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Political Pitch

Frying pan to fire?

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SURPRISE ELEMENT: The government misread Mamata, assuming she would withdraw her ministers but not withdraw support

With Mulayam and Mayawati stepping in to support the UPA, the government is safe for now. But given their history of undependability, Congress leaders concede that the future could be more uncertain than the past.

It was supposed to have been Prime Minister Manmohan Singh's second nuclear deal moment. But as events unfolded in the tumultuous aftermath of his big bang reforms gambit, doubts began to surface. Had the PM got the script wrong this time? Did Mamata Banerjee's revolt signal the beginning of the end for UPA 2? Even if the government survived, how long would it last? And how would it function with tough talking, hard bargaining, fickle leaders like SP's Mulayam Singh Yadav and BSP's Mayawati supplying the oxygen for survival? And most importantly, what would the political uncertainty clouding the government's future do to the recently kick-started reforms process?

All the bluster and bravado of government ministers and party spokespersons could not quell the concerns swirling through Congress circles as they contemplated the road ahead. Their carefully laid plans to prepare for the 2014 general election with a new-look party and government were threatening to go up in smoke. They were back again to firefighting. And this time, with both Mamata and Mulayam Singh sounding the poll bugle, the prospect of an early election loomed ominously.

In hindsight, many in the Congress, and even in the government, feel that the manner in which the reforms package was unveiled was ill-advised and hasty. "What was the need to do so many things in one go?" fumed a senior minister in the government who did not want to be identified. "I'm a pro-reforms person but I know that we have to respect people's sentiments and do things slowly. Price hikes are always unpopular and FDI in multi-brand retail was a thorny issue. They could have done one, say the diesel price hike, let people absorb the shock and then gone in for the cap on LPG cylinders. By pushing everything together, they've unnecessarily kicked up a controversy. "

According to those familiar with the thinking process behind the recent decisions, three factors were responsible for the sudden flurry of activity. One was the dismal state of the economy. A slowdown and the consequent falling growth rate coupled with the government's fiscal woes were causing concern and needed immediate fixing.

The second was the mounting pressure from foreign investors to get reforms back on track. Time magazine's branding of Manmohan Singh as an "underachiever", quickly followed by The Washington Post's description of him as a "silent, tragic figure", were among the many tactics used to prod the government to move. Once the biggest obstruction to Manmohan Singh's pro-reforms urges, Pranab Mukherjee, shifted from the finance ministry to Rashtrapati Bhavan and was replaced by a reforms-friendly person in P Chidambaram, the PM gained elbow room to reclaim his constituency and recoup his sagging image.
There was just one more hurdle to be crossed. Sonia Gandhi had to be convinced. And silver-tongued Chidambaram proved to be a persuasive and valuable ally for the PM in this. They had several rounds of meetings with her in which they harped on the ballooning fiscal deficit, warned her that the government was running out of money and told her explicitly that the only way the government could provide funds for the pro-poor welfare schemes she wanted unveiled in next year's budget was by raising fuel and LPG prices and fast tracking reforms to bring in FDI.

She bought into the argument because her election strategy was at stake. This was the third factor. The Congress party's poll agenda was to be unfurled in the 2013 budget which party insiders say was being crafted as a "revolutionary showpiece document" that would shift the goalposts for the election and completely change the public discourse. It would obviously be a soft budget of populist welfare schemes and the ideas being mooted included comprehensive food security, health insurance and cash transfers in place of subsidies. The Congress would then be ready for elections any time after that.

Sonia Gandhi was to tell her aides later to suppress their left-of-centre leanings for the time being and support the government's reformist agenda because the decisions would raise Rs 1 lakh crore for welfare schemes that would help the party win public support in the next election. Interestingly, Congress general secretary Digvijaya Singh, who is the leading face of this section of the Congress, has since tweeted support to FDI in multi-brand retail and defended the reforms on TV.
Doubting Thomases in the Congress were quiet initially but now murmurs of dissent can be heard. Virbhadra Singh, the party's chief in Himachal Pradesh, where assembly polls are due in a couple of months, has asked for a rollback as has dissident Punjab leader Rajinder Kaur Bhattal. Others are agitating privately, rocked by anxiety over their poll prospects after the stunning diesel price hike and its cascading effect on food prices.

According to a senior leader who did not want to be named, some people have tried remonstrating with Chidambaram but he hushed them by reeling out debt figures that boggle the mind. He apparently told them that there are only three ways of tackling the fiscal deficit: borrowing money, raising taxes or increasing fuel prices. The first two, he insisted, would prove problematic;so he had to go in for the third option.

The government's reforms gamble was predicated on the reading that Mamata's bark is worse than her bite. She would pull out her ministers from the government, which would be a relief, but would hesitate to go the whole hog and withdraw support. Chidambaram's gung-ho press conference, at which he announced more reforms by October-end, was fuelled by this assumption and many in the Congress feel that he may have tipped Mamata over the edge with his provocative comments.

With Mulayam Singh and Mayawati stepping in to buffer the numbers in Parliament, the government is safe. For now, at least. But Congress leaders concede that they may have jumped from the frying pan into the fire. The two UP leaders have a proven history of undependability and both can be expected to indulge in competitive populism in the run up to the parliamentary election. How much this will derail the government's reforms agenda depends on the skill with which the Congress dribbles between the two of them. UPA 2's track record of political management has been poor so far, including the latest blunder of misreading Mamata.

Ally problems are not the party's only headache. There is considerable resentment about the power grid that has a stranglehold over decision-making, both in government and party. Many in the Congress feel shut out and harbour a grudge that their views are not being heard. "We are upset about the diesel price hike but who's listening to us?" grumbled a senior minister while acknowledging the deepening of worrying fault-lines.

There was a brief flash of excitement after the reforms were announced, that the government had finally overcome its paralysis to take decisions. But the current crisis has sent the morale plunging again. "It might be better if we have an election in 2013, " said one minister sombrely. "At least all this nonsense will stop. We can sit in the opposition and rebuild our party. "

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