03/24/2014 02:32 pm ET Updated Dec 05, 2014

India Is in a Jam As Elections Approach

Hindustan Times via Getty Images

NEW DELHI -- Why do the slowest cars on India's new 8-lane highways drive in the fast lane?

This is a problem the country's next prime minister needs to understand. Here's why.

India's in a Jam

The world's largest democracy is set to go to the polls from April 7 to May 15. At stake is nothing less than its much-lauded position as an emerging economic powerhouse and its much-hoped-for transformation into a bulwark of modern, liberal democracy.

India's stunning economic growth over the past 25 years marked the first time in centuries, if not ever, that the average Indian was truly been able to change his life and lot. This was the greatest wonder of the economic reforms India kicked off in 1985 and embraced more seriously in 1991. It felt then like a new superhighway that would speed India directly to superpowerdom was being conceived and built by South Block, as the Indian prime minister's office is unobtrusively called.

But now that road is jammed with indecision and self-doubt. "Everybody is in a state of limbo", Anand Mahindra, the head of auto giant Mahindra & Mahindra said recently. "I have never seen anything like this before."

India's GDP growth is down by 50 percent to around five percent. Industrial growth has slid to a dismal 1.7 percent. Employment is virtually stagnant and inflation is spiraling beyond 8 percent. Unbridled government waste has led the rupee to plummet 25 percent since 2011.

If politicians and bureaucrats seem barely concerned, it is because they have been too busy engaging in a corrosive cronyism that's made them billions of dollars. Meanwhile, ordinary people are struggling to start new business, get high-paying jobs or even gain admission into good schools. The scramble for opportunities is heightened by breakneck urbanization with hundreds of millions fleeing neglected villages for already-crumbling cities. In a country where people were usually polite even if poor, neighbors now compete ruthlessly for jobs, water, electricity and space, even a place in a line.

The mounting aggression and alienation is fraying India's social contract and a wave of anger and despondency is sweeping across this country, where, given 50 percent of the population is less than 25 years old, pessimism should be an impossibility.

These young Indians who grew up hearing India is a regional superpower are also bewildered by New Delhi's helplessness in the face of military incursions by Chinese and Pakistani troops, an erosion of India's military preparedness and indecision in the face of global crises, such as Crimea and CAR.

Feel-good episodes, like the elevation of India-born Satya Nadella to CEO of Microsoft and Rakesh Khurana to dean of Harvard College do reassure Indians of their native intellectual abilities and prodigious commercial skills. They feel confident and proud of being able to make it anywhere in the world. They just feel unsure of being able to make it at home.

India's frustration is made worse by furtive glances of envy across the Himalayas. China has long been India's rival and pace-setter. Its economic growth may also be slowing, but at 7.6 percent, it is still 50 percent faster than India's. More than that, China's careful calibrated policies have catapulted it into a new orbit and it remains the darling of global investors who pumped about $120 billion into the country last year. In contrast, foreign direct investment into India was barely $25 billion.

"(Global investors) are all very disappointed. They didn't expect India would end up this way," Narayana Murthy, the chairman of tech giant Infosys, said recently. "I used to sit on the board of a large global bank. About six-seven years ago, if China was mentioned three times, India would be mentioned once. But last year, China was mentioned 30 times and India was not mentioned even once. That says it all."

"How did it all go so wrong?" is what people are scratching their heads and asking. And blame game that results is taking political parties further and further from finding solutions to the problem.

The world's largest democracy set to go to the polls from April 7 to May 15, and at stake is nothing less than its much-lauded position as an emerging economic powerhouse and its much-hoped-for transformation into a bulwark of modern, liberal democracy.

Party to the rot

With elections just weeks away, the ruling centrist Congress Party is in a state of slow-motion collapse. Its new leader, Rahul Gandhi, the fifth generation scion of the Nehru-Gandhi dynasty, exudes his family's decency and good intentions. But the 43-year-old prince appears to possess none of his progenitators' vision, character or strength of will. Instead, he has become the butt of innumerable jokes that appear magically (and with a little bit of help from the BJP's powerful online war machine) in peoples' inboxes every day. Much of Congress appears to be in silent rebellion against Rahul, not least because he has and eschewed the hard-nosed grassroots mandarins his mother relied on to keep India's Grand Old Party in shape and surrounded himself with a cabal of untested, textbook advisors. They have presented no solutions to India's pain other than widening subsidies and handing out more populist sops. This isn't paying off because the Congress' own internal assessment is that it will win just about 95 seats in India's 545-seat Parliament, down from its current tally of 206.

