Life in Gurgaon

In the long term, good economics defeats bad politics

Rahul Gandhi and the Congress may have got a political epiphany with the controversy over the back series of GDP growth rates.

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The political message of the week has come from the Gandhi family. It is a significant message: A tweet from Rahul Gandhi praising Dr Manmohan Singh’s economic performance. For working quietly and diligently at building India’s economy, without tall talk or flaunting of “56 inches”.

His inspiration was that rare slip-up from the Modi government, which has otherwise mastered the weaponisation of data, when the back-series of GDP growth rates based on the new parameters surfaced on the ministry of statistics website. It showed the UPA’s 10 years in a better light than the NDA’s four. The data was taken down in panic and hidden under an obscure URL but with a warning to avoid using it. But Rahul Gandhi had received his political epiphany.

During its two terms, the Congress-UPA government functioned as two different political entities, party and government. They did not always work parallelly and were often at cross-purposes. Dr Manmohan Singh’s core belief was the same as in 1991-96. That only economic growth can lift India’s remaining poorest out of poverty; growth needs animal spirits of capitalism with its imperfections and then, the redistributive state kicks in, with a lot more to give away. If you don’t have surpluses, what do you distribute? The record growth of his first seven years brought the cash for funding loan-waivers, right to food and education.

In his first term, a workable balance was maintained. The trouble began after he won his second term. Who and what was to get the credit for this counter-intuitive second term, with much better numbers so you won’t even need another Treaty of Versailles (Common Minimum Programme) with the Left? This despite the nuclear deal which is supposed to have alienated the Muslims from the Congress.

It became a classical factivist versus activist debate. All those arguing that the party had been rewarded for growth and Manmohan Singh’s skill in not reversing, but carrying forward Vajpayee’s reform momentum were outside of politics. Within the Congress, the question was easily settled: It wasn’t Manmohan Singh government’s growth that got Sonia Gandhi’s Congress a second term. It was the Sonia-NAC “yojanas” and rights-based handouts that won them a larger mandate and Manmohan Singh was given a new innings.

All feudal systems, including family-run parties, follow a common pattern. Durbaris are quick to figure out which argument is going to win and that ends all debate. A formidable set of establishment intellectuals took control of 10, Janpath, and began tugging at Sonia Gandhi’s conscience with fine durbari skills: Growth is ok, but, ma’am, nobody’s thinking of the poor, the farmers, the tribals. They are suffering and Congress is losing them. None of these had ever fought even a college or RWA (Resident Welfare Association) election. In the year India crossed nine per cent growth (over 10% under the new series), I heard a leading and particularly pampered member of Sonia’s NAC say ruefully, “yeh kya hai, nine per cent growth, and 91% destruction”. All this kept getting back to Manmohan Singh, demoralising him completely.

This is when UPA’s growth momentum collapsed, as evident again in the new data. A series of blunders on the political economy followed: Incorrigible statist Pranab Mukherjee as finance minister, resumption of what PM Modi correctly described as “phone-banking”, retrospective Vodafone tax and then that incredibly arrogant and later dodgy environmental “activism” that killed the mining and energy businesses. All contributed greatly to the bank NPA curse Modi’s NDA inherited.

Yet, see where Indian politics has ended up. Rahul Gandhi, who inherited 10, Janpath’s povertarianism which reduced Congress to 44, is hailing Manmohanomics. Narendra Modi, who rode to 282 promising record economic growth would wish that the comparative growth figures had never come out. Since he is among our sharpest politicians ever, he would also know what broke his own momentum: It was that economic decision, driven by some ecclesiastical logic of jaadu-economics (sorry Surjit Bhalla, stealing it from you). It took away, exactly, as Manmohan Singh said in Parliament, two per cent from our net GDP.

That’s the NDA-UPA growth gap in the new series. If Rahul Gandhi is hailing it, and Modi government is hiding from it, what does it tell us? It is reasonable to conclude that in the long term, good economics defeats bad politics. That lazy good-economics-is-bad-politics punditry should be buried.