It's nice to see that the Indian National Congress hasn't been paying much attention to the English-language media narrative of the party's recent election victory: that narrative, fueled by endless representatives of corporate India in news channel studios, would have everyone believe that the UPA's victory, combined with the Left's resounding defeat, signaled a ringing endorsement for greater liberalization of the Indian economy (never mind that the most liberalization-friendly party around (even if by a whisker), namely the BJP, also lost, getting 50% fewer votes than the Congress). With the pesky Communists no longer part of the governing coalition, the story went, the way would be clear for further economic reforms, beginning with the removal of caps on foreign investment in the banking and insurance industries. Naturally, then, the presentation of the new government's first budget by the finance minister, Pranab Mukherjee, who barely mentioned such measures, and moreover made clear that any loosening of the cap on foreign investment in the banking and insurance sectors would be limited to 49% (up from the current 26%); and, more importantly, announced a host of measures targeted at India's poorest (including a funding increase of 144% for the UPA's signature National Rural Employment Guarantee Scheme ("NREGS")), was greeted with some cries of disappointment by India Inc., not to mention a massive 900-point tank on the Mumbai stock exchange.
The startling thing about these reactions is the protestations of surprise that have greeted the budget. It seems far too many in the Indian media and business communities had swallowed their own line about the "meaning" of these elections. But even a casual glance at the results shows that while such overarching narratives might make for attractive TV punditry, constructing them is hazardous where Indian elections are concerned (where, it should never be forgotten, the winning party, which received nearly 40% of the seats, got roughly 27% of the popular vote; even adding all of the Congress' UPA allies does not bring that figure anywhere near 50% -- an issue virtually all first-past-the-post systems have to deal with, although the problem is compounded by India's highly fractured electorate(s)). Even a casual glance at the election results shows that the Left's defeats cannot glibly be put down to a general (as opposed to class-specific) hunger for more free market policies. In its West Bengal bastion, the Left Front, now re-invented as a "pro-development" force not unlike the Congress itself, and (as Nandigram showed) quite willing to use the coercive power of the state to brutal effect in the service of that agenda, sustained significant losses at the hands of the Trinamool Congress, a Congress-breakaway that was now the champion of the small farmers of the sort whose land was taken at gunpoint in Nandigram, i.e., that had effectively outflanked the Left Front from, well, the left. And as for Kerala, that state seems to have been alternating between the Congress and the Left forever (the Congress, having been thrashed there last time, was due); leaving such (half-serious) explanations aside, the infighting in the state's ruling party, and the latter's unpopularity in the wake of serious corruption allegations against a prominent leader, left the Communist-led coalition in a very weak position.
Turning to the Congress, the party's brain trust surely could not have forgotten that the NREGS, and its loan waiver (more accurately a deferral) to struggling farmers, were its two most popular measures -- and it is gratifying that both have received more attention in this year's budget. Despite grave problems with the implementation mechanisms (barely functioning, although there have been some notable successes by virtue of NGO-audits), these initiatives have done some good, and have real potential. [One is gratified, but also a little depressed: the loan deferrals, for instance, are essentially band aids for farming families that are at the end of their tether (tens, if not hundreds, of thousands have committed suicide over the last decade); that even these gestures, embedded in the context of government policies that have proven far more sympathetic to the logic of economic liberalization than to the distress of small farmers, should be decried as "populist" by so many, speaks volumes. At least part of the concern is due to India's ballooning budget deficit; while these are serious concerns, a focus on fiscal discipline to the exclusion of all else, in a country where hundreds of millions live in wretched poverty, and where, additionally, infrastructure investment is an urgent need, smacks of fetish, not merely prudence. Economic liberalization, like the "socialism" that preceded it, has come to India by virtue of being sanctified as the reigning trend; not adopted upon serious reflection.]
But if the lessons the Congress would draw from its election victory should have been obvious, why the surprise among India's urban (relatively) well-heeled? Part of the problem is that far too many do not really listen to politicians: the urban middle classes tend to view Indian politicians only through the prism of corruption and/or opportunism -- with the result that ideological issues do not really register (with the exception of those ideological issues that are too overt to be missed, namely communalism and the self-identified "Marxism" of the Left parties). Thus no-one, it seems, was paying attention to the fact that Sonia Gandhi had praised Indira Gandhi's bank nationalization as far back as last November; or that the current finance minister, Pranab Mukherjee, is an Indira Gandhi acolyte of the first rank. I do not quarrel with the view that most politicians might well be scoundrels -- but far too many forget the elementary rule that they are not all scoundrels in the same way. One would do well to ponder the very real distinctions between the various political parties (the fact that both the Congress and the BJP have reached a broad consensus on economic liberalization heightens the significance of the economic issues that do divide them; the differences might be small, but they are meaningful). Had the pundits all done that, they would have agreed that this budget might be many things -- but surprising it isn't.