Election 2009: Indian Political Landscape Uncertain Ahead of Poll Results

Polling in the world's largest democracy ended on 13 May, and election results will be announced by the Election Commission of India tomorrow. For logistical reasons, polling was conducted in five stages in a month-long period from 16 April. Since the last election in 2004, 41 million more voters have registered, totalling around 714 million this year. Across 543 constituencies (each of which elects one member to the Lower House of Parliament, the Lok Sabha), more than 800,000 polling booths were set up, and 6.1 million security personnel were deployed. The two main contestants in this election, the Congress-led United Progressive Alliance (UPA) and the Bharatiya Janata Party (BJP)-led National Democratic Alliance, are unlikely to gain an absolute majority in Parliament. A myriad of Left and smaller regional parties, some of which have formed their own alliance, the Third Front, are expected to play a key role in forming the future coalition government. The UPA (led by incumbent Prime Minister Manmohan Singh) and NDA (led by former Prime Minister Lal Krishna Advani) are already in a frantic search for allies, in order to gain the needed majority of 272 seats, a goal that both alliances, according to exit polls, missed by at least 70 seats. While it is impossible to predict the outcome of the election, it is possible to map out new trends that have emerged in India's election landscape, as well as the challenges that will need addressing by any new government. Notwithstanding the difficulties in forming a workable government, the constitution mandates that the new government be sworn in by 2 June 2009, putting all parties concerned under pressure to speed up the process of coalition building.

New Trends

Indian politics has undergone massive changes since independence in 1947. While until the 1980s Congress was able to secure simple majorities, this picture has changed with the BJP increasingly eroding the power base of Congress, eventually managing to sweep to power in 1999. Since then, a steady rise of small, regional parties has emerged, eroding both the support base of Congress and the BJP. While to some extent this was so also during the 2004 election, this year witnessed an unprecedented number of parties, some of which contested the election alone, and some of which have joined a "Third Front". Of the myriad small parties, the most prominent and potentially influential is the Bahujan Samaj Party (BSP) that has mobilised the vote of Dalits or "untouchables" in Indian society. Despite affirmative action programmes instituted by the government, this caste remains discriminated against in Indian society. Led by Mayawati Kumari, herself a Dalit, the party has spread from its powerbase in the state of Uttar Pradesh (UP) by appealing to the country's low-income groups, cutting across caste and religious lines. The BSP won an outright majority in UP in 2007 in a major electoral upset and the state retains significant influence over the federal balance of power, returning 80 MPs to the legislature. Although lacking a clear manifesto, the party's alignment with the disadvantaged will resonate strongly among communities disenfranchised from recent accelerated economic growth. But there are a multitude of other parties that are expected to gain a significant share of votes, including the Communist Party of India (CPI), the Communist Party of India-Marxist (CPM) in West Bengal and Kerala, the All India Anna Dravida Munnetra Kazhagam (AIADMK) in Tamil Nadu, and the Janata Dal (United, JDU) in Bihar. Smaller political parties are also less likely to engage in pre-election alliances this year, and it appears that those who did are highly flexible to change allegiances as needed. This has made any prediction of election result, and any planning difficult if not impossible, highly frustrating the business community. The large number of political parties contesting the election alone means that many could end up as potential kingmakers to the prospective government.

Challenges Facing the Future Government

The challenges that any future Indian government has to address are massive. The economy faces a brisk slowdown as growth is expected to fall below 7.0% in the current fiscal year and could even drop below 5.0% in fiscal year 2010 as the global slump continues. As a result, the Indian economy is in dire need of stimulus packages that the Central Bank has warned cannot be supported by the current deficit-encumbered budget. Boosting revenue generation to release resources for development spending would require tough reforms to tax laws, but given that lower income groups are hit hardest by the worldwide economic downturn (and these form the majority of the electorate) such reforms are unlikely to be made. In order to make India more attractive for investment, heavy investment is especially needed for the country's infrastructure. As the income gap widens across social strata in India, it is essential to initiate pro-poor reforms in order to prevent social unrest and communalism. This includes improved policy on jobs, housing and health. In addition continued liberalisation and deregulation of the economy, which has added propulsion to growth in recent years is required to bolster non-debt creating inflows of foreign direct investment (FDI) into export-oriented manufacturing sectors. India needs to expand its manufacturing base to absorb excess labour from the agricultural sector. The prospective government also faces various sources of internal and external security challenges, including a growing Naxalite insurgency that has gripped up to 40% of India's territory. There are also various insurgencies raging in north-east India. Furthermore, relations with Pakistan, not only over Kashmir, but especially over the handling of militants in Pakistan will be key issues to address. This issue is especially pressing after the November 2008 attacks in Mumbai, after which India has accused Pakistan of turning a blind eye to extremism on its territory—an event which saw the gradually improving relations between the two deteriorate sharply.

The party manifestos of both Congress and the BJP are quite similar in terms of proposed solutions to the country's problems, even though the language chosen differs markedly. Economically, both parties broadly subscribe to the liberalisation of the Indian economy although pro-poor policy commitments will be undermined by the hard realties of the budget. In terms of national security, the BJP retains its hard stance against terrorism and illegal immigrants, while Congress has vowed to take a tougher stance against terrorists. On the social policy front, both parties promise to enact massive pro-poor packages that range from comprehensive social security provisions to minimum food rations. The main difference between the two parties remains ideological (with Congress appealing to the centre-left, and the BJP to the centre-right). However, the business community is highly concerned about the programmes of some of the smaller parties, especially those situated in the far political left. Most leftist parties have put forward plans to roll back previous, and block future, reforms aimed at liberalising the economy. Reforms affected include those on labour laws, the nuclear deal with the United States and major reforms on foreign investment. The business community's fears over the stake of the Communists in government are reflected by the Indian stock markets. Yesterday, the stock markets rose significantly after claims of the incumbent Congress party that it is certain to be able to form a ruling government without the help of the Communists. However, in the past weeks Congress has repeatedly reached out to the CPM and other Leftist parties. While the Left has rebuffed Congress on this on a number of occasions, statements of leaders of the CPI and the CPM suggest that the Left is also intent on preventing a BJP-led government.

Outlook and Implications

Fears are that a coalition government put together with parties with highly divergent goals could severely hamper much-needed progress on key reforms. There are also doubts as regards the longevity of any such government. However, while a hung parliament is widely expected, it is also true that this time analysts are highly unsure as to the more specific outcome of the election. As a result of the political uncertainty the domestic as well as international business community has been hesitant in coming forward with new investments, and the U.S. government is highly cautious in approaching India with regard to its newly formulated Af-Pak strategy, in which it says India plays a major role. The new trends that emerged in the conduct of this election suggest that in the long term unstable coalition governments are likely to increasingly be the norm as the political environment is increasingly fractured. That could frustrate the implementation of coherent and long-term policies required to boost economic development while weakening the power of the legislature in favour of the bureaucracy, which is riddled with endemic corruption. It could also result in increasingly distinct regional tiers in India where states with a dynamic and effective state government develop faster than those without. Localised, state government could also begin to take precedence over the federal administration and national issues. The emergence of special interest parties such as the BSP are perhaps indicative of this fracturing of the political environment and the emergence of special interest politics.