Cover Story: Politics


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The second referendum on Modi propels reforms
The state elections of Maharashtra and Haryana, which together account for 378 assembly seats, were touted as an acid test of Prime Minister Narendra Modi’s vote- catching ability and his enduring appeal as a leader who breaks caste barriers and takes apart the stomping grounds of political dynasties. Pundits were in a hurry to give a verdict whether the Modi magic, on full display during the General Election of April-May, had waned since then. They were curious to see whether he could still generate a cascade of support for his party in state elections, where local priorities often outweigh national concerns. These elections were also a referendum on BJP President Amit Shah, his first full-fledged election since assuming the party’s top post. Any electoral reverse would have had the commentariat and political rivals calling Shah a one-time wonder, having micro-managed caste arithmetic and the BJP campaign successfully in the Lok Sabha polls as the party’s pointperson in Uttar Pradesh.

Yet, Shah was ready to take the risk of pulling out of the party’s alliance in Maharashtra with its recalcitrant ally, Shiv Sena, and go it alone. He had his reasons, though he found it difficult to convince party colleagues early on. Some leaders, like Union Minister Arun Jaitley, were worried about any possible electoral setback being portrayed as Shah’s failure as president. Others were averse to taking such a risk within months of a resounding victory, insisting on the status quo. Besides, the tie-up was several decades old, and never had the BJP fought elections alone in Maharashtra, where the Sena— known for its abrasive ways—was used to playing the dominant partner. Back in those days when the late BJP leaders Pramod Mahajan and Gopinath Munde would discuss the alliance’s strategy with the Sena founder, the BJP’s list of candidates would usually be rejected outright, with a new list handed over by the late Balasaheb Thackeray—with no questions asked; BJP leaders would quietly swallow the insult.

That was then. Under new circumstances, Shah had other plans. He had already sensed a groundswell of support in the state for the BJP, thanks mainly to Modi. “I had extensively toured both the states (Maharashtra and Haryana) well before the election campaign had begun (polls were held on 15 October and results declared four days later). And by the time I returned, I was not ready to compromise my cadres’ self-respect any longer. My decision was clear: any tie-up had to be mindful of the interests of the party and cadre,” says Shah in an exclusive conversation with Open, a day after his party has won a majority in Haryana and become the single-largest party in Maharashtra, where the BJP has won over 100 seats. No party has secured more than 100 seats in Maharashtra elections in the past 24 years. The BJP has bagged 123.

When Shah broke the news of snapping ties with the Shiv Sena at a BJP Parliamentary Board meeting, Modi was preparing to leave for his tour of the US. Modi, who would return to address some 27 massive rallies, left the decision to Shah’s discretion. Many others were fidgety, and soon, party veteran LK Advani would argue that the BJP should keep the coalition in the state intact. Shah’s logic was clear and he wouldn’t have the old guard offer him tips. “[Such] coalitions took shape when the country lacked a credible leadership and parties lacked geographical spread,” he says, emphasising that the BJP’s base had grown manifold over the years. The current party leadership’s apprehensions of fielding Advani in the campaign were vindicated when he suggested a patch-up with the Sena right after the poll results were announced on 19 October. “He would have been a reluctant campaigner, not someone who would have lived up to the aggressive nature of the campaign that saw bitterness between the allies come to the fore. Shiv Sena’s rowdy behaviour and regionalistic indiscretions came under sharp attack. He would have remained soft,” says a senior BJP leader from Maharashtra.

Shah knew whom he was betting so big on. “But we are at a time now when we have an undisputed leader in Modi, with large approval ratings. The BJP, too, has grown much beyond its traditional strongholds and support base. BJP has now become the principal pole in Indian politics,” he tells Open

Shah wouldn’t want to dwell on the intricacies of the snapping of ties with Shiv Sena, but party insiders say that the BJP President’s problems with that party, now led by Thackeray’s son Uddhav, were strictly over professional concerns. “Shah, an organisational wizard, resented parleying on equal terms with a man who has 100 per cent less efficiency compared with his father and 100 per cent more arrogance,” says a BJP leader.

