Missed opportunity

When the Congress-led United Progressive Alliance (UPA) came to power in 2004, there was a good deal of expectation, particularly in the business community, that this would probably be a term marked by version 2.0 of India’s economic reforms.

After all, the dream team that kick-started reforms back in 1991 was back: Manmohan Singh, P. Chidambaram and Montek Singh Ahluwalia, who made up the triumvirate that had flagged off the much-applauded process of liberalisation, were again in charge, albeit in somewhat different (read: more powerful) avatars.

Sadly, that was not to be. The UPA’s track record on reforms in the past four years has been pathetic. Blame that partly on the nature of coalition politics, which is essentially based on keeping different constituents happy even if it means tough compromises. But more than just coalition politics, it was the nature of the coalition that put paid to whatever sequel the ‘dream trio’ may have scripted. The UPA’s dependence on the Left’s external support, in effect, hobbled whatever good intentions that these reformists may have had.

What is worse, the opportunities to push forward the reform agenda—whether it is PSU disinvestment, pension overhaul or financial sector reforms—were missed during a period marked by buoyant growth and a generally upbeat business and economic environment. The UPA’s four years in power saw an average of 8 per cent plus growth in GDP, increased tax collections and good corporate performance. They say ‘strike when the iron is hot’. The UPA, hamstrung as it was by its support from the Leftist ideologues, did not. Cut to the present. The Congress is now allying with the Samajwadi Party after the Left has threatened to pull its support as it opposes the proposed Indo-US nuclear deal. While this is an alliance for survival, it’s unfortunate that such an alliance is coming now instead of, say, right at the beginning of the UPA’s term. If it had, things could have been very different.

Still, better late than never. The best thing that could have happened for the UPA is the marginalisation of the Left. For four years, the CPM and other Left parties have been like a thorn in the UPA government’s side, obstructing every move to take the reforms agenda forward. Now, finally, in its last lap, the Congress-led coalition has a wider support base in Parliament.

Although it comes at a time when inflation is rocketing and economic growth slowing, this may be a good opportunity for the Congress to push through tough decisions that’ll help reforms along. Will it do so? That’s a tough call, particularly in a year that is not only a runup to general elections but also one that is witnessing economic distress.