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Cong’s big chance and threat by Manini Chatterjee

The Congress today appears besieged and beleaguered with key allies and even members from its own ranks lining up behind the combined Opposition in vehemently opposing the Manmohan Singh government’s decision to allow FDI in multi-brand retail.

But, paradoxically, this state of siege — reflected by the prolonged deadlock in Parliament with a quasi no-confidence motion hanging over it — also gives the Grand Old Party a great opportunity not just to end the state of drift that has plagued UPA II since 2009 but also multiply its political capital by reaching out to the two key constituencies that stand to gain from the FDI decision: farmers and consumers.

The Congress leadership seems to have intuitively realised this because it has firmly stood by the government this time round, even willing to face an adjournment motion rather than order a partial or complete “rollback” as demanded by practically every political party, barring the Akalis.

Normally, there should be nothing surprising about the ruling party backing its government.

But in India, ever since the Narasimha Rao government unleashed economic reforms two decades ago, this has rarely happened. The Congress was always uneasy, if not downright hostile, to what came to be known as “Manmohanomics” or what the Left unfailingly described as the “IMF-World Bank-WTO-dictated anti-people new economic policy”.

The economic reforms were tolerated on the grounds that India had no other choice when faced with an unprecedented crisis in 1991. But the Congress never embraced it, and always sought to differentiate between the party’s “pro-aam aadmi” inclinations and the government’s LPG (liberalisation-privatisation-globalisation) orientation.

Ironically, it was the BJP-led NDA — which is now at the forefront of opposing FDI in retail — that was much more unapologetic about continuing with the policy of economic reforms. The BJP was also much more explicit in extolling the visible prosperity that these reforms had brought to sections of the Indian people, notably an expanding urban and semi-urban middle class. It was this understanding that led BJP leaders to overstate the “feel good” and “India Shining” theme in the 2004 Lok Sabha elections which badly backfired at the hustings.

When the Congress unexpectedly won enough seats to head a coalition government in 2004, the old dichotomy between party and government did not disappear. Even though Sonia Gandhi chose to make Manmohan Singh — the face of economic reforms — the Prime Minister and the two shared an exemplary rapport, the ideological distinction between the Congress and the government remained.

Since UPA I was dependent on Left support, the government was unable to carry out “second-generation reforms” — but it was not as if the Sonia-led party was too keen on pushing for reforms either.

This became all the more clear when UPA II — unshackled by the Left — dithered on taking any bold liberalisation measures, much to the dismay of India Inc. While Congress stalwarts, notably Pranab Mukherjee, became vociferous advocates of reforms that led to high GDP growth, the basic understanding was that growth would lead to more revenues which in turn would help finance massive social welfare programmes such as the MGNREGA, Sarva Siksha Abhiyan, National Rural Health Mission, and the proposed food security provisions, et al.

In other words, the Congress did not see any direct benefit from liberalisation in terms of mass support but tolerated the government’s pro-reforms agenda in so far as it could finance “aam aadmi”-centric largesse that could bolster the party’s electoral fortunes.

In this backdrop, the government’s decision to allow FDI in retail is a potential game-changer. Unlike other reform measures which were seen, at least initially, as benefiting only corporates, multinationals and a narrow urban middle class, this decision — if implemented and played rightly — has the potential to reach out to vast numbers.

If farmers stand to benefit from much better remuneration for their produce, particularly in the case of perishable food products, consumers stand to gain from lower prices as a result of organised retail and the fierce competition it is likely to engender.

The voices from the fields have already given an inkling of the farmers’ support waiting to be tapped. Peasant leaders not just in Punjab but even in suicide-ravaged Maharashtra have been far less opposed to the idea of FDI in retail than Opposition leaders or traders’ associations. They have argued that organised retailers, at the very least, cannot be worse than the exploitative middlemen (often in the guise of government agencies) that farmers are currently dependent on.

Similarly, consumers — and they extend far beyond the metropolitan upper middle class and include small town and semi-rural India — are potential beneficiaries of greater choice and lower prices.

This is why, perhaps, the issue of FDI in retail may have paralysed Parliament but has not evoked the same outrage on the streets as the issue of corruption and price rise did in the recent past.

One other reason is that after 20 years of reform, many people no longer buy the Opposition’s argument that FDI will destroy India’s diversity and independence and jobs and spell a return to “neo-colonialism”.

In the 1990s, similar fears were evoked when McDonald’s and Kentucky Fried Chicken entered India. But neither could displace Indian street food — the pizza has coexisted with pao bhaji, the burger with the samosa.

The massive size and bewildering economic and cultural diversity of the Indian consuming class can, many believe, absorb Walmart and Tesco without displacing the vegetable seller who delivers home or the neighbourhood store which supplies on credit. Retail chains, thus, may provide many more jobs than they will displace, this section feels.

At the same time, however, the potential political benefits of the FDI decision will not accrue to the Congress as a matter of course. The party’s top brass — i.e. Sonia and Rahul Gandhi — who have so far kept silent, will have to take the lead in defending the decision and take its pro-farmer and pro-consumer message to the people.

Otherwise, the Opposition will get away with the message that FDI is an unmitigated disaster because it will destroy small shopkeepers across the board.

This is the Congress party’s “so be it” moment which can give it a much bigger boost than Manmohan Singh’s did in relation to the Indo-US nuclear deal. If the party plays its cards well, the BJP base can be reduced to what it was during the Jana Sangh days — a party of shopkeepers — and the Congress can regain the support of the existing and aspiring middle class as well as a vast constituency of farmers. It is a daunting challenge. Can India’s Grand Old Party bestir itself to meet it?