SPECIAL ARTICLE Dissonance between Economic Reforms and Democracy Ashutosh Kumar The story of recent electoral democracy in India is one of here are two parts to the post-Soviet neoliberal and neo- a paradox. Most political parties affirm the necessity of conservative political theory. One of them is the assertion that there are no external challenges left either to free economic reforms. Yet, this affirmation belies support T market or to liberal democracy. This part is widely recognised for the same among large sections of the populace, and, even though grudgingly, its claim also widely accepted. The particularly the poor. Even more paradoxical is the fact other part is an assumption, not too explicitly stated and there- that political parties, despite their emphasis on policies fore not so frequently recognised. The assumption is that there is no internal tension between free market economy and liberal related to the economy in their respective manifestos, democracy. The two are in fact assumed to be not merely com- tend to rely on identity issues for mobilisation. This patible but also complementary. article tries to explain the reasons for this puzzle. So powerful and pervasive has been its propagation that the last two decades have witnessed a near universal acceptance of this belief. The result is that the promotion of free market and liberal democracy are unproblematically tied together. No less significantly, the political class in India, regardless of its party composition, has equally been keen on emphasising that economic reforms in India have been closely tied to a consistent practice of democracy. India’s twin success story is hailed, at home and abroad, espe- cially because very few post-colonial societies including the af- fluent ones have been able to dodge the pitfalls of “non-party, plebiscitary democracy and strong executive leadership grounded in populism”.1 The admiration is laced with a sense of amazement as India still lacks almost all the ingredients that are supposed to make democracy a success. Democracy in India qualifies to be “an ideal case for testing democratic theories”2 for it “is a phenomenon that, by most accounts, should not have existed, flourished or indeed, long endured”.3 Against the grain of such celebration, however, many percep- tive commentators have been issuing warnings that democracy is being viewed and judged primarily in its minimalist form, en- compassing nothing but a multiparty system, regularly held elec- tions, and peaceful transfer of power. Khilnani, for example, points out that “the meaning of democracy has been menacingly narrowed to signify only elections”.4 This is a revised and updated version of an article originally presented at This paper makes an attempt to underline the limits of mini- the conference on ‘Political Regimes, Economic Reforms, and Policy Pro- malist form of democracy in the Indian context by visiting its cesses in Indian States’ on March 20-22, 2006, organised by the Centre for electoral politics since the initiation of neoliberal economic reforms Economic and Social Studies, Hyderabad as part of the Governance and and taking note of the marked dissonance between the two. Policy Spaces Project. Comments from Bishnu Mohapatra and Jos Mooij were helpful. Bhupinder Brar, Ashutosh Varshney, Rammanohar Reddy, Assertion of the Marginal? Kailash K K and Janaki Srinivasan read the earlier drafts and offered incisive comments. The author thanks them all. A running theme in most studies of electoral politics in recent India is the phenomena designated as “democratic upsurge”.5 It Ashutosh Kumar ([email protected]) is at the department of refers to the mobilisation and politicisation of those social political science, Panjab University, Chandigarh. groups, which had for long remained politically dormant. These 54 january 5, 2008 Economic & Political Weekly SPECIAL ARTICLE groups were either economically poor or were identity groups, an equally steady opposition to privatisation of government which had been historically disadvantaged. Election studies companies. The average figures 35 and 47 in 1996 and 2004. have consistently showed that in the recent decades the turn- Among them, the percentage was larger in the case of socially out of these marginal sections has been higher than the aver- disadvantaged groups. The figures were 37 and 45 per cent age turnout. This increased turnout is taken as an indication of of the dalits and 30 and 42 per cent of the adivasis in 1996 political involvement and participation, leading to vast expan- and 2004. sion in the proportion of active citizens, which, in turn, has Now let us juxtapose this first fact with the second. The second caused unprecedented volatility of the electoral outcomes, fact is that major political parties had emphasised their un- forcing political parties to seek new forms of political align- ambiguous commitment to economic reforms in their election ments and