The routine reopening of India’s Parliament has suddenly emerged as an awkward test for the Congress-led government’s ability to push reforms such as price deregulation in the face of opposition from its rural base.
Tens of thousands of farmers from Uttar Pradesh state protesting against low state sugarcane prices forced the postponement of the winter session of Parliament on Thursday in a major political headache for the government, re-elected in May. Now, a once-divided opposition seemingly unable to recover from election loss have vowed to disrupt Parliament until the government reverses a policy aimed at bringing in more market forces to the sugar industry, one of India’s biggest cash crops. On Friday, the opposition forced an adjournment for a second day, with lawmakers running into the house shouting slogans.
The massive street protest that brought much of central Delhi to a standstill also reflected the fragility of political stability in India, with its myriad caste, class and ethnic issues always simmering among its 1.2 billion people.
“Such a display of opposition unity ... has rarely been seen outside Parliament,” The Economic Times commented on Friday. “The UPA government has only itself to blame for giving an issue to the opposition on a platter.”
The ruling United Progressive Alliance coalition has given states greater autonomy in fixing sugarcane prices to help lift restrictions on the heavily regulated sugar sector and stop sugar mills bearing the fiscal brunt of subsidized prices. But a backlash has played into hands of the opposition, including the Hindu nationalist Bharatiya Janata Party.
Only a week ago, domestic politics appeared to be playing second fiddle to international issues, such as global climate change negotiations and Prime Minister Manmohan’s Singh’s visit to Washington D.C. next week. That mood has changed. Buoyant from the closure, protesters say the ball is now in the government’s court. The government may hold an all-party meeting on Monday over the issue. “We have now adopted the policy of wait and watch for next two to three days,” said Anil Singh, national secretary of the National Alliance of Farmers Associations. “The response to Thursday’s rally was satisfying. Now the government has come to its knees,” he added.
It signals the reform in India will not be plain sailing, despite a large majority for the Congress-led coalition.
Singh has promised economic reforms such as the deregulation of state-run sectors, introducing more foreign investment into areas like insurance, and boosting spending on infrastructure to allow India to compete with the likes of China. But some reforms face endangering the Congress party’s pro-poor “inclusive growth” manifesto and dashing hopes of a major revival in Uttar Pradesh, where Gandhi scion Rahul Gandhi has reached out to the poor in high-profile campaigns.
Any reforms face the stark fact that two-thirds of India’s population lives in villages. One reform, bringing in foreign investment in retail, has already floundered because of opposition in rural areas.
Indeed, Gandhi was reported to have phoned Singh over worries that the sugarcane issue could derail Congress inroads into India’s most populous and politically important state. The protest does not mean all of the Congress party’s reforms will be in trouble. It still has a clear majority in Parliament.
For example, most analysts expect the government to raise limits of foreign investment in the insurance sector, a policy aimed at allowing India’s near 40 percent savings rate to be recycled into investment and sustain higher growth rates.
“Disinvestment, etc., will go on, even though there will be protests as usual,” political analyst Amulya Ganguli said. “The opposition is delighted to have got an issue,” he added.
