International Business: INDIA
AFTER THE VOTE, CAN INDIA'S CENTER HOLD?
Regional forces are grabbing power from Delhi
What started off as a mere election has suddenly escalated into a battle for the soul of India. After nearly 50 years of strong rule from a central government, New Delhi is facing a tremendous surge of power from states, regional political parties, and disparate ethnic groups such as Tamils. Clearly, the center is under assault.
The Bharatiya Janata Party (BJP) emerged as the largest single party from the elections, and on May 16, A.B. Vajpayee was asked to form a new government. But the nationalistic Hindu party did not have enough seats to form a lasting regime, and other parties resisted joining it. In a chaotic three-way struggle, an eclectic assembly of regional parties, called the United Front, and the discredited Congress Party were jockeying with each other and with the BJP to see which of them could cobble together a government. The BJP has until May 31 to build a coalition and win a vote of confidence in Parliament.
The BJP, which is mostly a northern, upper-caste party, protested the fact that the United Front was playing upon regional rivalries by working with the Congress Party, which was trounced in the vote. Says BJP economic spokesman Jay Dubashi: "They're ganging up against us. It's almost North vs. South."
Whatever government emerges, it will be weak and short-lived. Pessimists argue that the world's largest democracy is facing the risk of breaking up. But other analysts say more decentralization might benefit India. Harold A. Gould, an India scholar at the University of Virginia, believes Indian states will compete even more intensely with each other for foreign investment and thus will remain committed to economic reform. "Even if the central government became almost a figurehead, so what?" says Gould. "The internal structure of India is a lot like Europe, and Europe gets along with multiple countries in a loose kind of federation."
GRIDLOCK. Indian intellectuals also say their country's economic progress will stay on track, no matter which party wins. Even communist-governed states such as West Bengal and Kerala, they argue, support continued opening.
Under any scenario, U.S., European, and Japanese multinationals are going to face a more complex task of negotiating with individual state governments and won't be able to rely on New Delhi as the final arbiter. More advanced Indian states, such as Maharashtra, Gujarat, Karnataka, and Punjab, could prove increasingly attractive, while less developed states fall further behind.
Foreigners also are likely to encounter gridlock when it comes to such tough issues as privatizing state-owned enterprises and managing the rupee and the overall financial system, says Marshall M. Bouton, executive vice-president of the Asia Society and an India expert. On these issues, Bouton says, "there isn't going to be rapid movement forward."
A weak central government won't be as effective in combating the centrifugal forces that challenge India's unity. One of the important fault lines is north vs. south. The BJP, for example, was routed in key southern states, winning just six seats. The reason is that the BJP is viewed as a Hindu-centric, upper-caste party of the north, and southern voters are mostly lower Hindu castes and Muslims.
A particularly prickly issue is language. Television stations in Madras, Tamil Nadu's capital, for example, will not carry news broadcast in Hindi even though it is officially the national language. Moreover, shortly after being sworn into office in May, M. Karunanidhi, chief minister of Tamil Nadu and leader of the regional Tamil Maanila Congress party, issued a diktat ordering all shops and businesses to have their names written in Tamil in addition to English. No one uses Hindi.
What convinces most India-watchers that these forces won't spin out of control is that the country does have a strong tradition of central institutions such as the Reserve Bank of India and the Supreme Court. While China, Asia's other emerging superpower, is more internally cohesive in terms of language and ethnicity, the central bureaucracy in New Delhi should be able to maintain a loose grip despite ever-shifting political currents. In the eyes of some, that might actually be healthy.By Manjeet Kripalani in BombayReturn to top