Debating India

Friends of the BJP

Saturday 31 July 1999, by CHANDRASEKHAR*C.P.

The BJP has managed to win all segments of big business with an interest in India, and this is bound to fill its campaign coffers further.

IT has been a time of political instability in India. On April 17, the Bharatiya Janata Party-led coalition government lost its majority before completing 13 months in office. A futile search for an alternative followed the installation of a caretaker go vernment and necessitated the dissolution of the Lok Sabha. Soon thereafter it was made known that Indian intelligence had completely missed a large-scale intrusion across the Line of Control by Pakistan-sponsored infiltrators. For over two months the mi litary was engaged in a virtual war to flush out the infiltrators, which proved costly in terms of human lives and material and financial resources. Barely had the ’war’ neared its end, in the form of a reported retreat of all surviving infiltrators faci liated by an intervention by the United States, that the Lok Sabha elections were announced. The country now prepares for another democratic exercise whose outcome, it is widely believed, would be yet another hung parliament. Uncertainty in the political sphere still persists.

For the ordinary citizen, virtually brainwashed by the advocates of liberalisation into believing that political uncertainty is sure to neutralise and even reverse the gains of "reform" (whatever they may be), this sequence of events seemed to promise no thing but an economic nightmare. To everyone’s surprise, however, recent surveys of business confidence indicate that Indian business, having been overcome by recessionary pessimism till recently, is now decidedly upbeat. Two factors seem to account for this turn in business confidence. Signs of a recovery, however moderate. And the increasing proximity, verging on outright collaboration, of the BJP and its government on the one hand and big business (both domestic and foreign) on the other. With a busi ness-friendly government in place, which is expected to provide major concessions to industry if it returns to power, industrialists claim to have been encouraged to increase production, banks and finance companies to provide credit and fuel a consumptio n boom and foreign institutional investors (FIIs) to turn bullish, all of which have rendered stock markets buoyant.

Official figures point to a sharp turnaround in the economy. Industry, which has been in recession since October 1996, appears to have suddenly turned buoyant with the growth rate during April-May 1999 rising to 6.3 per cent in the case of the General In dex and a creditable 7.3 per cent in the case of Manufacturing, compared with the corresponding period of the previous year. The stock market is booming, with the BSE Sensex having touched an all-time high of 4,810 points and still hovering close to that level, driven by FII investments, which amounted to $300 million in just the first fortnight of July.

While there are reasons to believe that this recovery in itself would be difficult to sustain and could prove a mere flash in the pan, the additional expenditures incurred as a result of the Kargil conflict and the huge sums which are likely to be spent during the election campaign and the process is bound to be a source of stimulus for the economy. Until well after the election, therefore, business is likely to be positively happy with the government from a purely profit point of view.

But it is not merely because of a fortuitous recovery at the end of the BJP-led government’s shortened term that big business is positively inclined towards the BJP. In fact, just prior to the last election, a survey conducted by a financial newspaper am ong business leaders attending a national convention reportedly indicated that a majority were in favour of a BJP government. This did indeed constitute a change in the attitude of big business. Even till a few years ago there were two factors determinin g the image of the BJP in the eyes of big business. First, that it was directly, through some of its own pronouncements and acts, and indirectly, through its close links with communally inclined movements and organisations, responsible for furthering div isive tendencies and triggering communal strife. Secondly, that while it was securely on the side of private property, its rhetoric was one that suggested a bias in favour of the small (rather than large) traders and businesses and against foreign firms and interests.

These features were not too palatable to a big business community which had decided around the mid-1980s that opportunities for profit in a protected home market were diminishing and had chosen to back a strategy which involved its alliance, as junior pa rtner, with international capital. From this point of view the state had to have three characteristics. First, it must have no truck with any set of forces that rake up divisive issues and intensify civil strife since such tensions could undermine the co nfidence of foreign investors as well as hold up economic activity for varying periods of time. Secondly, it should not be too overtly nationalist, restrict the inflow of foreign capital on the grounds of protecting domestic, especially small, capital, a nd suppress opportunities for collaboration with international capital.

Thirdly, since the relationship between domestic and international capital in the new environment was bound to be contentious, the state needed to be the agency which mediated the relationship between the two and prevented domestic capital from being swa mped by transnational firms.

The first of these requirements was obviously difficult for the BJP to satisfy. Not only is the BJP itself strongly communal, but it utilised the rabble-rousing and emotive capabilities of a number of communal organisations to win itself a leading role i n governance at the centre.

In fact, in a number of areas, especially in culture, education and historical research, through subtle and obvious means, the BJP has indeed sought to further its communal agenda after having come to power.

However, on the broader national stage, in the name of the common platform of the coalition that it led, the BJP has not merely eschewed the more overtly communal of its programmes, but has also been able to dampen the communal activity of organisations such as the Rashtriya Swayamsewak Sangh and the Vishwa Hindu Parishad. There have been occasions, as in the case of the conversions issue, when the smouldering divisiveness of this new force in national governance has shown its ugly face. But "BJP the pa rty" has been able to quickly divert attention from what "BJP the movement" does and temporarily defuse what could have been an explosive situation.

