Global finance, democracy at loggerheads

P. Raman | Updated on March 12, 2018 Published on June 27, 2012

Dr Manmohan Singh and Ms Sonia Gandhi… clash of two agendas inIndia, and within the Government.

Universal franchise and free market capitalism are considered to be the two sides of Western democracy. Conviction in the infallibility and inevitability of the model has been so strong that the dominant powers used every means to topple and democratise the ‘rouge’ regimes.

But few had anticipated that the two pillars — democracy and capitalism — could come into such sharp conflict with each other in such a short time. This has been happening throughout the world in the past few years.

The protagonists may try to brush aside the spreading phenomenon merely as the incumbent rulers’ failures to push neo-liberal economic reform with adequate force. The respective ruling parties, on their part, realise that the standard reform prescriptions, such as cutting government subsidies, public health schemes and other welfare measures, are sure to ensure their electoral rout.


Hence, electoral democracy, the very foundation of the modern system, is being despised as a hurdle, if not challenge, to the present kind of globalisation.

Global financial capital insists on pushing its way in countries already under squeeze. In many EU countries, it has taken the form of a severe financial siege.

Yet, almost in all of Europe, angry voters reeling under the rigours of growing unemployment (23 per cent in some cases), wage cuts, and reductions in health coverage and other safety nets are using their voting power to challenge the outside imposition.

Watch the way the voters have made their own regime change. This has happened in Spain, Italy, Ireland, Portugal, Denmark and Finland.

In Greece, after initial negative voting, the voters have given a majority to a ‘pro-bailout’ group. Just last month, local polls in the UK revealed rejection of the Cameron government’s austerity programmes.

Even Germany’s Ms Angela Merkel got a wake-up call from her own strongholds. In France, the newly elected Mr Francois Hollande is obliged to keep his poll promise of subsidised water, power, fuel and 75 per cent tax on those earning over one million euro, the very issues the global financiers have resented.

This has brought about another element in the conflict between the people’s will and imperatives of global reform. Which is more crucial — the will of the people as expressed in a constitutionally valid general election, or the diktats of the global capital?

Already, politicians are being blamed for their failure to convince people about the virtues of austerity. Now, there are suggestions concealed in long commentaries for things such as ‘guided democracy’. Some have even suggested ‘transient regulations’ when voters behave ‘immaturely in a freewheeling’ manner. Another protagonist is more forthright: insulate the economic policy platform from the purview of elections.

In the US, the clash takes the form of what Dr Paul Krugman calls Wall Street’s war to impose its self-serving agenda on the electors. The frustrated Wall Street campers described it ‘99 per cent vs 0.01 per cent’.


In India, the conflict of the two agendas works at two levels. Within the ruling establishment, the government wing is under constant pressure to curtail Ms Sonia Gandhi’s welfare programmes, the Congress party’s sole helpline during the elections. Denial of fixed pension to the elderly, hike in tariffs and fuel prices and fear of foreign giants ousting millions of local traders and their suppliers are issues of contention. At one stage, it seemed like the pragmatic politicians within the party were able to prevail. But in the past six months, 10, Janpath, seems to have yielded to the reform pushers.

At the second level is the clash between those pushing an elitist agenda and the electoral compulsions of the demands of an aspirational aam aadmi. Recent assembly elections have brought this into sharp focus. Regional parties had vied with each other with a long list of populist schemes to woo different groups of voters while the Congress party went on harping on youth aura, FDI and GDP.

When the DMK earlier offered TV sets to voters and the AIADMK saris, we had ridiculed them. But both won. P.V. Narasimha Rao suffered his first shock in the Karnataka and Andhra elections after he scrapped the universal PDS.

By way of damage control, he came up with his ‘revamped’ PDS. By far the biggest voter revolt was against the NDA’s elitist ‘India Shining’ plank. In elections, you cannot sell fiscal discipline and austerity.

Look at the kind of promises made by the regional players. Last time, Mr Nitish Kumar and Ms Mayawati had promised bicycles to all girl students.

An estimate puts the one-time offer of schemes promised by the Samajwadi Party in UP at as high as Rs 30,000 crore. Loan waiver for farmers alone is put at Rs 11,000 crore. If Ms Sonia Gandhi could do it, why can’t we, Mr Akhilesh Yadav asks. Then, there are recurring annual commitments, such as Rs 6,000 crore as support price to farmers, Rs 1,000 crore unemployment allowance, Rs 1,819 crore worth laptop computers and free books for students up to Class VIII, free education for women up to graduate level, fee waiver for poor students, old-age pension for farmers, irrigation and water subsidy and higher education and marriage allowance for Muslim girls.

Akalis in Punjab followed a similar pattern — free laptop for three lakh students, dole for registered unemployed, doubling of widow and old-age pensions, a five marla plot for landless village families, free gas to BPL families, free power to dalit and economically weaker sections, incentives for three lakh girl students and free healthcare for blue card holders and widows.

The winners are now seeking central assistance to finance the electoral bounties. In case the Centre rejects their demands, as is most likely, that itself will be made an issue against the perceived anti-poor, reforms establishment.

With rupee falling steadily and rating agencies and global finance pushing hard for scrapping the FDI cap, we are possibly walking into a BoP mess. World capitals and visiting dignitaries have tightened the investment siege. Delhi’s reform establishment is in a state of panic.

But the trouble is that the Indian electorate has a tradition of being more alert and brutal than its counterparts elsewhere.

(The writer is a columnist and was political editor of two prominent economic dailies.)

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Published on June 27, 2012
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