Once the decision was taken, Shah didn’t want the likes of Advani at the stump. He didn’t want a person devoted to the sanctity of an uneven alliance to dampen a fiercely fought election, which saw a fierce exchange of words between the two allies. But Shah had his team in place. Emboldened by the central leadership’s resolve to fight the polls alone, the BJP cadres swung into action; it was an opportunity for them to make the most of Modi’s popularity. For his part, Shah didn’t want to leave anything to chance. As always, he was in high-energy mode, barely sleeping and managing the war room. He also had senior leaders from other states assisting him. While Union Minister Ananth Kumar was put in charge of monitoring the situation in Delhi, Radha Mohan Singh and Manoj Sinha were in charge of Hindi-speaking urban areas of the state; Bhupender Yadav and Santosh Gangwar were managing the affairs in Hindi-speaking rural areas. Union ministers such as Dharmendra Pradhan and Nitin Gadkari were also thrust into action in Maharashtra. Rajiv Pratap Rudy did a commendable job, organising rallies across the state, especially those addressed by Modi. Every 50 wards (the list of which typically appears on a single page, or panna) had a senior BJP leader in charge (called ‘panna in-charge’).

Shah, a master of grassroots India, knew of the crack- up of the incumbent Nationalist Congress Party-Congress party alliance before walking out of the Sena-led coalition in Maharashtra. The Congress would accuse the BJP and NCP of an unholy plot, but the BJP has denied engineering any such political coup. “Had that been the case, how come we went hammer-and-tongs against the NCP during the campaign? How come Modiji campaigned in NCP chief Sharad Pawar’s pocketboroughs that no national leader since Indira Gandhi had ever dared enter?” asks a BJP leader from the state.

After the victory, Uddhav called Shah to congratulate him. Shah thanked him, and contrary to the expectations of the Sena leader—whose party mouthpiece Saamna suggested mending ties a day ahead of the poll results— Shah didn’t discuss politics. However, there was no dearth of speculative reports in the media of the Sena approaching the BJP for plum posts in the new cabinet. A senior BJP leader laughed off such reports, saying no one in the party has shown any inclination for a rapprochement with the humbled ally. The leader contended that contrary to perceptions in a section of the media, both the BJP and RSS are on the same page on this issue. “The Sangh leadership has given us a blank cheque to act on what we think suits our interests in Maharashtra,” he says without elaboration, but adds that the BJP is in no hurry to negotiate with any party. “Let the party cadres celebrate. It is their moment.”

Shah thought of the Maharashtra gamble as a long-term strategy. After all, party workers were disillusioned with the alliance. Besides, the growth of the BJP in the state was slower than expected, with aspiring leaders preferring to join the Sena instead because it was the dominant partner, the one presiding over ticket distribution. “We were ready to break new ground. We wanted the BJP to grow in this fertile state and we have many committed leaders with unblemished records in public life, and here we are,” says Shah.

Modi Blitz, Again

The Prime Minister never stopped fighting, even after reducing the Nehru-Gandhi dynasty to irrelevance in the General Election earlier this year. He has shown no mercy to the political parties he has felled in the process; he continues to target them aggressively, and he did so in the Maharashtra polls as well. His primary intent was clear: to expand the BJP’s turf and gain control of the Upper House of Parliament, the members of which are elected by an electoral college of state legislators.

An hour before he was to depart from the US after a blockbuster tour, Modi called up leaders back home and asked them to draw out a ‘hectic’ campaign schedule for him. While in America, his Madison Square Garden address had created just the ripples he’d wanted back home. The image of an Indian leader enthralling crowds overseas, impressing bureaucrats and sharing cheerful moments with US President Barack Obama had inspired national pride. That successful visit lifted Modi’s popularity several notches in India, no matter what the pundits had to say about the content of his speeches and the clichés of his pronouncements.