Seeking to gain from the political tumult is the Hindu nationalist BJP. Its prime ministerial candidate, Narendra Modi, 64, is the son of a low caste school teacher who ran away from home to become a yogi and spent his late teens working as a tea vendor. His hugely successful but relentlessly controversial rise to become the three-term chief minister of the western state of Gujarat and now head of the BJP has turned him into a hero for many. But he remains a villain for others, who accuse him of ordering extra-judicial killings and fueling, or at least failing to control, bloody ethnic riots between Hindus and Muslims that killed 1000 people in Gujarat in 2002. Over the last decade Modi has reinvented himself as a 'deliverer of development', winning plaudits from India's powerful industrialists for his quick clearance of projects and praise from middle class voters for his efficient, relatively corruption-free civic management. That may put the party on track to get almost 200 seats. But the BJP's revivalist 'Hindutva' ideology continues to unsettle moderate Hindus, Muslims, Christians and other minorities who fear Modi could be an authoritarian leader with a communal mindset.

The new Aam Aadmi (ordinary peoples) Party that was born out of public anger after a spate of rapes and mega scams is rallying supporters by promising clean leadership. Its leader, Arvind Kejriwal, an engineer from the famed IIT system-turned tax officer-turned-activist-turned-politician, captured the nation's attention with a brilliant display of protest politics and grassroots guerilla tactics. His central position is that India's political parties are all party to the rot. But AAP is unlikely to win more than 25 seats, both because it lacks organizational depth and because a series of missteps have alienated it from India's first-time voters who were its early supporters.

These 18-year-olds account for a staggering 230 million of India's 814 million voters and could well determine the outcome of the election. For the last two decades neither the Congress nor BJP has been able to win the 272 seats needed to form a majority government and both have been dependent on support from smaller regional allies. This era of coalition politics has been a boon to parties, such as Mamata Bannerjee's AITC in West Bengal, Nitish Kumar's JDU in Bihar and Jayalaitha's AIADMK in Tamil Nadu. This time around, these players have understood the vulnerabilities of the major national parties and revived their hope of being able to cobble together a grand coalition of their own, a so-called Third Front. Though still nebulous and infirm, the possibility of a Third Front government supported by the Congress is also a possibility, even if it makes the spines of many citizens tingle. Previous experiments with Third Front governments have ended in disaster, as their fractured, ideologically disconnected members have been unable to muster the unity needed to govern.

Resistance to real reforms

While all these parties are doing an outstanding job of attacking each other none have presented any real plans or ideas for reversing India's problems. When pushed, most leaders only make vague commitments about furthering economic reforms. That is still seen as the only way to rebuild India's road to progress.

But economic reforms are only one cylinder of any country's economic engine. They can only take a nation so far on their own. What India needs today is to begin reforming the other three pillars of progress -- its bureaucracy, judiciary and political system.

This is exactly what China did after Deng Xiaoping began reforms in 1978. Economic reforms came first, but Beijing quickly moved to reforming its bureaucracy, particularly how it selected, trained, incentivized and empowered its officers. It re-jigged the manner in which government functioned, giving greater autonomy to provinces and brought new administrative practices into government departments. It has also set about strengthening the rule of law, building new courts and seeking to create greater predictability and speed in the delivery of justice (if only in non-political matters). Lastly, the Communist Party itself was put through serious and rigorous reform and change.

If India today lags China as Infosys' Murthy lamented, it is primarily because it has not understood that its initial economic reforms don't need to be expanded as much as supported by reforms in politics, governance and justice. Without this, all the progress of the last two decades will be bottlenecked.

Consider those slow cars clogging up India's new highways by driving in the fast lane. Economic reforms incentivized private players -- and government -- to build those of new toll roads. But this means little of the traffic on them still moves at 40 miles an hour. If the slowest cars on Indian roads drive in the fast lane it is simply because their drivers simply don't know better -- they think "slow drivers should stick to the side of the road and not hog the middle." This is because local governance is so broken there is no real training for drivers and licensing norms are both archaic and easily breeched with bribes.

