The arrival of ‘outsiders’ in New Delhi

In August 2010, during a trip to New Delhi, I heard talk of unprecedented corruption. The 2G scam had come to light, as had the scam in coal mine allocations. Amazingly, this time it was the bureaucrats and “insiders” who were rebelling at the scale of alleged corruption and payoffs.

The situation was ripe for “outsiders” to step in and an outpouring of support arose for the anti-corruption protests led by Arvind Kejriwal and others, for which Anna Hazare was the mascot. The backlash was swift and after some impassioned speeches in parliament, nothing happened. People too seemed to be overcome by scam fatigue.

However, Kejriwal proved to be a tenacious fighter and he launched the Aam Admi Party (AAP). Initially, his efforts were not taken seriously, but now many are carefully watching the fledgling party. The AAP, by all accounts, is going to cause significant damage to the established political order in New Delhi during the state elections in December. Many opinion polls give the AAP around 20% of the vote share and 3-12 seats – a dream debut for a political party. The mainstream media, which ignored Kejriwal for a while, is now closely covering the AAP’s journey.

If nothing else, the AAP has forced a change in the discourse of the Delhi elections. It has also elicited the support of many who earlier ignored politics and various people are volunteering their time. I too made two donations to AAP – through my credit card. There has never been a more transparent way to donate to a political party in India.

Another “outsider” is also threatening the established order in Delhi – Narendra Modi, the prime ministerial candidate of the Bharatiya Janata Party. Across cities and small towns, it is easy to see that he has caught the imagination of many people. He is seen as an agent of change. Even senior journalists in Delhi speak of how he has shaken his own party’s cosy Delhi network.

Narendra Modi’s rallies are drawing unprecedented crowds. Whether or not he and his party are able to convert his personal popularity into votes, he has succeeded in rattling the establishment. His reputation of running a clean administration with a firm hand and development as a focus are his key assets.

At the end of September, he addressed 400-plus executives from the advertising and media world in Mumbai. Everyone listened to him with rapt attention and frequently cheered. The taxi driver who drove me back could not stop speaking about why Modi deserves a chance. The taxi driver in Delhi during a recent visit said the same.

Modi’s critics have said that he is divisive and will not be able to attract alliance partners. But Modi has now reached out to Chandrababu Naidu of the Telugu Desam Party, who no longer seems averse to supporting him. Uddhav Thackeray of the Shiv Sena was seen with Modi at his first speech in Mumbai. Now, Jagan Mohan Reddy is praising Modi’s administrative skills. And in Nagpur, Sharad Pawar said that in politics there are no “untouchables.”

Recently, Modi said that the religion of the poor does not matter and toilets are needed in India before temples. That is certainly not the rhetoric of a right-wing Hindutva politician. The makeover is well underway.

Modi is forcing others to talk of development and governance. Such are the forces of change that the ultimate “insider,” Rahul Gandhi, belatedly spoke out against the ordinance to shield convicted politicians. Prime Minister Manmohan Singh has gone further and dumped the bill itself. But the tide had turned much before the intervention by Rahul Gandhi, when the president reportedly questioned the undue haste with which the ordinance was being pushed through.

Why is all this relevant to an observer of Indian politics? It is relevant because the winds of change can lead to a better and more transparent India with rule-based systems and less discretion.

However, the immediate price is a policy paralysis and a stalling of investments – these are likely to continue for some more time. Diesel prices are now being increased every month and nobody is protesting. With better regulators and established rules, power tariffs have been raised, and now Indian Railways is adjusting passenger fares based on the movement in fuel prices. This was not possible even a year ago – and Mamata Banerjee’s protestations were only one reason.

Look also at the number of “insiders” who have been to jail or are in jail over the last three years – it includes A. Raja, Kanimozhi, Sanjay Chandra, Vinod Goenka, Sahid Balwa, Laloo Prasad Yadav, Om Prakash Chautala, Jagan Mohan Reddy, and Ajay Chautala. This would have been unthinkable even two years ago. The old system is being forced to change.

At the same time, the business models that were developed over decades – regulatory arbitrage, resource grab, preferential policy formulation – are also unravelling. It is still too early though to start talking about an economic revival. Re-starting the stalled cycle will take time and will need a decisive mandate at the centre in favour of the new.

Change will be a long drawn-out process, a system entrenched over decades will not yield rapidly. The beneficiaries of the old system are still thriving; corruption is still rampant. Whether it is Modi or anyone else, there is no magic wand. But slowly a new rule-based order is indeed emerging. In this new order, discretionary powers are fewer, regulatory vigilance is high, and the price for wrongdoing is very high. These changes can only augur well for India’s long-term growth story.

Anirudha Dutta was the Head of Research at a leading foreign brokerage house. He writes on the economy, politics, and issues related to policy.

This blog was exclusively written for Gateway House: Indian Council on Global Relations. You can read more exclusive content here.

For interview requests with the author, or for permission to republish, please contact outreach@gatewayhouse.in.