Back from the US, the Prime Minister hit the ground running, campaigning tirelessly to ensure an edge for the party in Maharashtra. He did so knowing well that the state’s Assembly elections were going to be a referendum on his popularity as a crowd-puller. Never short of ideas, he plunged right in, calling for an end to dynasties, referring to the Thackerays and Pawars of politics. To his own delight, Modi’s image as the perpetual dynasty slayer seems to have stuck.

Like President Obama, whom he spent quality time with in Washington DC, Modi too has used his oratorial skills for a political advantage. Like leaders of the stature of Ronald Reagan and Margaret Thatcher, Modi’s capacity to communicate effectively seems to have paid off. Evidently, he has a left a mark wherever he has addressed gatherings, be it at a doctors’ summit or a high-level conclave of businessmen. At the peak of the campaign, on 9 October, he took time off to fly to Indore to address businessmen at a meet aimed at promoting investment in Madhya Pradesh, ruled by his BJP colleague Shivraj Singh Chouhan. His speech at the function stood out, and he was well prepared. The previous night, the gist of what he would speak about was shared with the Chief Minister’s office so that both would not raise the same points. Modi brought up specific issues and challenges facing the state of Madhya Pradesh, and the businessmen in attendance, including those from abroad, were impressed. “He is a natural speaker, but Modi still prepares and knows what to raise and when. He never disappoints anyone while giving speeches and that is a great positive in any popular leader,” says a person close to him.

As the country returns to a phase where the fortunes of regional parties are on a slide, Modi has been able to project himself as a strong-willed ruler who means business. “We are thankfully in a phase where politics of performance matters more. If you perform, you will survive, or else you will perish,” says Shah. Some experts attribute the weakening of regional parties to a super cycle in politics that saw the power of national parties diminish in the late 1960s when the Indira Gandhi-led Congress high command started nominating leaders in states—which led to a lot of bad blood within the party with pliant state leaderships spurring the rise of regional satraps and parties.

Rhythmic Cadence

While Modi focuses on sanitation, women’s empowerment and the effective use of government schemes, he does not believe in doling out lollies. “The new Government of Modi doesn’t follow a one-size-fits-all approach. These schemes have to work. And they cannot be run from Delhi. Schemes need people’s participation,” Shah says. The Modi Government has made it clear through various statements that it would get rid of welfare schemes that have destroyed entrepreneurship. Many poverty economists have failed to look at opportunity costs associated with a scheme like the Mahatma Gandhi Rural Employment Guarantee Act (MGNREGA); in focusing on employment, they forget that the scheme’s outlay could be better spent on the building of rural infrastructure and skilling initiatives that would eventually generate more income for the rural poor and help turn them more enterprising as well. The guarantee of an assured—even if low—income tends to generate laziness.

Modi, however, is not someone who wants to get rid of a useful scheme just because the Congress party was behind it either, party leaders aver. “Modi’s style of governance is presidential. Which is why he decided to make the most of the Unique Identification number (UID) project,” says one of them.

Modi recently rejected suggestions by a few party colleagues that the UID project be done away with. His argument, according to a person close to the matter, was that much investment had gone into it and that it was a useful project. Similarly, he often shoots down suggestions that border on the utopian. A senior leader had suggested that the Ganga cleaning programme be expanded to cover other rivers like the Yamuna. Modi simply said such an expansion would dilute the spirit of the programme that needed single-minded devotion. “We shouldn’t lose focus,” he told one of his Cabinet colleagues. He has, in the past, shot down a Foreign Affairs Ministry proposal not to support plans for a BRICS Bank headquartered outside India. He had said that one needs to be pragmatic in dealing with trade partners.

