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National Observer Home > No. 63 - Summer 2005 > Articles

India's 2004 Elections: Implications for the Future

Sharif Shuja

Sonia Gandhi's Congress Party defeated the Vajpayee's Bharatiya Janata Party (B.J.P.)-dominated National Democratic Alliance (N.D.A.) in the 2004 Lok Sabha elections. The results announced on 13 May 2004 have been said to be one of the biggest upsets in Indian politics since independence. The Congress won 145 seats to become the largest single party for the first time in almost a decade, followed closely by the B.J.P., which won 138 seats. The Congress-led alliance secured 216 seats. So severe was the B.J.P.'s defeat that as many as 25 of its ministers were voted out.

Prime Minister Vajpayee conceded defeat and provided his resignation to President Abdul Kalam. Amid safety fears, Sonia Gandhi said that she did not want to become Prime Minister. She declared: "The post of Prime Minister has not been my aim. I would follow my inner voice. Today it tells me that I must humbly decline this post." It is worth noting that extremists killed her husband, former Prime Minister Rajiv Gandhi, and her mother-in-law, Prime Minister Indira Gandhi.

Manmohan Singh, the former Finance Minister, who launched India's shift away from a state-run economy in 1991, became the new Prime Minister.


Every society leaves behind symbolic as well as material debris among its old monuments and ruins. Election time is a particularly significant time to examine which slogans and symbols survive and which undergo transformation.

Indian election slogans generally revolve around ideas of unity, stability and innovation. "India shining" and the "feel good factor" were the slogans of the B.J.P. "India shining" had been coined following the recent upswing in the economy, which registered 8.5 per cent annual growth rates in the last quarter of 2003. The B.J.P. argued that India was thriving, its economy was growing, industrialisation was taking place, agriculture was giving good returns and everyone was consequently feeling "good". However, this did not translate into votes.

The main opposition party, Congress, accused the B.J.P. of trying to "cover up its glaring failures". It highlighted the first-time negative employment growth that the country had seen during the N.D.A. years, with unemployment crossing the 10 million mark. Congress also debunked claims of high G.D.P. growth rates, maintaining that during the N.D.A.'s five-year rule, the growth rate was just five per cent, and it was only in the last quarter of 2003 that it reached 8.5 per cent.

More than a quarter of the populace continued to live below the poverty line, unemployment was on the rise, prices of essential commodities were rocketing, social tension had increased and atrocities against women and minorities were increasing. The United Nation's 2003 human development report calculated that 47 per cent of Indian children under the age of five were under weight. An estimated 300 million Indians survive on less than $1 a day, and 160 million lack access to clean water.

Over the past four years, the B.J.P. government brought little significant change to the life of the common Indian citizen. Merely spreading Hind-utva teachings, it failed to impress ordinary Indian people, who received little comfort from the rhetoric.

However, while India supposedly "shone", it was noted that immigration to Western countries continued to rise. The favoured destinations were Canada, Australia and New Zealand. On a purely material level, of course, Indian has some grounds for optimism, but the core issues like corruption, lawlessness, poor infrastructure and the dirt in the streets remained the same.

India's resurgence, unfortunately, failed to reach the hundreds of millions living in poverty in rural areas, where electricity, jobs and clean water are luxuries. It was rural Indians who voted in decisive numbers, not the urban upper class that has been the main winner from the boom. The B.J.P. also invited sharp criticism from the opposition after turning a blind eye to attacks on the Muslim minority. This minority factor was also an important election issue.

A defining element of Indian politics since independence has been a commitment to secularism. India is a secular state, but it has to deal with the "problem of Islam" and the Muslims. Muslims in India are persecuted from time to time. That secular commitment is at risk from an aggressive brand of Hindu nationalism that equates Indian national identity with Hindu religious identity. The country's radical nationalists view the secular political system as a threat to Hindu identity, largely in view of the power it offers India's 140 million Muslims. Weakening, or even abolishing, the secular state has therefore become part of the radical nationalist agenda.

This may force Indian Muslims — traditionally moderate and supportive of the secular state, even on the sensitive matter of Kashmir — to shift their allegiance from the state to some sort of larger international Islamic movement, as many Muslims have done in Indonesia, Malaysia, and Singapore. Such a radicalisation of religious identities is a matter of serious concern in a nation of a billion people that possesses a nuclear arsenal and has had troubled relations with its populous and nuclear-armed Muslim neighbour, Pakistan.

Radical Hindu nationalism is a dominant form in mainstream Indian politics. The B.J.P. is a nationalist party whose goal is to convert India into a Hindu nation. The Hindus are profoundly religious, but this religiosity had become more active and aggressive with the injection of nationalism. The ideology of the B.J.P. threatens not only democracy but the unity of India itself. Its most violent elements were responsible for the destruction of the Babri mosque in the small city of Ayodhya in the state of Uttar Pradesh in the north of India. On 6 December 1992, a mob of 300,000 fanatics, brought together by the party and other extreme right-wing groups, destroyed the mosque and quickly built a shrine dedicated to Rama. The result was a series of riots in which more than 1,500 people, largely Muslims, died.

