The 2014 Indian Elections: Careful What You Wish For

By Prashant Agrawal

Minorities constitute a sizeable portion of India's electorate. In Varanasi, a burqa-clad woman shows her inked thumb after voting.Source:

In Varanasi, a burqa-clad woman shows her inked thumb after voting. India’s next national election could result in a coalition of regional parties winning control of the central government. Source: Al Jazeera English’s flickr photostream, used under a creative commons license.

These are difficult times for India. The exchange rate has hit an all-time low, the current account deficit is soaring, foreign investment inflow has slowed to a trickle, the price of fuel and basic goods are skyrocketing, and hiring is slacking. One by one, noted observers have written a slew of devastating critiques of the nearly decade-long rule of the Congress-led coalition government.  There is very little good news coming out of the country, and against this backdrop, voters are preparing for next year’s national elections.

Ironically, in 2014, we may remember this as the good times. Most Indian pollsters forecast that the Congress Party will win fewer seats than in 2009. It is entirely possible that a third front will romp through with more than 200 seats in the next election, leaving either the Congress or Bharatiya Janata Party (BJP) to support it from the outside.  In 2012, I projected that the next national election could lead to a Third Front government, one led by neither the BJP nor Congress. In such a scenario, multiple regional parties form a government with the silent support of either the Congress or BJP.

In the fluid nature of Indian politics, strange bedfellows emerge in the pursuit of power. Parties in the Third Front include the CPI (Communists, in West Bengal and Kerala), the Samajwadi Party or BSP (Uttar Pradesh), the JDU (Bihar), the Telegu Desam Party (Andhra Pradesh), and others. One of two main parties in Tamil Nadu would happily join a Third Front coalition in power at the center. At the moment, the talk is of Rahul against Modi. But the real face-off in 2014 might be Mayawati vs. Jayalalithaa vs. Nitish vs. Mulayam vs. Mamta; all potential leaders of a Third Front government.  Unfortunately for the markets and business, it wouldn’t matter which one of them wins; the emergence of any one of them would unhinge the business community.

In those states where the Third Front has come to power, they have shown a marked tendency towards left wing, anti-competitive economics. Economic reform has not been the mantra of most of the states it has controlled, (with the possible exception of Bihar), and therefore none of the leaders of a Third Front government would be corporate India’s choice to lead the country.

As troubling as the situation is today, a non-Congress or non-BJP led government could be disastrous for the Indian economy.  A Third Front government would be unstable, as has been the case in the past, because no one party would be dominant. The second United Progressive Alliance (UPA) government provides an illustrative example: Tamil Nadu’s Dravidian Progress Federation party (DMK) was granted oversight of the Telecom Ministry in return for its support of the Congress government. DMK leadership then tried to maximize earnings through the auctioning of airwaves. The result was the “the 2G” scandal, one of the largest corruption scandals in independent India’s history with $40 billion in losses incurred (the $34 billion “Coalgate” scandal also rocked the UPA government in 2012). The consequence of a Third Front government could be a continuation of endemic corruption and the maximization of revenue at the expense of the populace.

More importantly, governance could suffer more than it already does. A case in point is the very recent “Durga” scandal in Uttar Pradesh.  A young Indian Administrative Service officer, Ms. Durga Shakti, carried out her job to stop illegal sand mining, and was promptly suspended by the Samajwadi Party because she refused to conform to the party line. A national uproar has ensued to no avail, with the Samajwadi Party remaining defiant. A Third Front, due to its regional nature, would likely exacerbate exactly this kind of situation. It may very well result in a series of “2G” and “Durga” scandals turning the nation backward instead of propelling it forward.

The Third Front governments of the recent past – VP Singh, Chandra Shekhar, Deve Gowda and I.K. Gujral – have collapsed within months of coming to power, even with the outside support of the Congress and BJP. A lack of policy initiatives and political infighting could cause reforms to be further stymied.  Indeed many would argue that reform is slow even today, but in a Third Front government, it may come to a full stop. It is hard to imagine a group of disparate parties signing onto a platform that seeks to better integrate India into the global economy through liberalization – it is equally hard to imagine them coming up with a coherent foreign policy. The worsening current account deficit, which the current government has attempted to contain, could swell further as each party in the Third Front doles out largess to its key constituencies. Given that most Third Front parties are regional, one would expect a sharp increase in subsidies to each of their home states.

It may seem impossible, but we may look back at these days as the good old days.  For those seeking change in India, be careful what you wish for.

Mr. Prashant Agrawal is a non-resident adjunct fellow with the CSIS Wadhwani Chair in U.S.-India Policy Studies.

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