Unease in India Over Anti-Corruption Party’s Economics

After a stunning victory in New Delhi elections two months ago on a platform of rooting out corruption, the shine is coming off Arvind Kejriwal and his Aam Admi Party because of concerns over the party’s economic platform.

Kejriwal resigned as chief minister on Valentine’s Day after a tumultuous 49 days in office, triggered by the engineer-turned-politico’s failure to introduce an anti-corruption bill. But just before resigning, Kejriwal’s government filed a police complaint against Mukesh Ambani, the country’s richest man and chairman of Reliance Industries, for “creating an artificial shortage of gas in the country

Though such allegations are hardly new for Ambani, Kejriwal’s finger-pointing sans evidence and the way in which he quit office have raised serious questions about the rookie politico’s economic policies and his approach towards businesses.

That concern has intensified as after winning 28 of the 70 seats in the Delhi assembly, and being pushed into forming a minority state government with the backing of Congress in December, the AAP is now setting its sights on the national stage. It plans to field candidates in most of India’s 543 constituencies for the forthcoming general election.

AAP’s ambitions are increasingly being watched by Indian business leaders and urban liberals with trepidation who feel the party’s economic policies are incoherent, hostile to the free market and don’t infuse confidence in India Inc. The party fulfilled a campaign pledge to block foreign-owned superstores, including Wal-Mart, from opening in Delhi, saying they would drive India's ubiquitous family-owned shops out of business, and has threatened to limit foreign investment, a troublesome concern in a country starved for foreign investment.

On Sunday, Kejriwal followed up on his charges against Ambani, launching a nationwide campaign by going after not just Ambani but the Congress and BJP parties as well, saying the Reliance owner had funded the campaigns of both the BJP’s prime minister candidate Narendra Modi and that of Congress vice president Rahul Gandhi. Kejriwal has repeatedly accused the tycoon – as well as his billionaire brother Anil – of influencing the current administrative system to land key projects and acquire huge sums of money.

“Corporates are worried. Kejriwal talks about businesses and politics being hand-in-glove but making such sweeping statements and accusing respected businesses without evidence is not conducive to the country’s business climate,” said Amar Aggarwal, a third generation jeweler in Delhi’s walled city.

Industrialists are also wary of its pursuit of what they term as the party’s “socialist, left agenda” which they feel is too ambitious and tough to implement. Many dismissed as impractical and unworkable Kejriwal’s decision to provide 700 liters of free water and halve electricity tariffs to Delhi’s residents soon after coming to power. The main worry was: Can the state exchequer, already burdened by subsidies, afford a higher dole out?

Said Anil Saxena, CEO of an IT company in New Delhi, “Kejriwal seems driven by a one-point agenda of erasing corruption. While nobody refutes that corruption is an endemic problem in India, outlining an economic vision is vital too.”

However, the party’s supporters assert that the party’s vision document is rooted in decentralized good governance, transparency, accountability and equity—all of which are very desirable.

But missing in this promise are the mechanics to fulfill his agenda. “It is one thing to suggest something radical, and entirely another to draw up a blueprint to achieve it,” said a senior Congress party functionary.

The vision document, the official said, lists only the party’s milestones—containing inflation, providing jobs, increasing agricultural productivity by 50 percent and so on. To its core constituency at the bottom of the economic pyramid, the AAP promises to double per capita national income in eight years, at present US$1200.

CEO’s aren’t buying into the AAP’s vision, not surprising given the gaps in it. They feel Kejriwal is evasive. “Arvind Kejriwal’s vision, or lack of it, has adequately been established in his theory and action by running away from responsibility,” said Randeep Surjewala, a Congress spokesperson.

“This is an election year and people are asking specific questions to all political parties on many economic issues. People are interested in knowing the economic agenda of all political parties. People are going to understand each political party through its economic agenda. So it doesn’t help to be evasive,” said BJP spokesperson Nirmala Sitharaman.

However, driven by constant criticism to spell out his economic blueprint, Kejriwal recently addressed a Confederation of Indian Industry summit in Delhi. His main agenda here was to dispel the notion that AAP was against business.

"We are not against capitalism, but we are against crony capitalism. We are depressed when spectrum worth Rs1.5 lakh crore (about US$400 billion) is sold for Rs6,000 crore ($1 billion) within one week. This is not called business, it is called dacoity (banditry)," Kejriwal noted. He said the government had no role in running business, the domain of private players. The government should only focus on governance, he added.

Yogendra Yadav, an AAP senior leader, says the core of economic policy will lie in the party vesting crucial decision making in the hands of the common man. “From tax collection to decisions on mining licenses and land acquisition, there will be greater participation of the people,” says Yadav.

Kejriwal, in his book Swaraj, underscores the need to empower gram sabhas (the lowest administrative unit in villages) across the country. "The gram sabha should be made the owner of all small water resources, small minerals, and small forest products in the area that fall under its purview. It should also be ensured that without the permission of any affected village, no rights over land, forest or mines be given away," he says in the book.

The party’s opposition to foreign direct investment in retail, point out his critics, could lead to unemployment and displacement. Again, on skill development, the focus is likely to remain on strengthening primary, secondary and higher education systems and not so much on vocational training.

The party appears to have an obvious socialist bias, but with a number of corporate India luminaries joining recently, some are hopeful that balanced thinking may gradually pervade its thinking.

"People like us have joined the party and we will help bring about a blend of growth with populism," said V. Balakrishnan, former director of Infosys who joined AAP in December.

G.R. Gopinath, serial entrepreneur and founder of Air Deccan, India's first low-cost airline, has also joined AAP: "The most compelling fact about AAP is that it is against corruption and will be transparent in decision making. If you fix corruption, then you fix most things."

Critics believe the new party will self-destruct when the aspiring urban young who voted for it in Delhi realize what the party stands for. “The first test they have flunked is FDI in retail. Even their other promises don’t sound workable,” said a BJP volunteer.

“The fall of AAP (government) in the national capital may well point to an ominous prospect of an unstable government coming at the center in the next two months even while India Inc would like a reform-friendly and a stable regime at the national level,” the Associated Chamber of Commerce said in a statement.

The Chamber urged AAP to be engaged with the industry and trade so that it gets clarity. "If the parties with sharp conflicting political and economic ideologies come together and form the government in the states and at the center, the economic growth and business environment will take a hit,” the statement said

Whether AAP will heed this advice, or remain unmindful of it, only time will tell. In the meantime, India Inc is keeping its fingers crossed.

(Neeta Lal is a New Delhi-based senior journalist; neetalal@hotmail.com)