International -- International Business: INDIA
AFTER THE VOTE, CAN INDIA'S CENTER HOLD? (int'l edition)
Regional forces are grabbing power from Delhi--and that may be a good thing
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, usually led by a Gandhi family member, 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 as never before in the country's postcolonial history.
The Bharatiya Janata Party (BJP) emerged as the largest single party from national elections in early May and on May 16 was asked to form a new government. But the nationalistic Hindu party did not have enough seats to form a sustainable government by itself, and other parties resisted joining a BJP-led coalition. 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 workable government. The BJP has until May 31 to build a coalition and win a vote of confidence in Parliament.
WEAK AND SHORT-LIVED. The BJP, which is mostly a northern, upper-caste party, sharply protested the fact that the United Front was playing upon regional and caste rivalries by working with the Congress Party, which was thoroughly trounced in the elections. Says BJP economic spokesman Jay Dubashi: "They're ganging up against us and making plans. It's almost North vs. South." If the United Front does form the next government, the new Prime Minister would be Deve Gowda, chief minister of the southern state of Karnataka, who has no national profile. Current Prime Minister Atal Behari Vajpayee would be forced back into the role of opposition leader. Investors, meanwhile, were suffering a bad case of whiplash. The Bombay stock market, which rose 69 points to 3,796.29 on the prospect of a BJP government, dropped 150 points by May 21 as uncertainty spread.
Whatever government emerges, the prevailing view is that it will be weak and short-lived, with new elections likely in a year or so. Pessimists argue that a new political alignment in the world's largest democracy means India's nation-state is at risk of breaking up. The fact that the United Front, a hodgepodge of communist and socialist parties from far-flung regions, catapulted to prominence does seem to guarantee that shifting coalitions of parties and interest groups will make India harder to govern. "This is going to be a permanent fixture," says Ajay Upadhaya, a respected New Delhi-based commentator.
But other analysts say more decentralization might actually benefit India. Harold A. Gould, an India scholar at the University of Virginia, believes individual Indian states will compete even more intensely with each other for foreign investment and thus will remain committed to liberalization and 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."
Indian diplomats and intellectuals also say their country's economic progress will stay on track, no matter which political party wins. Even communist-governed states such as West Bengal and Kerala, they argue, support continued economic opening. "As market forces take over, the control of the center will become more tenuous," says Sunny Oberoi, managing director of Capital International India.
Under any scenario, the U.S., European, and Japanese multinationals that have invested in India 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 nearly as much as they once did. More advanced Indian states, such as Maharashtra, Gujarat, Karnataka, Punjab, and West Bengal, could prove more attractive, while less developed states, such as Bihar, Orissa, and Uttar Pradesh, risk falling further behind.
Foreigners also are likely to encounter some policy gridlock when it comes to such tough issues as cutting India's budget deficits, 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 key issues, Bouton says, "there isn't going to be the kind of rapid movement forward that many would like to see." A government dominated by the United Front, for example, would be tempted to increase spending for groups such as farmers that have been hurt by reforms.
A weak central government also won't be as effective in combating the centrifugal forces that always challenge India's unity. One of the most important fault lines is north vs. south. The BJP, for example, was soundly 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. Ashis Nandy, a political psychologist at New Delhi's Center for the Study of Developing Societies, says voters in the south are mostly lower Hindu castes and Muslims and don't trust the BJP. Conversely, the Congress Party is now considered a party of the south because it won most of its seats there.
North-south friction dates back 3,000 years, when the Aryans swept into India, subjugated the local Dravidian population, and drove them south of the Indus River. Contemporary friction began in 1947, the year India became independent. For 44 years, until 1991 when P.V. Narasimha Rao became Prime Minister, every Premier India produced came from north India.
NO HINDI. If these tensions flare, it could threaten any central government's ability to retain even a nominal role. One prickly issue is language: In 1947, Hindi, predominantly spoken in the north, was declared the national language, prompting sporadic riots. To this day, television stations in Madras, Tamil Nadu's capital, will not carry national news broadcast in Hindi by state-owned stations.
Moreover, the immediate reaction in the south to the BJP's even attempting to form a government was an upsurge in ethnic activism. 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 and advertising billboards written in Tamil in addition to English. No one would willingly use the Hindi language. "There has been a southern resurgence," comments a Madras-based executive.
What persuades 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