Here was our first acid test: How do we cover the government’s biggest annual event with a fresh and unique perspective? The initial idea, to profile Pranab Mukherjee who had become finance minister after 1985, was quickly discarded and we searched for a better idea.

We hit upon it in the two budget speeches that Mukherjee had presented in the 1980s when he ran the finance ministry under Indira Gandhi. They had an uncanny similarity to the UPA’s latest budgets. You could cut and paste entire passages from the previous budget speeches to 2009 and nobody would notice. The issues were the same, the language was the same and even the remedies were from the Eighties. That nailed the story for us.

On returning to power in 1980, Indira Gandhi had actually initiated the early measures towards economic reform, even though in a quiet manner. We called it “reforms by stealth.” And it was clear that Sonia Gandhi was evolving her brand of inclusive growth in much the same way: Pursue big bang programmes for the poor and push reforms quietly, one step at a time.


WHERE DOES THE STORY STAND
Without doubt, the Congress government had an opportunity to find a new path of development that acknowledged the global predominance of the western capitalist system yet was rooted in the Indian reality. It also appeared for a brief while that it also had the political gall to look far ahead.

But there was disappointment in store. Domestic electoral politics pushed many reforms that would have braced the inclusive growth programme to the back seat. Crucial issues such as amending land acquisition laws have fallen victim to short-sighted coalition politics. The next general elections are four years away but government policy is being held to ransom by upcoming polls in states such as West Bengal and Uttar Pradesh. It is unabashed vote bank politics again. Sonia Gandhi brought back Indira Gandhi; not the reforming one, but the Socialist Mrs. Gandhi of the 1970s.