Shaky coalitions make good economics

Another high-decibel election season is upon us, and going by the first samplings of hate speeches by upstart politicians, it promises to be as rambunctious a campaign as any that we’ve seen over the years.

Early opinion polls point to the likelihood that another ragtag coalition of parties will take office and muddle their way through for a full term or for a few years until a bruised political ego or a momentary surge of opportunism causes the arrangement to collapse, warranting yet another high-decibel election season.

There’s been much agonising over such unstable and opportunistic political arrangements, which have sort of become par for the Indian electoral course for two decades now. Conventional wisdom has it that weak coalitions at the Centre are bad for the economy because an excessive preoccupation with political survival and with keeping coalition partners in good humour impedes any attempt at initiating bold economic reforms or offering good governance. That’s just an extension of the argument that “good” politics makes bad economics and that liberal democracies cannot promote economic growth as fast as authoritarian regimes can.

But, in fact, India’s experience of coalition governments at the Centre and with economic growth demolishes that argument — or, at the very least, underscores an important exception to that rule. For starters, it’s no coincidence that the time-cycle of India’s move into a higher orbit of economic growth matches pretty closely the period when coalition arrangements have come to occupy centre-stage at the Central level.

Virtually all the economic opening up and reform programs that enabled this speedier growth were carried out when motley, multi-party coalitions were in power: this is just as true of Congress-led arrangements as of those led by the BJP or the extremely nebulous and politically malleable “United Front”.

In contrast, the years when one party dominated power politics at the Centre were characterised by the “Hindu rate of economic growth” and a system of political patronage. In particular, the 14 years that Indira Gandhi served as prime minister (over different tenures) — during which she invoked Article 356 to dismiss elected state governments no less than 39 times — were politically and economically ruinous.

Even if one concedes that she had to deal with separatist movements in Punjab, Jammu & Kashmir and the North-East and occasionally irresponsible state governments, her excessive predilection to dismiss elected governments on partisan considerations undermined the federal spirit and impeded state governments from realising their full potential as local-level economic change agents.

In the era of coalition governments, however, the space for such reckless dismissal of state governments has been limited by the realpolitik considerations of managing political arrangements in which typically a constituent at a Central-level coalition may be in power in a state. And although there have been occasional errors of omission — when there was a fair case for invoking Article 356 but it wasn’t (as in Gujarat in 2002) — coalition politics have generally strengthened the federal structure and the process of decentralisation of power and encouraged state governments to look beyond political survival to advancing economic reforms.

Sure, there have been populist excesses, at the Central and state levels, as coalition partners binge on public money. And, of course, you don’t often see shining examples of good governance. But there’s nothing to indicate that the record of single-party governments was any better on those counts.

The option, then, is between single-party misrule based on patronage, which delivered low economic growth, and coalition arrangements that, with all their faults, occasionally demonstrated that political liberalism makes good economics. I know which one gets my vote.