India’s beleaguered government looks to have found some authority – arguably for the first time since it won the 2009 general election. The Congress party last week outfoxed its tricky coalition partners to ensure that the finance minister, Pranab Mukherjee, is the nominee and likely victor in the coming elections for the ceremonial role of president. But Sonia Gandhi’s party needs to do more that actually fires up the economy. A strong replacement for Mukherjee would show the way.
Gandhi should have put her foot down when Mamata Banerjee, the chief minister of West Bengal upon whose support Prime Minister Manmohan Singh’s government relies, refused to back changes that would have allowed foreign direct investment in retailing. Likewise when anti-corruption legislation was blocked, when fuel subsidies were protected, when rail fares were held down, and when insurance, pensions and aviation were sheltered from FDI.
It’s not ideal that the courage to fight Mamata came over an issue that could have lost face for Congress but doesn’t really make any economic difference. Still, it could be a sign of more backbone to come. The Samajwadi Party supported Congress in Mamata’s place. The SP may now be brought formally into the coalition.
With luck, the win could bring Congress the will and momentum to pass a backlog of liberalisation measures. In that context, it’s good news that Mukherjee’s reign as finance minister will come to an end. He may be an arch politician, but annual economic growth has slumped to 5.3 percent during his tenure. If a more effective replacement can be found – and P. Chidambaram, twice finance minister in the past, is the front-runner – then there is hope that the gummed-up political system may start moving again.
But the SP will not be a pushover. In a sense Congress only replaced one wily political operator with another. The SP rules Uttar Pradesh, India’s largest state and, in return for supporting the government, there will have to be sops. That’s something the government was unwilling to do to the satisfaction of Mamata in West Bengal. Spending precious political capital on a ceremonial beauty prize is one thing. But finding ways to make real economic reform happen against the odds will be the real test of whether Congress has really rediscovered its mojo.