Has UPA-2 recovered its nerve and verve?

Frankly, the UPA-2 had a bad run ever since it came back to power for a second time in the summer of 2009. It seemed to be a never-ending scam season, stretching from the 2G spectrum allocation or misallocation scam through the Commonwealth Games scam to the coal blocks allocation scam. It seemed that the government could not do anything right. There were also the defeats in Bihar and Uttar Pradesh assembly elections for the Congress, and the party was just a junior partner in Mamata Banerjee’s historic victory in Bengal. And then there was the political humiliation of dealing with the Anna Hazare agitation for a Lokpal, and the government was forced on the backfoot; apart from the blunder of senior cabinet ministers rushing to the airport to meet yoga instructor Ramdev, which showed the government was a frightened creature running helter-skelter to keep things under control.

There was a turnaround with the announcement of two decisions, allowing foreign direct investment (FDI) into multi-brand retail followed by that of introducing direct cash transfer or cash transfer scheme. These were bold decisions from a beleaguered government blamed for policy paralysis. They are not major economic decisions that they are being made out to be, but political gestures to send out the clear signal that the government is thinking beyond scandals, and that it is looking at a distant horizon of bringing about economic changes. In politics gestures matter as much as decisions. The question remains whether people are any more satisfied with mere gestures.

The crucial question is whether these gestures are enough to save the day for UPA2 in the 2014 Lok Sabha elections. The opposition parties are hoping that the people will judge the government and punish the UPA2 for the scam series. The Congress and its UPA partners are hoping to fend off corruption charges by turning around the economy, which has been doing quite badly for the last two years. Politicians from every party dismiss any mention of 2014, the year of reckoning, as too distant. The present stretches rather endlessly for the politicians, and they are happy to be engaged with it. The UPA2 thinks that this gives it ample opportunity to mend things.

Will the cash transfer scheme and the FDI flow into multi-brand retail help in the recovery of the economy? The international economic rating agencies have been quite positive, especially after the announcement of allowing into FDI in multi-brand retail.

And that is part of managing the international public relations (PR) sentiment. This looks a slightly hollow affair because the international economic situation remains quite bleak with the euro zone crisis deepening, and the Americans showing only faint signs of economic recovery. So, positive nods from the West are not of much use in boosting the economy at home.

If the UPA-2 is groping for solutions, the opposition presents no unity of purpose or thinking. The right-wing BJP is opposed to FDI in multi-brand retail because it fears the more than a million strong small retail traders being wiped off, which is a good political exaggeration. It will turn the country into a nation of sales girls and sales boys, said one of the party’s articulate leaders, Arun Jaitley. The same challenge was posed by the BPOs in the earlier stage of economic reforms when thousands of young people turned into semi-telephone operators and service assistants, but which was hailed as the great IT revolution in the country. The country has passed through that fear and through that phase. It could as well pass through the Wal-Mart-Tesco phase as well and survive. Interestingly, the BJP has a strange stance over the cash transfer scheme as well. It fears that the public distribution system (PDS) would get dismantled.  It speaks the language of a semi-socialist party of small traders.

Do the communist parties and the regional and the caste parties count? They do for smaller rather than for larger reasons. It is their ability to win seats in the states, edging out the so-called national parties, which gives them an edge in the numbers game. The enthusiasts of this play of regional interests overstate their case when they are argue that the time of national parties is over. It is just that the national parties have now to orchestrate more closely with the regional powers. The big players have to display greater nimbleness.

The Congress and the UPA-2 look poised at the moment but this state of grace may not last through 2013 and into 2014. Sixteen months is too long a stretch. The government can be sure of meeting the economic challenges but not the political ones.

Parsa Venkateshwar Rao Jr is editorial consultant with DNA