Manipal, India — Although most international commentators spoke of the Congress Paraty's victory in the 2004 Indian elections as the "revolt of the poor," in reality it was the result of defeating their BJP-led rivals in every major city in India bar Bangalore. Rather than a vote against economic reform, it was the slowing down of reforms during the last two years of the BJP-led regime that made the urban middle class -- now 220 million strong -- either abstain or vote against the BJP.
Unfortunately, the present "owner" of the ruling Congress Party, Italian-born Sonia Maino Gandhi, joined the usual pundits in seeing her victory as a vote against reform, and has reined in the economist Prime Minister Manmohan Singh, who has instead concentrated on two fields where he is an obvious novice: foreign policy and national security. His experiments in appeasement have been based on a liberal belief that jihadis are just misled idealists who can, with tenderness, be corrected.
Simultaneously, just as the United States and the European Union are beginning to accept New Delhi's traditional stand that Pakistan under its generals is part of the problem and not a solution, Manmohan Singh and Sonia Gandhi have been cozying up to Pervez Musharraf. They have publicly taken at face value his claim that the jihadis in Pakistan operate independently of the army, even though many routinely use military communications equipment and are trained by those in uniform. It is small wonder that the nearly three years of United Progressive Alliance government have witnessed a sharp increase in Maoist insurgency and the revival of the Kashmir jihad. The army has become dispirited by consistent pressure from the Congress-led government to go soft on the jihadis and surrender Kashmir's Siachen heights. Also, India's nuclear scientists were dismayed at the conditions set out under the Henry J. Hyde Act passed by the U.S. Congress last year, which would in effect end India's three-decade quest for a nuclear deterrent against China.
However, neither of these threatens the political future of the United Progressive Alliance as strongly as does the current disenchantment of the middle classes with the Manmohan Singh government. Today, the largely urban middle class has become a potent voting bloc, overtaking the Muslims and rapidly drawing level with the 340 million "backward caste" group. It was the swing toward the BJP of this segment that brought the party to power in 1998-2004, and the move away from it that sealed the fate of the Vajpayee government. Two months ago, the Congress Party surrendered Mumbai to the BJP, and last week it lost the city council elections in New Delhi, a city that has till now been a Congress fortress. These are indicative of the disillusionment with Prime Minister Manmohan Singh of his natural constituency, the urban middle class.
Aware of the weight of Muslims and backward castes in the voting arithmetic of India, Sonia Gandhi has forced Singh to abandon his economic preferences in favor of a populist platform that showers both groups with taxpayer-funded sops. However, the devil lies in the details of implementation. Each echelon of India's administrative structure is so riddled with sloth or corruption that less than 20 percent of the money lavished on schemes actually reaches the intended beneficiary. Honest officials mostly prefer to play it safe by avoiding decisions, while the corrupt are energetic, but only in ways that enrich themselves at the expense of public interest. Much of India's political class sees their profession not as service but as the ticket to wealth; officials know the best way to run the government the way they want is to pass a few lucrative deals in the way of their presumed ministerial masters, leaving them wallowing happily in the dirt.
Populist schemes have caused taxes to rise, such as the steep rise in service tax from 4 percent to 12 percent this year. After Indira Gandhi, this is the government with the most punitive approach to taxpayers ever, with raids and harassment multiplying along with the bribes needed to escape the numerous new punishments -- such as the recently introduced right of the Income Tax Department to seize all cash and assets of a taxpayer who, in the subjective opinion of the revenue official, is guilty of evading income tax to the tune of $3,000.
The sudden change to a Stalinist-style atmosphere within the central government has disillusioned most of those who saw Singh as a reformer and Sonia Gandhi as a person open to Western-style economic reform. Instead of following that path, and perhaps as overcompensation for her Western origins, the unchallenged leader of the ruling Congress Party is instead pushing for massive outlays on populist schemes, the closure of growth nodes such as special economic zones, and the entry of caste criteria into the selection process for India's only world-class educational institutions, the Indian Institutes of Technology and Management.
