International -- Asian Business
DOES THIS PARTY REALLY WANT TO TURN BACK INDIA'S CLOCK? (int'l edition)
Behind the BJP's rhetoric, there may be room for reform
The 1,500 businessmen attending a conference in Madras in early January were baffled. Leaders of India's three major political parties were presenting their economic platforms for the upcoming national elections. The United Front and Congress Party representatives clearly pledged further liberalization of India's economy if voted into power at the conclusion of elections on March 6.
But Jaswat Singh, representative of the Hindu nationalist Bharatiya Janata Party (BJP), sounded downright loopy. "The economic agenda is not an orbiting globe," he said, sounding a little like mystic healer Deepak Chopra. "Rather, it is part of the modern universe." Puzzled audience members turned to each other and sniggered.WIGGLE ROOM. One month later, nobody's sniggering at the BJP. On Feb. 3, the party, whose candidate Atal Bihari Vajpayee is likely to become India's next prime minister, released a manifesto that pledges to shelter much of Indian business from foreign competition for 10 years. Outside investment would be welcome only in areas such as infrastructure, where Indian companies have little expertise. The BJP would also put off convertibility of the rupee beyond the previously set year 2000 and discourage takeovers of local companies by foreigners. "Indian industry needs a period of transition before it can compete with global players," the manifesto reads.
Such strident statements will surely alarm foreign investors and local economic progressives. Yet under the protectionist rhetoric, there's a bit of wiggle room that could allow India to continue reforms that have stalled with the past two years' succession of unstable governments. The BJP pledges not to reverse policies of previous governments. And it advocates more deregulation, privatizing public companies including the phone company, consolidating banks, and cutting red tape. Supporters also point out that in 1996, when the BJP held power for just 13 days, it acted sensibly by pushing through approval for the $2.5 billion power project by Enron Corp. of Texas, which local politicians had held up for years.
So which is the real BJP? It seems it's a mix of hardcore Hindu fundamentalists and protectionists--like physicist Murli Manohar Joshi--and more liberal types like Jaswat Singh, who despite his nutty speech in January is an economic moderate. The manifesto reflects this split, though some industrialists note that the moderates have also won some clear victories. After vigorous protests from business executives, the party dropped a plan to make foreign buyers of Indian stocks hold shares for up to five years. The party is also trying to recruit top business figures--such as respected former central bank governor C. Rangarajan--to accept positions in a future BJP-led government. "The BJP manifesto shows it is equally committed to India's growth," says Anand Mahindra, managing director of India's huge tractor maker Mahindra & Mahindra Ltd.
Spurring the BJP to moderate its former stance is the popularity of Sonia Gandhi, the Italian-born widow of assassinated Congress leader Rajiv Gandhi. Her dramatic decision in January to begin campaigning for the Congress Party has narrowed the BJP's lead by a third. Alarmed, the BJP has backpedaled even further from its rabid anti-Muslim rhetoric in an attempt to lure undecided voters. Still, the BJP maintains some very worrying policies. It has not dropped its plan to build a Hindu temple on the site of a mosque its followers destroyed in 1992. And it also supports a nuclear weapons program--to the alarm of the U.S.
Its legacy certainly prompts the question of whether the BJP will drive India back into the dark ages. But many analysts are banking on the moderates to prevail. "Once the party is in power, it will take very pragmatic views, openly and transparently," says steel magnate and BJP adviser Viren Shah. The hope is that the party will hardly want its maiden term in office marred by a slide into economic chaos.By Manjeet Kripalani in Bombay