Similarly, the B.J.P. turned a blind eye to attacks on the Gujarat Muslim minority that killed some 2,000 people in 2002. An Indian tribunal investigating the massacres found that Hindu nationalist groups had methodically targeted Muslim homes and shops. Local and national security forces failed to respond adequately to the crisis as it unfolded: initially the state police did not intervene, and the central government only belatedly sent troops to Gujarat to restore order.

On the whole, the Gujarat episode left Indian Muslims feeling neglected by the government. It also destabilised the Vajpayee-led coalition government. From the 21 coalition partners to media and vibrant Indian civil society organisations, there was a great disregard and rejection for the hard-line policies of the Vajpayee regime.

The communal riots in Gujarat alone cost the nation millions of dollars not only in property damage, but also in lost productive time (grief, injury and stress causing under-production), recovery costs (treatment, loss of experience, retraining of new incumbents) and other costs (legal, administrative and social). All these factors contributed to the defeat of the B.J.P. in this election.

The Economy

The Indian economy has been a proactive one; it has done very well through its decentralisation process. This is a good opportunity for the new government to drive forward the reform process. The idea of decentralisation has consistently proven its merit. Economists argue about the way a modern national economy functions, but almost all agree that the best role for government is to provide economic incentives rather than any kind of direct coordination. The weakness of centralised economies and organisations — indeed the reason history has come down on the side of decentralisation — is that centralisation inhibits the development and flow of ideas. And ideas are the currency of the twenty-first-century economy.

Today's business organisations will succeed or fail on the quality of their ideas and on the speed with which the best of those ideas can be implemented. Organisations that foster an environment where creativity is rewarded, and that discourage rigid adherence to hierarchy, will best be able to meet the challenge of this new century.

Through the decentralisation process, India became the second fastest-growing economy in Asia (after China). However, India's economy remains fragile in many respects, beset by inefficiencies. A weak transportation system, inadequate communication and electrical infrastructure, and an obstructionist bureaucracy may make it hard for India's economy to match China's spectacular growth.

India is the fourth largest economy in the world and, despite its reputation as a third-world economy, its achievements include being at the forefront of many areas of innovation. It is a world leader in the computing and technology sector and is one of a handful of countries in the world with a space programme.

India's economy grew at an annual rate of 8.5 per cent in the last quarter of 2003. Under the B.J.P. government, India was thriving, with a booming economy. Now the Congress-led United Progressive Alliance (U.P.A.) Government is in power. So, in economic terms, what does the change of government mean for India?

Will the economic reform process continue at the pace set by the previous rulers? Will the investors keep pouring funds into the country? Will the current level of development of infrastructure be maintained?

India's economic liberalisation policy remains unchanged. Congress Party officials have reaffirmed that it will seek to increase foreign investment and push ahead with reforms, a process that it initiated when in power in 1991. The party's economic strategy aims at reducing barriers to investment, simplifying bureaucracy, streamlining taxation and trimming the state's role in the economy, all with the goal of pumping up India's G.D.P. growth rate. However, policies that were the hallmark of B.J.P. rule, such as the privatisation of state-owned enterprises, will likely be put on hold.

The Road Ahead

In many ways, there is likely to be more continuity than change. The development in infrastructure is likely to continue, as any political party which allowed the process to falter would suffer an electoral backlash.

For India to sustain a high rate of economic growth, it will need to attract much more foreign direct investment. India's grossly inadequate infrastructure is a significant disincentive for political investors. There are occasional reports about daily water and power cuts, poorly functioning ports and airports, and a deteriorating road system. Improved infrastructure not only offers opportunities for employment, but also raises standards of living, reduces transportation time and costs, and attracts foreign investors.

Accounting for over 20 per cent of global trade, the European Union is keen to extend its relationship with India. The European Commission — which is the executive arm of the world's largest common market with a single currency — has proposed to the European Council a strategic partnership with India in view of its impressive economic growth, size, economic and military clout in the region, and importance in world affairs. The Council's view provided the basis for discussions at the fifth India-E.U. Summit held in The Netherlands in October 2004. Underlying the move for strategic partnership is their deep commitment to democracy.

As India becomes a more significant player in the global economy, it will become an increasingly important trading partner for Australia. Already, Australia is India's eighth largest investor. Australian companies have joint ventures in India in manufacturing, telecommunications, hotels, minerals processing, food processing, oil and gas, and the automotive sectors. India is also likely to become a more significant investor in Australia in the areas of copper resources. In December 2002, India made an agreement with the West Australian Government to build the world's largest ammonia plant. India is already an important consumer of Australian education services, and is now the ninth largest source of overseas students to Australia.

Economists predict that India's recent strong growth in services, manufacturing and exports will continue. Most of the key portfolios in Dr. Manmohan Singh's Government have been allocated to experienced Congress M.Ps. Two ministers in particular — P. Chidambaram in finance and Kamal Nath in commerce — are well respected in international circles.

However, the election is serving as a reminder to Indian politicians that India must not neglect the many poor and rural voters who simply have not benefited from the economic-reform process.

In other words, the U.P.A. Government has to deliver quality primary education, clean drinking water, basic health care and roads to the villagers. If that Government merely continues the old policies, it will lose touch with the people, which will be a prescription for losing office.

National Observer No. 63 - Summer 2005