Ironically, through her handpicked and antediluvian Education Minister Arjun Singh, Sonia Gandhi is seeking to block the desperately needed entry of U.S. and other foreign universities into India -- which is far behind even China in the number of high-quality patents filed and the number of Nobel Prize nominees produced by its education system. None of India's universities figures in even the top 50 of Asia, or in the top 200 internationally. It had been expected that Manmohan Singh would make some forward moves, rather than regress under Sonia Gandhi's pressure since taking office as prime minister in mid-2004.
Observers say that the present UPA government has, if anything, outdone the previous National Democratic Alliance regime in graft, and the result has been a diminutive pool of achievements to show for massive infusions of cash. Food security has gone the way of the war against the jihadis, with state grain reserves falling from 65 million tons under the previous regime to less than 12 million at present, not enough to prevent grain speculators from cornering stocks, and consequent consumer pain caused by a rise in food prices by over 55 percent in the past year. As a result, the common man has turned away from the Congress Party. Added to middle class alienation, this has weakened a ruling party that has recklessly adopted a Hugo Chavez-style model of development in an effort to win reelection in 2009.
While domestically the UPA government has adopted populism and turned away from the reform model introduced under Congress Prime Minister Narasimha Rao in 1992, it has simultaneously sought to project a West-friendly image by voting against Iran in the IAEA and smothering criticism of the British boarding of an Indian vessel in the waters off Iraq, which resulted in the capture of 15 naval personnel by the Iranian navy. In times past, such interdiction of an Indian ship would have led to a flurry of complaints by the government, which has instead looked the other way, as it did when Norway expanded its reach into Sri Lanka, Washington in Bangladesh and Beijing in Nepal, to the diminution of India's footprint in all three.
Interestingly, while "nationalists" in India favor robust economic and cultural engagement with the West, they want a clear separation in foreign policy from the often-counterproductive policies of the United States and other NATO powers in locations such as the Middle East, especially over policy toward Iran. Nationalists see the country as a bridge that can link the West with constituencies that are presently alienated, and would like to enhance the Indian diplomatic presence in states such as Venezuela and Iran, that are now squaring off against the NATO powers. This, they believe, could give the needed public cover for policies that would multiply the fast-developing commercial and cultural linkages between India and the Western world.
Instead, the Manmohan Singh government has managed to give India the worst of both worlds: being seen internationally as a surrogate of the West, while blocking needed Western involvement in sectors such as education. In a way, this mirrors what has happened in the nuclear field. By refusing to sign the nuclear Non-Proliferation Treaty and detonating an explosive device in 1974, India became a nuclear pariah, denied all technologies that could even remotely have a connection to the nuclear or missile industries.
At the same time, by refusing to test till 1998 and observing restraint thereafter, and by not selling technologies to friendly countries to raise funds for the expensive nuclear and missile program, nor using clandestine means to procure technologies the way its neighbors have done, India has suffered the pain of nuclear denial without any of the benefits of "bad" behavior, such as cash from sale of missiles and atomic power plants. The very fact that India is in effect accepting the NPT's international restraints while a non-signatory has resulted in the meager reward for good behavior that is now on offer by the Bush administration, an offer that ironically is being attacked by critics as "too generous" to the Indians.
Maladministration and graft have prevented any substantial number of people benefiting from the numerous populist measures, and have not brought the expected windfall of "backward caste" support for Gandhi's party. At the same time, the pro-United States tilt in foreign policy has annoyed the country's 156 million Muslims, and made them abandon the Congress Party in elections. Their disenchantment with the UPA -- caused in large part by the Washington-sensitive line taken in foreign policy by Manmohan Singh -- has added misery to a party already burdened with a developing Hindu backlash against social and economic policies that explicitly favor Muslims in a way that has not previously been attempted in India.
By seeking to please everybody, the UPA seems to be turning everyone away. The results may be dire in the clutch of regional elections scheduled to take place over the next 18 months, and in the national polls that will follow. Populism at home and Bushism abroad seems to be a toxic recipe for the Congress Party, alienating the very constituencies -- the Muslims and the urban middle class -- that brought it to office in 2004.
-(Professor M.D. Nalapat is Director of the School of Geopolitics at Manipal University.)