Before winter, the fall

Common understanding of the stock market is that whenever there is political or economic instability the market starts crashing and the sensex begins moving southwards. In India, just the opposite is at display. In the last two months of political instability caused by the Left threat to withdraw support from the UPA government if it chose to operationalise the civilian nuclear deal with the US, the stock market has gone up by 3000 points. Does this indicate robust market sentiments that are unmindful of what happens in the realm of politics, or do the investors bringing funds to the Indian bourses have a different view of the political crisis? Do they feel that the Left-UPA face-off is not for real and the government’s stability would not be undermined? Or do they have a different agenda?

Despite the inherent contradictions in the attitude of those investing in the Indian growth story, there is no denying the fact that the investors are getting big returns from a throbbing stock market. There is no such luck for those who only benefit in an environment where the government looks coherent, purposive and decisive. The UPA government, since the nuclear deal crisis broke out, does not look any of that. It looks confused, diffident and on the defensive. Prime Minister Manmohan Singh’s presence may be buoying the stock market, but it is hurting the business of governance that thrives in an environment of political stability. His insistence on pushing the deal, even when the Left parties that sustain the coalition are opposed to it, shows his refusal to get real. If the Left pulls out and the government falls, then whatever deal that Singh signs would collapse. So, why this insistence?

In one of his media interactions, the prime minister had said that his government was not confined to “one issue” alone and he had a lot of other things to do. We could not agree with more! There are scores of pending issues that should ideally occupy his concern. This ranges from fighting terror, beefing up internal security, sorting out the muddle in our foreign policy ( Burma, China, Africa, for instance) and creating credible delivery systems to give meaning to radical  programmes like the National Rural Employment Guarantee Scheme or the miserable unorganised sector. But nothing like that has happened as these programmes were not invigorated by participatory politics and remained in the deathly control of the rapacious babu-contractor nexus. Singh cannot entirely be blamed for this mess as he inherited a legacy that was corrupt and chaotic, but this ‘nuclear obsession’ without articulating the benefits of ‘other’ closer strategic ties with the US, has made his government dysfunctional. In the absence of any political clout within his own party and outside, he looks inadequate to handle such a controversial deal. His cabinet colleagues and allies do not share his conviction and are aggressively pushing him to change his mind.  They do not understand why signing the deal should mean facing fresh elections when there is no guarantee that Singh or Sonia Gandhi can lead the ruling combination back to power. Due to these manifest shortcomings, the government and the party seems to be in the throes of a fierce power struggle. Much of the antagonism over the deal among the allies and outside is stoked by Congress leaders who see this as a chance to de-legitimise the prime minister and force his exit. Sonia Gandhi and the 30 index stock market maybe backing Singh, but in a largely non-monetised economy where voters are scrounging for one meal, this support is unlikely to deliver the goods electorally. Indeed, MPs who do not want early polls are rallying around so as to allow Parliament to complete its full term. In this season of instability, the dice is surely loaded against the prime minister.