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Secular socialist stagnation

A spectre is haunting the Congress. It is the spectre of Narendra Modi. He has been denounced from the rooftops by Congress spokespersons and their helpmeets in the media. But he seems to swell rather than shrink in the public imagination. In its desperation, the Congress does not know whether to ignore him as an insignificant provincial leader, not to be compared with Rahul Gandhi, the next ruler of the Congress and hence by implication of India for ever and ever. Or to shout from the rooftops ‘Fascist, Fascist’.

When the BJP chose Modi or rather he thrust himself upon the leadership, the Congress should have been ecstatic. Here was an opponent tailor-made for Congress imagery of the communalist BJP versus the shining secular Congress. Surely game set and match for the Congress. But in poll after poll, a picture is emerging. The Congress lags behind the BJP in vote share and seat projection; Rahul lags behind Modi in popularity. Why this turnaround? Have the people who were so faithful to the Dynasty for its “sacrifices” turned irrational or just ungrateful?

The answer is—It’s the Economy Stupid. The Indian economy is in free fall. Inflation has been relentlessly high for nearly four years now and shows no sign of slowing down. The current account deficit is high as is the budget deficit, even at 5 per cent. The rupee displays the symptoms of the fevered economy. It is not just the latest move by the US Federal Reserve which is the cause. Economists including Raghuram Rajan and Duvvuri Subbarao were warning as long ago as March 2012 that we could relive the 1991 crisis. It is inflation which is the killer and has alienated voters against the Congress. With the rupee declining, inflation will get worse.

The wound is self-inflicted. It comes from the Congress’s split personality. Its liberal economist wing wants growth, fiscal discipline, low inflation. Its socialist wing wants redistribution, believes inflation is an instrument for securing such redistribution, trashes growth and only wants to promise more entitlements and spend money. The economists live in an emerging yet poor economy. The socialists have decided they are in a Western European dispensation and are in a hurry to build a welfare state.

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