The Prime Minister has also let action—rather than rhetoric—do the talking while dealing with incursions and attacks from Pakistan. When informed of Pakistani strikes, he asked the Army to give a befitting reply with the gun. Several rounds of mortars were fired for several hours to stun Pakistani forces. Then the guns fell silent on both sides of the border. “Strength respects strength. Pakistan would not have stopped had we not gone for a massive offensive,” a senior Foreign Affairs Ministry official says. According to Delhi-based geo-strategist and author Brahma Chellaney, the mortar-for-bullet response showed that Modi is different from his predecessor, Manmohan Singh, whose peace-at-any-price approach was founded on the naïve belief that the only alternative to do nothing in response to terror was to go to war. “So, whether it was the Mumbai attacks or a border savagery, such as a captured Indian soldier’s beheading, Singh responded by doing nothing. The real choice was never between persisting with a weak-kneed policy and risking an all-out war. Indeed, that was a false, immoral choice that undermined the credibility of India’s own nuclear deterrent and emboldened the foe to step up aggression,” Chellaney says.

A Union minister claims that there is indeed a “cultural shift” underway in Raisina Hill. “The idea is to have bureaucrats and politicians work in tandem to ensure the speedy implementation of projects. That was made a few officials unhappy because they are used to dawdling. Otherwise, the whole Government is working hard. There is fear of being caught napping. Which I think is not bad,” he says. He adds that it is a “renewed sense of purpose” that prompted the Government to go ahead with big-ticket reforms such as diesel price deregulation and a new pricing formula for domestically produced natural gas. Over the next few months, the Government will unleash its next round of reforms by implementing the Goods & Services Tax (GST) and going for higher foreign direct investment (FDI) in insurance and pension, says the minister. “A new coal allocation policy is also being drafted,” he adds.

The victory in these elections (in a departure from tradition, Modi was the face of the state polls too) is expected to give a big push to Modi’s initiatives. “After all, with Gujarat and Maharashtra (likely) under its control, the party will have control of states that contribute 22 per cent to the country’s GDP. That gives enormous confidence to any ruler,” says the Union Minister.

Certainly, state-election victories are expected to give Modi more strength in the Rajya Sabha, which will see many members retiring by 2016. He would be less constrained then to push ahead with key pieces of legislation that may otherwise face resistance in the Upper House, where the BJP is in a minority. Maharashtra and Haryana together send 24 members to the Rajya Sabha. At the moment, the BJP has two Rajya Sabha seats from Maharashtra and none from Haryana. The party has over the past one year won several state elections, and wrested control of Congress-ruled states like Rajasthan. Which means Modi’s goal of a majority in the Rajya Sabha is likely to be achieved. It is just a matter of time.

Red Tape to Red Carpet

So far, the Modi Government has been trying to undo the damage done by the previous Congress-led Government, which had promoted cronyism besides harassing other businesses. Its latest move is to reduce the time of registering a company to a single day from 27 days (as estimated now), as part of a series of measures aimed at making the process of doing business in the country less cumbersome. Currently, on the World Bank’s ‘ease of doing business’ index, India ranks 134 out of 189 countries listed, way behind China and even neighbours such as Pakistan and Bangladesh. The Department of Industrial Policy and Promotion (DIPP) would be the nodal agency and it has set a deadline of 3-6 months for the implemention of these changes. A Cabinet note says that the Government also plans to slash the number of taxes. It adds that the DIPP has set timelines for various reforms for ministries and departments. For example, it has been suggested that there should be no inspection of low-risk businesses and only a computer-based random selection of high-risk ones for scrutiny.

The Government move comes in the wake of American businesses referring to a certain ‘fatigue’ in doing business in India. The Indo-American Chamber of Commerce (IACC) has raised concerns about India’s taxation policies. “It is not seen as a tax-friendly country and high-profile cases like Nokia and Vodafone, the last where issues of retrospective taxation came up, worry potential investors,” Asoke K Laha, IACC president, has said.

In the face of huge odds, within months of coming to power, the Modi Government has put in place a mechanism to address the grievances of corporates. Additional Principal Secretary PK Mishra is the new point person of the Government to deal with corporates. Though many top-bracket businessmen may not be able to rub shoulders with their politician-friends the way they did in the past, their concerns can be addressed by Mishra. Anyone who has difficulties in getting clearances for their projects can approach him—a practice that could serve a major blow to cronyism cultivated in the past both by corporates and politicians alike. A senior Mumbai-based businessman couldn’t meet ministers despite spending weeks in Delhi. “Businessmen can meet Mr Mishra. They don’t have to waste their time or that of the ministers. They don’t have to take any circuitous route,” says another Union minister. Businesses have often complained that half their time in getting a project run was spent lobbying in the corridors of power in Delhi.

