Why did Sharad Pawar not support the BJP



India 1999: the prospects after the elections / Horst Mund and Klaus Voll. - [Electronic ed.]. - Bonn, 1999. - 19 pages: graph. Darst. = 58 Kb, Text & Image file. - (FES analysis)
Electronic ed .: Bonn: FES Library, 2000

© Friedrich Ebert Foundation






For the first time since 1984, the elections to the Indian parliament (Lok Sabha) confirmed an incumbent government. The National Democratic Alliance (NDA), an ensemble of 24 smaller regional parties, led by the Hindu nationalist Bharatiya Janata Party (BJP), won 300 seats. It therefore has an absolute majority that is sufficiently stable to ensure that the new government has good chances of survival in the medium term. Despite some regional gains, the Congress (I), led by Sonia Gandhi, came off disappointingly overall and suffered the worst defeat in its history.

In terms of foreign policy, India faces two main challenges: will it succeed in easing its relationship with Pakistan, which has been severely burdened by the Kargil conflict and the recent takeover of power by the Pakistani military? How can the looming improvement in relations with the USA be made permanent?

The elections have strengthened the proponents of greater world market integration of the Indian economy. With a series of quick announcements, such as the privatization of the insurance sector, the government is soliciting the trust of Indian and foreign investors. The government begins with the claim to carry out a "second phase" of economic reforms in order to achieve the growth rates of seven to eight percent necessary to overcome mass unemployment.



The overthrow of the second government of Prime Minister Atal Bihari Vajpayee in April 1999 did not lead to the alternative government planned by his opponents within the 12th Lok Sabha but to the elections in October. Congress (I) President Sonia Gandhi, widow of the former Prime Minister Rajiv Gandhi, was unable to unite a majority of all parties in opposition to the BJP government at the time, despite her outward confidence in victory. Your party suffered a considerable loss of reputation.

After the dissolution of parliament by President K.R. Narayanan, the Vajpayee government was able to continue its official business on a provisional basis and indirectly use the state apparatus for its own purposes for five months. The most recent military conflict with Pakistan, the so-called Kargil conflict in Kashmir, led to national solidarity and distracted from the ambivalent 13-month record of the BJP coalition government.

The flexible strategy of the BJP of entering into alliances nationwide with a total of 24 regional parties made optimal use of the vote potential of the NDA it led. The Congress (I), largely removed from important basic realities of Indian domestic politics due to decades of government power, strove for a sole government and was hardly able to form alliances with important regional parties.

The election process, which was carried out over six weeks under the greatest security precautions in five phases and concluded in October, was shaped by an almost "presidential" election campaign that polarized the top candidates Atal Bihari Vajpayee and Sonia Gandhi. The BJP and its NDA backed India's victory in the Kargil conflict Pakistan, the personality of the "liberal" prime minister and the aversions of the upper caste middle classes against Sonia Gandhi. The Congress (I) accused the government of failing in security policy in the run-up to Kargil and referred to what it considered to be a poor government record. Nationwide, however, it was predominantly local factors, the balance sheet of state governments and caste alliances, that determined voting behavior. Disenchantment with politics and elections impaired voter turnoutwhich, at around 58 percent, was four percentage points below that of the previous year.

The elections ended a decade of unclear majorities. The voters gave the National Democratic Alliance, led by the BJP, a clear government mandate and confirmed an incumbent Prime Minister for the first time since 1971. The absolute majority of the new government offers good conditions for the necessary political stability in the coming years.

Incidentally, the proportion of women in the Indian parliament has hardly changed over the decades, not even in this election. The BJP put forward 54 and the Congress (I) 50 candidates. Only 47 women entered parliament. Women make up less than nine percent of the MPs. Despite all the debates and declarations of intent in recent years, neither the 11th nor the 12th Lok Sabha reached an agreement on the intended reservation of a third of the parliamentary seats for women, especially because important parties for regulating quotas in favor of women were disadvantaged Layers (OBCs, STs and STs) entered.

