New India’s Marg for Boom…and Bust
BY SRIKRISHNA AYYANGAR
In an ideal world, the Indian voter would want both Narendra Modi and Arvind Kejriwal as Prime Ministers at the same time. Growth enthusiasts supporting Modi and democracy enthusiasts with Kejriwal seek transparent policy processes, accountable executives, and the removal of corrupt politicians who facilitate resource extraction at the cost of public welfare. Tackling all these demands simultaneously inevitably warrants the concentration of political power in a single office, i.e., only a Hercules can clean the Augean stables. Will plebiscitary authoritarianism (running an authoritarian government with mass support) that we seek this year make governance more equitable? Evidence from other countries suggests a mixed picture: a stable but temporary economic upturn followed by a democratic downturn with a protracted revival.
Pivot of Economic Revival
Peru, Argentina, Brazil, Russia and Thailand among others have gone down the road of “dual transitions” – of undertaking market and governance reforms simultaneously with plebiscitary authoritarian leaders. While electoral analysts will rightfully parse differences between candidates to project electoral outcomes, political analysts will show that plebiscitary authoritarian leaders emerge when democracies have been ravaged by a kleptocratic political establishment masquerading as a government, triple or quadruple digit inflation, chronic unemployment and insurgency at the margins.
To be fair, India’s candidates seem much more staid when compared to their predecessors in other countries. For example, consider Hugo Chávez, whose just-over-a-minute speech with the magic phrase por ahora, changed the face of Venezuela for years to come; or the young, bungee jumping, highly glamorous Collor de Mello in Brazil who fell from grace almost as quickly as he rose. There was also the equally glamorous and irreverent Carlos Menem who justified his love for the fast life. The cold and efficient technocrat Alberto Fujimori of Peru and the even colder skydiving enthusiast Vladimir Putin, who rescued Russia from the vice-like grip of the mafia-like siloviki, should also be added to the list.
The concern, however, should not be their colourful lives but the consequences of their coming to power. The sequence is almost self-evident — macroeconomic stability, then fundamental legal restructuring, encouraging the personalisation of public office, followed by corruption, chaos and a slow, but eventual, revival.
First, most of these leaders were very successful in reviving their economies. Fujimori brought down a monthly inflation rate of 400 per cent in the 1990s to 15 per cent in 1994 and shored up tax revenues to 16 per cent of the GDP with a growth rate that outpaced the Latin American average. Menem brought inflation down from around 1,800 per cent in 1990 to four per cent in 1994, while foreign direct investments surged from $2.3 million in 1992 to $2 billion in just two years. Price increases of oil from $20 a barrel in 2000 to a peak of $100 in 2008 enabled Chávez to launch possibly the largest set of redistributive missions, equal to 3.5 per cent of the GDP, to provide health care, schooling, subsidised rations, forestry and land redistribution. Similarly, Russia under Putin saw growth rates averaging seven per cent for more than eight years with a doubling of per capita incomes. Further, Menem and Fujimori carried out massive privatisation measures.
Plagued by Corruption
But macroeconomic stability came at a political cost. To facilitate economic transition that required the centralisation of political office, these leaders radically changed the rules of the game by introducing new constitutions that helped them appropriate power, recruited neophytes from their immediate family, or whoever made their allegiance public, to key positions, and turned a blind eye to or actively participated in corruption. Chávez, Fujimori, Menem and Putin introduced new constitutions within the first five years of coming to power that centralised political control in their office. Chávez succeeded in ending the autonomy of the Central Bank, renationalised key firms in telecommunication, electrical sectors, and, most importantly, the petroleum firm that instigated a coup which was quickly defeated. Fujimori channelled almost 65 per cent of the national budget through his office. Centralised powers allowed the passage of decrees that bypassed legislative scrutiny.
Most regimes were also plagued by corruption, because pay-offs were necessary to sustain the regime – documented bribes to more than 10,000 judges, press, legislators and other public officials under Fujimori, kickbacks running into millions to various family members of Menem from scams, and so on. While Putin tried to reduce corruption, it was a common secret that there were price lists of bribes ranging from school admissions to introducing legislation in the Duma.
Nevertheless, these leaders remained popular for quite some time because they had saved their economies from the brink of collapse, while the Opposition in these countries remained discredited. Dominant parties in Venezuela mustered only five per cent of the vote share in 2005. Argentina had five Presidents within three weeks after Menem’s term. And Putin is likely to remain in power till 2018, one of the longest serving leaders in Russia after Stalin and Brezhnev.
However, intractable problems like unemployment and income inequality, exogenous monetary shocks that undermined economic stability and rampant corruption eventually overwhelmed their political strategies. Eventually, these countries imploded under the weight of unemployment, corruption scams, inequality and the breakdown of law and order. Tens of thousands of the poor and unemployed protested in Lima and Buenos Aires in the early 2000s, and more recently in Moscow, Bangkok and Caracas.
India is not a presidential system with a single dominant party and an authoritarian past to go down the path of other countries. Nor are our prime ministerial candidates as brazenly ruthless as their global counterparts. But considering that many of our candidates do follow a “my way or the highway” kind of politics, the experience from other countries serves us well to footnote the dark possibilities of dual transitions.
-the writer is a faculty member at the Azim Premji University
-courtesy: The Hindu