A dharna by activists of the Swadeshi Jagran Manch in New Delhi in December 1998. Despite the "swadeshi" rhetoric of the BJP, it has displayed little by way of real economic nationalism since it came to power.

This effort to conceal communal aggression has been buttressed by the drive to present itself as a liberalising moderniser on the economic front. After all, many would argue, a party which is seeking greater integration of the Indian economy with the wor ld system can hardly be accused of being driven by a retrograde ideology. In time, it would become clear to the BJP that liberalisation can pay off in other ways as well. As the BJP-led government was losing credibility partly because of obvious instance s of incompetence and partly because it was struggling to meet the competing demands of partners in an unwieldy coalition, it chose to exercise an option that has been available to successive governments for some years now: that of triggering a second se t of nuclear devices at Pokhran. This act, which was driven more by domestic compulsion than any perceived change in the security environment, received as expected a hostile international response. The BJP reacted to that response by using policy initiat ives favoured by the G-8 and economic concessions to foreign investors to buy the acquiescence of developed country governments.

The result of all this is by now well known. Despite the "swadeshi" rhetoric of the BJP, it has displayed little by way of real economic nationalism since it came to power. Not only has it continued with liberalisation initiated under the Congress(I), bu t it has accelerated this process, especially after the nuclear tests at Pokhran. Foreign firms and governments have been wooed with mining and oil exploration concessions, extremely lax implementation of liberalised foreign investment regulations, reduc tions in import tariffs and the abolition of quantitative restrictions. The recently announced trade policy for 1999-2000, for example, goes way beyond the requirements set by even India’s liberal commitments to the World Trade Organisation.

Another factor encouraged the BJP along this route: its close links with the richer sections of the Indian diaspora. Unlike the migrants to West Asia, these sections have more or less chosen their host country as their new homeland. They are either inter ested in directly investing (for profit) a part of their own accumulated wealth in India (which they are familiar with) or in serving as intermediaries in the efforts of foreign firms to build new positions or strengthen an existing foothold in the India n market. They are also keen that restrictions which unwittingly hamper their interaction with their country of origin should go. Nothing demonstrated the BJP’s concern for them than its decision to provide a diluted form of dual citizenship in the form of the Person of Indian Origin card.

The BJP’s links with a large segment of well-heeled non-resident Indians (NRI) has deep roots. In search of an identity in an alien environment which can at times be hostile, this segment is constantly rediscovering its Indianness. A part of that process is a return to Indian tradition and the adoption of a nationalistic attitude, in forms however distorted.

The BJP’s own communal traditionalism and its effort to use nationalism as a political ploy has cemented the relationship between a section of this diaspora and the party. In return for NRI support, the BJP has been only too eager to liberalise policy to facilitate the economic interests of this section, which need not always coincide with national interest.

From the point of view of Indian big business, this ability of the BJP to resolve, in different ways, its dilemma of having to keep alive its traditionalist and nationalist face, while winning favour abroad through economic liberalisation, has not been a ll positive. It has meant that the BJP’s willingness to mediate the relationship between domestic and foreign capital has been limited. Nothing illustrates this more than the spate of instances when foreign firms have either parted ways with their Indian partners to create a new fully owned Indian subsidiary or bought out the stake of their Indian partners with the same objective. The recent decision of IBM, which to the economic nationalists of yore epitomised the predatory transnational, to break its partnership with the Tata group, is a typical example.

In response to this trend, the BJP’s policy appears to be one of avoiding going against its image of being more open to foreign investors and market-friendly initiatives. It has chosen to appease domestic big business by providing, in lieu, huge concessi ons in areas where foreign equity holding is restricted or by opening up new areas where foreigners can enter only through a firm involving majority Indian partnership. The violation of all norms in the case of the telecom licence fee issue, even when it involved disciplining one of its own Ministers and dismissing objections from the President and the desperate bid to accelerate the process of privatisation of prime public assets are examples of the BJP’s desire to provide special concessions to big ca pital. Although sections of Indian big business are losing out to transnational firms, they appear quite satisfied with this special treatment from the state. In any case, big business has had no clear-cut economic policy agenda of its own, in the wake o f its strategic decision to back liberalisation. Nor can it possibly see any other domestic political formation doing more for it than the one led by the BJP. It is likely therefore to vote for a known entity, even if half-heartedly, rather than back for ces whose policy directions are uncertain.

In sum, as of now the BJP has managed to win all segments of big business with an interest in India: the foreign investor, the non-resident player and big domestic capital. This of course is bound to fill the BJP’s campaign coffers further, with open and concealed private contributions. It is likely therefore that the tendency in recent years for the BJP to run a much more capital-intensive campaign would only be strengthened. Whether that is likely to sway the minds of the electorate to give it a clear majority is, however, as yet unclear.

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