Allocation of seats 13th Lok Sabha, October 1999

543 seats, 537 results


Since it was founded in 1980, the BJP has had a "liberal" and a "traditional" wing. The traditionalists, represented by Interior Minister L. K. Advani and Dr. Murlimanohar Joshi (Human Resource Development), are closely associated with the Hindu nationalist cadre organization Rashtriya Swayamsevak Sangh (National Volunteer Corps / RSS). You represent the politics of Swadeshi, i.e. an extensive economic independence of India, and want to allow foreign companies only in the areas of space, military and high technology, but under no circumstances in the consumer goods sector. The long-term goal of an "empire of the Hindus" (Hindu Rashtra) and the geographical concept of "Hinduism", which also extends to neighboring countries (Hindutva) officially did not give up the RSS yet. The liberal wing is led by Prime Minister Atal Bihari Vajpayee and Foreign Minister Jaswant Singh. He advocates an extensive opening of the Indian economy as well as a constructive balance between the religious communities and good neighborly relations in South Asia.

Obviously, the BJP recognized the limits of its own growth capacity and therefore pragmatically opted for a nationwide coalition course. It opened to layers that had little to do with the hard core of its ideology. In the "battle of two lines" during their 13-month term of office in 1998/99, the world market-oriented, liberal wing triumphed over the traditional one. In spring 1999, the latter accused the Vajpayee government of "selling out national interests".

The BJP hoped that this election would win both votes and mandates. Optimists in the party headquarters reckoned with at least 200, some even with 220 parliamentary seats. They assumed that the 1989 decline in Congress (I) and the phenomenal rise of the BJP would continue. The hopes were of course disappointed, the BJP was able to hold its 182 seats, but it lost nearly two percent of the vote nationwide. The further strengthening of Hindu nationalism with its claim to cultural hegemony therefore failed to materialize. On the other hand, however, the voters gave the BJP a clear mandate. At the same time, they also strengthened the federal character of the alliance, which is well expressed in the new cabinet.

The larger number of NDA partners and their partially improved performance are likely to increase the claims and the scope for negotiation of these parties inside and outside the government. The strategy pursued by George Fernandes to bring the socialists (Samata Party, Lok Shakti, Janata Dal-United) closer together proved to be successful and is likely to increase their negotiating potential, as well as considerable disruptive potential in government work.

With this election, Hindu nationalism undoubtedly consolidated. For the third time since 1996, the BJP moved into the Lok Sabha as by far the strongest parliamentary group. However, at least for the time being, it looks as if Hindu nationalism has reached its limit of growth and cannot win a majority on its own.

This raises the question of the strength of the allies. Since the mandates of the only two parties with a national reach, BJP (182) and Congress (112), together decreased from 323 to 294 seats in the last elections, the proportion of the other parties naturally increased. With the exception of independent parties (SP and BSP) in Uttar Pradesh, the BJP partners are the clear winners of this trend. The Telegu Desam Party (29 MPs) in Andhra Pradesh, the Shiv Sena in Maharashtra and the Janata Dal United, created by George Fernandes shortly before the elections, did well above average.

The partners of the BJP, loosely connected in the National Democratic Alliance (NDA), have gained in importance compared to the 1998 election due to their significantly higher number of mandates. Although this alliance of interests promises political stability, at least for the near future, it cannot be ruled out that individual coalition partners will maximize their interests in matters of fact and thus the central government could again become a plaything of regional interests.

For example, TDP boss Chandrababu Naidu, Prime Minister of Andhra Pradesh, declared unequivocally before the cabinet was formed that his TDP was not a member of the NDA and would only support the government from outside in a relevant manner. But perhaps Jaipal Reddy, MP from Andhra Pradesh, former minister of information and long-time spokesman for the "United Front", is not entirely wrong in granting the NDA parties the status of "dependent allies" of the BJP, which are fundamentally critical of sociopolitical ideas the BJP couldn't even comment.


In 1998, Sonia Gandhi, temporarily the last representative of the Nehru Gandhi dynasty, which had ruled India for decades, replaced Congress (I) President Sitaram Kesri, who was unsuccessful in the 1998 elections, at the head of the party. The politically relatively inexperienced party president, advised by a guard of predominantly older politicians without a real party base, tried a new programmatic start. Successes in November 1998 in the parliamentary elections in Madhya Pradesh, Rajasthan and New Delhi also seemed to confirm this path at the ballot boxes. Compared to 1998, the party was able to gain a good two percent overall, but still had to accept the loss of a further 29 seats. It slumped to a record low of only 112 mandates.

