All of Prime Minister Manmohan Singh’s critics are unanimous that irrespective of how good or bad the times, he looks the same: worried. I can tell you, however, that one of his biggest worries has remained as it was 15 years ago. Which is when I had a conversation with him on board a morning Indian Airlines flight from Delhi to Bombay.
The NDA had just come to power and was making some reformist promises. But my interlocutor on that flight was speaking both as an economist and a politician. He was so worried, he said, because he feared that India’s growth, even economic stability, was under threat going ahead because of its people’s disinclination to pay real prices for goods and services provided by the government, and the politicians’ inability, and lack of courage, to persuade them to do so. He mentioned fuel, foodgrain, rail and bus fares, electricity and water.
If we look back carefully at what has been accomplished over the past 12 months or so, he might wish to revisit that view now, and happily so. It is still work in progress, but there is evidence now that our people are changing. And, as almost invariably happens in democracies, the political class has failed to foresee this welcome change, or embrace it.
The increase in rail fares this week has gone through almost bloodlessly. So bloodlessly, in fact, that you worry if this is some deceptive calm before all hell breaks loose next week. But it won’t. As it didn’t when diesel prices were hiked substantially and a rude LPG cylinder cap introduced in September last year. Streets did not go aflame, and the departure of Mamata Banerjee from the UPA was an inevitable moment of liberation.
The threatened Bharat Bandh, in spite of the Left and the BJP coming together with Mulayam, Mamata and Karunanidhi, was a flop like any other protest against fuel price hikes before this. The only places where it was visible were West Bengal and Kerala. But you can bring those states to a standstill even if you call for a bandh because Brazil did not win the World Cup. These states are ever so bandh-ready.
I saw Kochi come to a pause as news came in that Saddam Hussein had been hanged and several parties had given bandh calls. I was, at that precise moment, floating as a tourist in Mattancherry, the heritage quarter of Kochi harbour. And was witness to the fact that the first people to pull the shutters down and join the bandh were the shopkeepers on the ancient Jew Street.
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Consider some other recent user price increases. There have been heavy increases in bus fares in Tamil Nadu, Punjab, Karnataka and even Kerala. While all of us, particularly the pink papers, fret over the health of the power industry and state utilities, do you know how many states and union territories have hiked power tariffs in the past 12 months? It is 31. The average of this increase is a robust 16 per cent. Tamil Nadu has instituted the highest increase (37 per cent), and it was the state’s first hike after nine years. And even the formidable DMK was not able to exploit it to rebuild its broken politics, it could only secure a tiny rollback. Kerala followed with a 30 per cent hike, Mumbai 28 per cent, Delhi 20, UP 17.6, Maharashtra 16.5, and Punjab and Himachal 12 per cent.
Two facts need to be underlined here: Delhi saw some protests, mostly not from the poor or the middle classes, but the Resident Welfare Associations (RWAs) of the pampered South Delhi colonies. No wonder the Kejriwal bijli-jodo campaign ended so abruptly: there is no sympathy for power thieves any more, as there is none for corrupt netas. Second, Himachal, which announced one of the lowest increases, of 12 per cent, rolled it back indirectly by announcing a subsidy cushion after some protests in the election year. But why is tiny Himachal so important?
The government panicked and subsidised some of that increase, hoping it would make the voter happy. Just as, following the same, stale, old-school politics, it presumed that the Centre’s LPG cap, “suicidal” so close to the Himachal elections, would win it a second term. The BJP built a campaign around LPG and rising prices, and threw in an imaginative freebie as well: free induction heaters. And what was the result? It got thrashed.
That is why tiny Himachal is important. Because it tells you Indian voters are moving on. And there are real economic and social reasons behind this welcome change. Himachal, for example, has a very high percentage of government employees, and now, with the rise of some industrial areas (Baddi, in particular) in the plains and foothills, also a growing population employed in the organised sector. These can be described as VDA-Indians. VDA stands, obviously, for Variable Dearness Allowance, which rises at quick, often quarterly, intervals with the price index, giving this growing population an inflation hedge.
This, the increase in the number of Indians employed in the organised sector, is the reason why these price hikes have been absorbed. Last week, the IITs increased their tuition fee by 80 per cent. Did you see thousands of parents march to Rajpath? Our airlines have fully established the principle of fuel surcharge, thereby protecting themselves from wild increases in crude prices. The only complaints you have seen were from some in the media. Planes are full.
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Welcome, then, to this pragmatic new India. Where some in the middle classes are VDA-hedged, and others have seen their incomes grow so fast they can pay more for better services rather than insist on sarkari freebies. Of course, the poor are in a different category altogether. But the sad truth is, most of the poor do not benefit from these subsidised prices. Our subsidies mainly go to the middle classes, and the rich.
For the poor, the basics, foodgrain, fuel, and even power tariffs, are protected at the low levels of consumption they can afford. The only people protesting, in the cocktail circuit and on TV channels, are the rich. For them, subsidies are an entitlement and a status symbol, and not a necessity. Go to the petroleum ministry website that now has a truly sensational list naming each individual subscriber and how many subsidised LPG cylinders they have been using so far. Look at the centurions: they are all members of your political and financial A-lists.
There has never been any voluntary movement, any offer, and mobilisation, on the part of the really rich, or powerful, like our ministers, MPs, even judges of higher courts, to say they willingly give up even the six cheap LPG cylinders as an undeserved subsidy. But what do you expect from elites who will be outraged if you just removed that obscenity of a signboard at every highway toll plaza listing those exempted from paying a piffling toll? How you wish that one day, a Chief Justice of India will take the lead and voluntarily give up at least that one privilege. He wouldn’t even need a PIL to pronounce on that.
But we are digressing. The basic point is, the Indian voter is changing for the better. She wants to be delivered better services and goods and with greater dignity, and won’t mind paying more for them. It is for the leaders now to understand this welcome change and build a new politics around it, fuelled by aspiration, growth and performance, not mere freebies as in the past.
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