If it had been only another item on the continuing agenda of economic reform, the decision to permit foreign direct investment in retail would have been taken at least two years ago. Dr Manmohan Singh’s government has been in its favour from the moment it was sworn in seven and a half years ago, but was thwarted by the Left, without whose support it could not have maintained a majority in the Lok Sabha during its first term. That is understandable. No sensible government risks its survival for the benefit of a multinational’s bottom line. But 2009’s general elections changed the arithmetic of the Lok Sabha dramatically, and with it the algebra of policy manoeuvres. However, the Left’s decimation did not alter a basic fact: that opposition to retail FDI cuts across partisan lines. The government has majority support in a compliant Cabinet, but not in the less obedient Lok Sabha. The coalition that governs India is now split, although not broken.
What prompted the Prime Minister and his Finance Minister Pranab Mukherjee to expose such fissures by pushing through a decision that could have remained dormant? Neither of them has any ideological commitment to adventure in governance. Both would rather live to fight another day than duel unto death over a policy-shift that may have its merits, and certainly does not demand any trapeze swing immediately. They knew that support for FDI was fragile even among senior Congress leaders like Defence Minister A.K. Antony, who was at the top of the wobble list. As it so happened, Antony did wobble at the decisive Cabinet meeting, but did not fall out of line.
Antony is not alone. A section of Congress believes that it is leftist by persuasion, and finds itself closer to the Marxist view on international retail chains. Even the broad pragmatic base of the party is wondering whether it is quite the right moment to alienate the influential local market, small-town vendor and supplier on the eve of an election as important as that of Uttar Pradesh. The change might impress those who are driving the Indian economy into the international matrix, but it makes no domestic political sense. If the Congress loses ten additional Assembly seats in UP because the shopkeeper has persuaded the mandi that foreigners will arrive with the capacity to eliminate those who make a living through the supply-and-purchase chain, then the psychological impact on Congress fortunes could be many times more than a handful of seats would measure.
If the Congress loses ten additional Assembly seats in UP because the shopkeeper has persuaded the mandi that foreigners will arrive with the capacity to eliminate those who make a living through the supply-and-purchase chain, then the psychological impact on Congress fortunes could be many times more than a handful of seats would measure.
If the decision was meant to be a display of rejuvenation after more than a year of battering and injury, then Singh and Mukherjee should have ensured that the alliance remained intact through some persuasive pre-decision diplomacy with Mamata Banerjee in Bengal and Karunanidhi in Tamil Nadu. Trinamool and DMK now have one leg inside government, and the other leg outside. It is an ungainly sight. Railway Minister Dinesh Trivedi could not have confronted Pranab Mukherjee during this crucial Cabinet meeting without permission from his leader in Kolkata. The DMK MP T.R. Baalu mocked the government claim that this would create employment, asserting that it would destroy jobs. Instead, the government has decided to confront its allies. Why?
Dropcap OnThere are paradoxical situations in politics when weakness can be a temporary asset. The Congress is probably convinced that neither Trinamool nor DMK is in a position to do anything more than make tactical noises. They dare not bring down the government because they have nothing to gain and much to lose in a midterm poll. As partners, they will share the blame for rising prices and malfeasance. The electorate is not likely to praise them and punish the Congress alone. The paradox can be taken a step further. The Congress will become more vulnerable in the fourth year of this term, when allies could be tempted to choose a populist issue as the opportunity for fracture and consequent crumble.
But there is another possibility. Dr Manmohan Singh and Pranab Mukherjee may have realised that the clock has begun to tick in the wrong direction, and that their period in power is winding down. A vociferous lobby within Congress, perhaps with support from Mrs Sonia Gandhi, has been arguing that the only way that the party can face another election is under a new leader, and that leader can only be generation-next Rahul Gandhi. Since Rahul Gandhi would need some time to establish his credentials, the switch has to be by next summer. The assumption is that the older generation will perform their last service to the party by getting its candidate elected in the Presidential elections, after which the new era can be formally launched.
Timing in politics is never determined by a single factor. But there is always a decisive factor. Two have been offered; take your pick. But get ready for 2012; there is lots of excitement ahead.