Road policing is also negligible and roads are also crammed with slow-moving Vespas, rickshaws and other decrepit vehicles that should not be allowed anywhere near a highway. Bureaucratic bottlenecks means even the newest highways are littered with physical bottlenecks, such as single lane bridges over 8-lane roads, traffic lights on hi-speed highways, and even speed-breakers. Road signs are few and far between and often confuse drivers more than help them. Naturally, all this makes India's roads are amongst the world's most dangerous. Yet convictions of killer drivers are rare, with even cases taking years to progress in the courts.

Similar problems of economic progress being undermined by bad governance, corrupt politics and unreliable justice are everywhere. This is why when investors seduced by the apparent openness in India's economy invest billions of dollars in the "Indian dream" they often end up in nightmarish situations, with delayed projects, bureaucratic extortion, political face-offs and legal tangles.

But most parties are blithely ignoring this.

Political reform is an anathema to them. A proposal for government funding of elections has been killed by neglect. A push for campaign finance reforms is failing given Congress and BJP accounts show 75 percent of their contributions come from virtually anonymous and untraceable cash contributions. Initiatives to give states greater autonomy in raising and spending money are also ignored. A Supreme Court ruling that would have forced politicians convicted of crimes to forfeit their seats was also overturned by the government making legislative changes. Most parties do not even hold internal elections and since India does not have primaries voters have little choice over the candidates put up by parties.

Bureaucrats have also scuttled any attempt to rein in their powers and privileges. The Aam Aadmi Party is currently pushing for measures that would allow bureaucrats convicted of graft to be fired. But every other party is resisting this. The government is ignoring the recommendations of its own Administrative Reforms Committee and no opposition party has given any indication it would do differently. Attempts to make bureaucrats' appraisals public and link their promotions to performance instead of just seniority have also been ferociously suppressed. There is also intense resistance to break bureaucrats' monopoly on power by allowing government to recruit talented individuals from academia and the private sector. Instead, bureaucrats have taken over all the top positions in independent regulators that were created to counter-balance their powers. Other serious governance reforms, such as computerization of government files, the use of direct cash transfers and targeted subsidies, are also barely moving.

The courts, which were once held out as democratic India's greatest advantage over authoritarian China, are also in shambles. Despite a staggering 32 million cases pending in Indian courts, including 67,000 in the Supreme Court, hardly any new courts are being built. Astonishingly, most courts still shut for 90-120 holidays a year and attempts to cut judges' off-time have gone nowhere. Postponements and adjournments are routine and sometimes judges just don't show up for work. Sadly, where Indian judges were once renowned for their integrity, instances of graft are also rising. The government has used all this to push for a Judicial Standards and Accountability Bill that will bring transparency to the appointment of judges and allow independent investigation into charges of judicial corruption. But it has been hanging fire in Parliament since 2010 as the courts are resisting many of its clauses and claiming it is a backhanded attempt to usurp their independence.

This ensuing war between the government and judiciary ironically appeared to serve the cause of political reforms when the Supreme Court sought to give New Delhi a taste of its own medicine and push it towards uncomfortable reforms. It ruled that India's Central Bureau of Investigation, which is akin to the FBI and currently reports to the prime minister, must become autonomous. It also allowed voters the Right to Reject candidates (while stopping short of allowing the Right to Recall). But it went too far when it ruled that politicians convicted for two years or more for any crime would lose their seats. The government promptly shoved aside public opinion and propriety to pass an ordinance neutralizing the ruling.

Bureaucrats, who are also miffed at the government's intrusion into their fiefs, have also tried to strike back. The Central Information Commission, which oversees public requests for government information, ruled in June last year that political parties would also come under its purview. But all political parties simply ignored and refused to respond to requests for information. Last month, the CIC suddenly claimed to have lost all papers related to the ruling.

Such blatancy indicates India is far from repairing its broken administration, achieving greater probity in politics or giving people real access to quick and speedy justice. However, since it is still almost de rigueur for corporate India to speak optimistically of India's future, the industrialist Mahindra closed off his comments by saying the general elections will bring change. "We are just waiting for a new government to come," he said. But until India's next prime minister reforms India's idea of reforms, it may be a bit like 'Waiting for Godot.'