APRIL 30, 2014

By TIOL Edit Team

WITH the world's most cacophonous general elections entering its last phase, the focus is shifting to the speculated mandate. The most crucial and 'secular' issue shared by the stakeholders across the political spectrum is whether the electorate would give a decisive mandate to the BJP-led alliance or the Congress-led alliance.

The decisive mandate is the key to reversal of economic slow-down. Only a decisive mandate can end the current phase of despondency, uncertainty and drying up of investments in the economy.

A clear-cut people's verdict can serve as the plank for launch of long-pending economic reforms including the unpopular ones such as labour reforms and restoration of fiscal discipline.

Decisive mandate is also crucial for restoration of the powers and effectiveness of the Legislature as well as of the Executive. And this is the key to putting an end to judicial activism or overreach, which has been aided by so-called civil society and shoot-and-scoot media.

Unfortunately, the issue of intrusion of the governance turf by the judiciary due to legislative and policy paralysis has not been pitched by the political parties before the electorate.

A decisive mandate in itself can be a growth driver. It can end the phase of uncertainty in business environment and thus can accelerate economic growth by one or two percent. Businessmen want clarity and stability in policies, regulations and their implementation.

As put by credit rating major CRISIL, "We believe an improvement in the domestic business climate and confidence after the general elections, along with conducive macros will lift capital productivity, which, in turn, will take GDP growth to 6.5% levels."

In a report captioned 'Of growth & missed opportunity', CRISIL has analyzed prospects for economic growth over the next five years. It has systematically studied what 5%, 6.5% or 9% GDP growth will mean for India in the next 5 years. Unfortunately, the electorate lacks such perspective. Many voters do exercise their franchise on the basis of religion, caste and/or issues other than economic growth and jobs.

CRISIL says: "We believe India can grow faster over the next 5 years, but nowhere near the 9% heyday. There is a 50% chance growth will average 6.5% over this period, provided we get a decisive mandate in the ensuing general elections, which will hopefully speed up decision making, and improve the investment climate and competitive efficiencies."

Fractured mandate, which might result in formation of congress-backed third front Government would perpetuate uncertainty and thus take toll of economic growth. Some of the parties that would form the third front have been spewing venom against the business class and targeting certain big businessmen. The polluters of business climate cannot overnight transform themselves into the magnets for fresh investment, growth and jobs.

The fractured mandate would imply that the electorate as a whole cannot make a clear choice between economic growth, jobs, peace and prosperity on the one hand and emotive issues such as religion, caste and regionalism on the other hand. This would imply that the electorate prefers anarchy and gives priority to narrower and sectarian issues.

We do not know whether International Monetary Fund (IMF) has in mind the discordant Indian polity and perennial street agitations when it refers to the domestic shocks that affect economic growth.

In its Regional Economic Outlook for Asia and Pacific released on 25th April, IMF notes: "Among all Asian economies studied here, India has the lowest degree of output co-movement with its regional peers, suggesting that its cyclical fluctuations are more driven by domestic shocks."

Whatever by IMF's stance, we consider petty politics-driven Parliamentary, state assembly and municipal elections as a hurdle to smooth functioning of the economy. Elections are increasingly getting overloaded with promises of expensive freebies such as colour TVs with DTH connection that put strain Government resources and distort expenditures.

The elections, without basic societal values, sap economic growth and encourage fiscal laxity. The so-called dance of democracy fuels black money generation and circulation, promotes wasteful expenditure on travel, crowds mobilization, noise generation, liquor and narcotics, apart from deepening the country's divide on religious, caste, class and regional lines.

Unfortunately, the electorate does not understand that they are as much a party to bad governance as the political parties that wrestle for power to govern.

This brings us the larger issue- Is the Indian democracy maturing or degrading? Would political parties and voters ever align themselves on pressing issues of inflation control, economic growth for creation of jobs and wealth, poverty eradication through judicious mix of growth and social welfare?

Would each election sharpen the deep divisions and distrust among different sections of the Indian society? Is this the price the Nation has to pay for democracy?