What are the deeper causes for the worst defeat in the history of Congress (I)? The party, which had dominated the political system for decades, insisted on forming the government alone, thereby alienating potential coalition partners. The small number of alliance agreements in individual states highlighted the relative isolation of Congress (I), in complete contrast to the BJP, which was still ideologically "untouchable" in 1996. And despite Sonia Gandhi's convincing personal successes in the constituencies of Amethi in Uttar Pradesh and Bellary in Karnataka, the Congress passed (I) strategy to make the party leader the albeit unspoken candidate for the office of prime minister.The upholding of the dynastic principle, combined with her Italian origin, kept the partly very personal and below the belt, even in the absence of an efficient party organization Attacks by their political opponents did not stand.

Further reasons for the decline in the mandate of Congress (I) lie in the split off from the Nationalist Congress Party (NCP), led by ex-Defense Minister Sharad Pawar, which severely damaged the party in Maharashtra. The promises not kept after the 1998 election in Rajasthan in favor of a reservation for the agriculturally influential layer of the Jats influenced their drift in the "Jat belt" to the BJP. Overall, the Congress results were rather inconsistent: positive results in some regions (Punjab, Karnataka , Kerala, Uttar Pradesh, Madhya Pradesh, West Bengal and Maharashtra) could not save the overall balance in view of the deterioration in other parts of the country (Rajasthan, Delhi, Goa, Bihar).

The numerically important, still traumatized Muslims in Uttar Pradesh predominantly preferred the Samajwadi Party (SP) and the Bahujan Samaj Party (BSP) as the most important opponents of the Hindu nationalist BJP, whose fanatical supporters demolished the Babri Mosque in Ayodhya in 1992 and thus civil war-like clashes triggered in large parts of India.

After the successes in November 1998 and in the individual state elections held at the same time as the 1999 general election, Congress (I) now governs in seven important states (Maharashtra, Karnataka, Madhya Pradesh, Rajasthan, Delhi, Goa) of the Indian Union, while the BJP is responsible for the Time only ruled in Uttar Pradesh, Gujarat and Himachal Pradesh. However, the prospects are good for the elections next year in Bihar and Orissa.

For the first time, Congress (I) was able to halt its chronic loss of votes since the 1989 elections. Herein lies one of the most important glimmers of hope for the party, which has already been written off by many. But only giving up the claim to hegemony and thus a real willingness to form a coalition, profound programmatic reforms in the interests of a predominantly poorer electorate, personnel renewal and improved organizational structures can save the party from another crash. However, it does not currently have the potential to form the core of a real political and programmatic alternative to the NDA government.


The disintegration of the Socialists, once an important opponent of the first Prime Minister Jawaharlal Nehru, began in the 1950s with an abundance of barely manageable divisions. Janata Dal, who was responsible for the first time as a minority government in 1989/90 - the only Indian member party of the Socialist International - began promisingly under the social reform premier V.P. Singh. The union of the scattered socialists with representatives of the middle peasants in an alliance with emerging regional parties (1988-91: National Front, 1996-98: United Front including the Communists) resulted in a political shambles within a decade. The sometimes almost feudal character of patronage, the deliberate renunciation of a real party organization and the increasing alienation of the upper and middle classes as well as persistent personal quarrels reduced the leeway in the political center considerably. The permanent social crisis and the obvious paradigm shift away from the state-oriented, dirigistic economic and social model also contributed to this. From 1989, around 18 percent, after the last split in the run-up to the elections, the flag of the last upright in the form of the Janata-Dal Secular shrank to less than one percent of the vote and a single member of the gardener caste.

The rest (Ram Vilas Paswan, Sharad Yadav) left the sinking ship just in time and grabbed the lifebuoy thrown out by George Fernandes in the form of Janata Dal United (about three percent of the vote, 20 MPs). Although Fernandes and his followers still see themselves as socialists, the JDU became the BJP's main stirrup holder. Their wages consist of relatively influential cabinet positions (telecommunications, civil aviation). Far from any echoes of modern social democracy, this collection movement is oriented towards using the state apparatus for personal gain and articulating peasant interests, but only partially those of the lower class.