The Manmohan Singh Government had come under flak over a raft of scams, including allocation of coal- mining rights and spectrum licences to companies that enjoyed the goodwill of the regime. The country’s external auditor, Comptroller and Auditor General of India, had said in various reports that such unethical practices on the Centre’s part had resulted in losses of several lakh crore to the exchequer. The Government of the time also allegedly tweaked policies to suit the needs of friendly corporates, and scared off foreign investors with frivolous taxation measures.

The record of the previous Government in stalling projects by denying environmental clearances for flippant reasons had also generated much controversy. Jairam Ramesh had been ticked off by his own party leadership and his successor in the environment ministry, Jayanthi Natarajan, reportedly lost her job for allegedly seeking bribes to give the ‘green’ nod for held-up projects. She had been sitting on piles of files without giving any plausible reason and in the process slowing investment and hurting investor sentiment. The Ministry of Environment and Forests (MoEF), during Natarajan’s tenure, has been charged with holding up as many as 35 mega projects, each with a proposed investment figure exceeding Rs 1,000 crore. She had denied any wrongdoing, but jokes were rife that all projects that needed a green clearance also incurred a ‘Jayanthi tax’. Her predecessor Ramesh was accused of holding ‘extreme views’ on environmental safety.

“The Congress has brought in a culture of distrust and chaos while dealing with corporates,” says a Mumbai- based industrialist, reeling out a list of “harassments” he has faced from state and central Congress leaders for not paying bribes for getting his projects on track. As late as this month, leaders of the Congress-Jharkhand Mukti Morcha coalition reportedly demanded money from Tata Group Chairman Cyrus Mistry for extending a land lease in Steel City, Jamshedpur.

Meanwhile, the second BJP minister says that though the Modi Government would be friendly towards all businesses, it would be strict with companies that err or indulge in unethical practices. “Only fear of punishment would stop them from committing frauds. We are all for them until they try to cheat,” he says.

He emphasises that the Government has also placed a lot of stress on fiscal management. It has hired US-based economist Arvind Subramanian as Chief Economic Advisor and plans to enlist the support of the likes of Deutsche Bank’s global strategist Sanjeev Sanyal to shape policy decisions. Meanwhile, wholesale inflation in India has slowed to a five-year low of 2.4 per cent in September, the weakest since October 2009, according to Commerce Ministry data. Consumer Price inflation also declined in September.

“A better performance of the BJP in states will certainly inspire Modi to fast-track his reform moves,” says a Congress leader from Haryana, a state where the BJP has crushed two political dynasties and Jat-centric politics in the process (see ‘Shock Therapy in Hinterland’). BJP insiders credit its leaders Anil Jain and Kailash Vijayvargiya for the gains, especially among Dalits, in the state.

Crushing Loss

The Modi bandwagon has not only demolished the Congress party, which won its lowest ever tally in history in the recent General Election, but has also demoralised its cadres and leaders. Most of the grandees of the previous United Progressive Alliance (UPA) have disappeared from the political stage since then. Otherwise highly vocal politicians like P Chidambaram, Kapil Sibal and several others are nowhere to be seen either. This seemingly deliberate effort to stay away from public glare exposes the plight of the Congress that has been repeatedly hammered in elections. While the party clamoured for leader-of-the-opposition status in the Lok Sabha (which it is not entitled to, thanks to its low tally, though the ruling party has the discretion to accord the leader of the Congress Parliamentary party that status), its leaders have disappeared from TV studios, leaving to juniors the impossible task of justifying the Nehru- Gandhi family’s leadership.

The Congress has been relegated to the third position in both Haryana and Maharashtra. Analysts say the party’s setback in Maharashtra’s Vidarbha region is particularly remarkable where its tally has fallen to 10 seats from 24 in the 2009 elections. Separate statehood is a contentious issue in this part of Maharashtra, which comprises 10 districts and has seen hundreds of farmers commit suicide over the years because they could not service their debt to unscrupulous moneylenders.