support. manifestos of 2004. The general conclusion of these studies is that this volatility is good for democracy because it reflects increasing empowerment Party Commitment to Reforms of the poor and the marginal. How valid is such a claim? In order Congress Party’s manifesto titled ‘Congress Agenda for 2004-09’ to answer this question, we need to consider four facts that veer mentioned prominently its commitment to broaden and deepen around the ongoing process of economic reforms and underline economic reforms, to attain 8 to 10 per cent economic growth, to their implications. ensure efficiency and competitiveness in all production sectors. The first fact is that economic reforms have had no support For this purpose, the party promised incentives for increased among the poor and the marginal. In the large-scale National foreign direct investment (FDI). The party promised to continue Election Study (NES) undertaken by the Centre for the Study of with disinvestments though in a selective manner.7 Economic Developing Societies (CSDS) of parliamentary elections since reforms also figured prominently in the election manifesto of 1996,6 the electorate were repeatedly asked three different the BJP what was grandiosely called the vision document, the questions aimed at (a) determining the level of awareness party committed itself to “broaden and deepen” the process of about the economic reforms among the voters coming from liberalisation so that a modern and resurgent India could different sections of the society; (b) their opinion on the entry of emerge as the nerve centre of the global knowledge economy. the foreign companies in India; and (c) their views on the privati- The party also committed itself to make India a global manufac- sation of existing government companies/public sector units. turing hub. The 13-party BJP-led National Democratic Alliance (NDA) manifesto titled ‘Agenda for Development, Good Govern- Low Awareness ance and Peace’ proposed the following measures to be taken up: The data revealed that awareness about the economic reforms raising the foreign investment limits in the insurance sector, al- was abysmally low among the electorate even after a decade and lowing overseas investors to enter retailing, implementing an more of their initiation. If only 19 per cent of the respondents open sky policy and continuing the privatisation process includ- reported to have some idea of economic reforms in 1996, it ing the mining sector to “enhance and realise the hidden wealth was 26 per cent in 1998. Among those who were aware of the in the public sector undertakings”.8 The manifesto also promised reforms, the percentage of the dalits and adivasis was much to increase the FDI in the insurance sector and to continue the lower than that of other caste groups. Among the respondents, process of privatisation. So powerfully had the political senti- only 13 per cent of dalits and 6 per cent of adivasis had awareness ment swung towards privatisation that the mainstream left about the reforms in 1996 survey. The figures were 20 and 17 parties, namely, the CPI and CPI(M) which had otherwise respectively, in 1998. described reforms as anti-people and criticised other parties for A large segment of the Indian electorate had a negative adopting or endorsing them, did allow for disinvestments of the perception of the ongoing economic reform process. The NES of loss-making public sector units if it took place in transparent 2004 found that 44 per cent of the respondents, cutting across manner. Even “rational” labour reforms were accepted.9 class, caste and party lines, were of the opinion that the rich had benefited from the reforms whereas the poor had become Two Puzzles poorer. The upper caste respondents were split nearly equally The juxtaposition of facts one and two leave us with a puzzle. on the question but a very large portion of the respondents Why did political parties endorse economic reforms so strongly from the poor and peripheral groups viewed reforms as bene- when the sentiment among the electorate – among the poor ficiary only to the rich. Both the 1996 and 2004 data also re- and the marginal in particular – was so vehemently opposed to vealed the popular perception that the economic condition of such endorsement? The easiest explanation would be that the common people in the recent past had worsened. In 1996, parties miserably failed in gauging popular sentiment. The fate 53 per cent of the respondents held the government responsible of BJP’s “India Shining” campaign would encourage such a for increasing poverty whereas in 2004, 47 per cent held on to reading.10 But such an answer would beg a further question: the same opinion. why did all major parties fail equally in their attempt to read The question whether foreign companies should be allowed public mind? free trade in India was asked repeatedly in NES of 1996, 1998, A more complex explanation would be that the political parties 1999 and 2004.