Politics of subsidy draining India's financial strength

Politics of subsidy draining India's financial strength

There is no lack of subsidies for the economically poor in India: food, electricity, fertiliser, diesel - you name it, they have it.

Yet they are none the better for it. Poverty continues to be stark, and hunger and malnutrition are still prevalent.

Why hasn't such assistance proven to be a boon, despite the best of intentions? The answer is enmeshed in politics - and the politics of subsidy - in India.

Indian national politics has evolved from single-party domination to multi-party coalitions. Regional politics adds to the mix - and competitive populism becomes entrenched and has even expanded.

The Indian National Congress (INC), the largest political party, formed the country's first government after independence in 1947. The first parliamentary (or Lok Sabha) elections were held in 1951.

The INC won with a huge majority. It went on to dominate national politics until 1977, when the Janata alliance led by the Bharatiya Lok Dal (BLD) came into power. But the INC was back in power in the next two elections. In 1989, the INC, despite being returned as the single-largest party with 197 seats, did not have the absolute majority required. It was the second-largest party, the Janata Dal (with 143 seats), that then formed a coalition government under a National Front umbrella.

The situation now is a fractured electoral mandate, with no single party receiving a clear majority at the national level since 1989. The sheen of the INC has been diminished, and the Bharatiya Janata Party (BJP) is the second-largest national party. Other parties with strong regional bases have emerged.

These strong regional parties have helped national parties to hit the magic number - more than 50 per cent of total seats - to form the government. At every election now, be it at the national or state level, competitive populism rears up, which drains the exchequer.

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