Political scientists such as Princeton University Professor Atul Kohli believe that unless the Congress gives up its dependence on its first family, it will not be able to grow as a political force. But then, there are no signs that its party workers, fed on dynasty glory, will revolt against the Gandhis—whose control of the party remains unquestioned despite the humiliating electoral setbacks.

“We have suffered a debilitating defeat at the hands of Modi. This has forced many of my leaders to go into a sort of hiding mode. This is not good in a democracy, especially if the party wants to fight Modi and make a return. The party’s senior leader seems to be suffering from a huge inferiority complex, and they all shrink at the mention of Modi. It is surprising. We will have to start highlighting his failures as the opposition is meant to do,” says a former UPA minister. Like most Congressmen, he doesn’t, however, think that Rahul Gandhi is to blame for the “overall failure of our previous government”. Gandhi loyalists have tried hard to shield the family scion—who is largely missing in action—from any attack over the drubbing the party has suffered.

The Manmohan Singh Government was remote- controlled by his mother and it is no secret that Rahul Gandhi himself tried to undermine the Prime Minister’s authority in public through several of his actions. Months before the General Election, he publicly tore into pieces an ordinance introduced by the UPA Government to negate a Supreme Court order on disqualifying convicted MPs and MLAs, describing the Government’s move as “complete nonsense”. Rahul Gandhi’s efforts to distance himself from the previous regime have not yielded any results so far.

It is not just the Congress, the entire opposition seems to be suffering from an inferiority complex that the former minister talks about as Modi becomes increasingly popular. “The seniors of almost all opposition parties tend to feel they pale in comparison with Modi. This is ridiculous. I don’t know how senior leaders in the opposition managed to stay in the limelight when Indira Gandhi was in power,” wonders the former minister.

The non-BJP opposition also seems to be in disarray. “There has been no meeting or public event to express a sense of solidarity among them and their opposition against Modi, who is slowly becoming an all-powerful dictator,” regrets a CPM leader.

The BJP feels that it must sustain its victory momentum and spread its influence to new turf. The party leadership has zoomed in on Bihar and West Bengal as states where it will make all-out efforts to achieve power. In Bihar, where the Lalu Prasad-led Rashtriya Janata Dal (RJD) and Nitish Kumar-led Janata Dal (United) have formed an alliance to keep the BJP at bay, the party wants to dent the caste affiliations of this ‘opportunistic’ alliance through a ‘carefully calculated’ strategy. In West Bengal, where the Communist Party of India (Marxist) is now a shadow of its former self, the BJP hopes to consolidate non- Trinamool Congress votes. The BJP national leadership, emboldened by its performance in the recent assembly bypolls in Bengal where it won the Basirhat Dakshin seat, is hoping to wrest control of the Kolkata Municipal Corporation in the next year’s election and make gains in the 2016 assembly polls.

“Like we want to make Congress-free across India, we want to make West Bengal Trinamool Congress-free,” the second BJP minister said.

Ties with RSS

Senior leaders of the BJP hasten to dispel the notion that there are differences of opinion between the Sangh and the BJP. “Believe me, there is nothing like that. Whoever spread such canards are fools. Especially at the level of Modi and Shah, who are from the RSS, there would be no effort to undermine the role of the RSS,” says a senior leader.

The RSS has a new leader to engage with the BJP, Krishna Gopal, who has worked closely with Shah and other leaders. He was deputed by the RSS to help with the election campaign in Uttar Pradesh. “We enjoy great rapport with him, just as we enjoyed good relations with Suresh Soni whom Gopal replaced,” the senior leader adds. “Modiji and Amit Shah cannot do a thing that would earn the RSS’s displeasure.”

Perceptions outside may be slightly different, but having the RSS on board will definitely help Modi forge ahead, as his campaign doesn’t seem to end. His cause is greater power, and he needs all hands on deck.