The Indian left is essentially made up of the Communist Party of India / Marxist (CPI / M), the Communist Party of India (CPI), the All-India Forward Bloc (AIFB), which governs West Bengal, Kerala and the small north-eastern state of Tripura ) and the Revolutionary Socialist Party (RSP) together. Since 1989 there has been a steady decline in the votes and mandates of the communist left, although the basic social and economic structures could form ideal terrain for a progressive left. Instead, the Bengali communists, perhaps understandably in view of their ailing economy, are attracting foreign direct investment.

Although the CPI / M was able to retain its 32 seats compared to 1998, the loss of five seats for the CPI and two for the RSP led to a reduction in the left from 48 to 41 seats. Despite a verbally revolutionary rhetoric, for example, the CPI / M de facto extremely pragmatic and "social democratized". Its gerontocratic leadership is dominated by members of the upper caste who, for example, strictly reject political rapprochement with the Bahujan Samaj Party, which advocates the interests of the lower classes.

Regardless of their claim, the communists are not parties of national importance. They are limited to a few regional strongholds and very limited local areas of influence. With their approach focused on the state, they do not really offer an alternative social and economic modelas demonstrated by West Bengal. Ironically, the communists are losing in the urban working-class strongholds.In West Bengal, the Trinamool Congress, split off from Congress (I), and the BJP are even threatening for the first time their rural bastions, which have been considered impregnable since the 1970s through agricultural reforms in favor of middle-class farmers. Following the imminent resignation of 86-year-old Prime Minister Jyoti Basu, the influence of the communists is likely to decline further in the next elections in West Bengal.

The bipolarization of the Indian party system seems to be consolidating: on the one hand the NDA led by the BJP and on the other the informal main opponent Congress (I), supported by the communists. These two blocs as well as the political end of the socialists who do not support the BJP lead, at least in the short to medium term, to the end of all hopes for a social reform "third force" to separate itself from the two major parties.

In addition to the open (AIADMK in Tamil Nadu and RJD in Bihar) or informal alliance partners of Congress (I), only the Samajwadi Party (26 members) and the Bahujan Samaj Party (14 seats) were able to stand out as independent political forces with a longer-term perspective claim. The SP would probably not ignore an attempt to create a new "third force" that can never be completely ruled out in Indian politics, but it strictly rejects Sonia Gandhi's leadership role.


The election result reflects significant changes in the voting behavior of important social groups. According to a representative study immediately after the election, the BJP increased its pre-existing leadership over Congress (I) for both men and women; this applies to urban and, for the first time, even to rural areas. The party leads in all age groups and by a large margin in the numerically significant group of young voters.

Over half of the upper caste members voted for the BJP. However, it was primarily a positive one that ensured the consolidation swing of just over 15 percent within the strongest group in Indian society Other Backward Classes / Castes (OBCs). Just over half of the OBCs, who were influential among industrial workers and especially among the peasantry, voted for the Hindu nationalists. A third of the Dalits and Adivasis and even almost every fifth Muslim voted for the BJP, while in these groups the Congress (I) with almost 46 percent (Dalits / Adivasis) and over 62 percent (Muslims) leads by a narrow margin among the illiterate, who make up almost half of the electorate. For those with a school education, the BJP is far ahead of the Congress (I) at all levels.

It almost looks as if this election resulted in a consolidation of the "caste cum class society". Within a decade, the BJP has managed to expand its social base considerably. The Congress (I) has lost its former leadership role as a "party of the establishment ".



President K.R. Narayanan swore in on October 13, 1999, a day that astrologers calculated as favorable, for the third time in his career as Prime Minister after 1996 and 1998.

The 24-party coalition led by the BJP required, due to the increased presence of regional and state parties, that a wide variety of interests were adequately taken into account. Vajpayee therefore appointed a Council of Ministers with almost 70 ministers: 25 with cabinet rank and seven ministers of state with independent departmental responsibility, as well as 37 ministers of state without departmental responsibility. In order to achieve the desired number of ministerial posts, some departments had to give up parts of their previous areas of responsibility.

The cabinet clearly shows a continuity with the previous government in the key ministries. However, the previous trade minister Ramakrishna Hegde (Janata Dal United) and the former industry minister and "model Muslim" Sikander Bakht (BJP) were not taken into account. For the first time in the history of independent India, there is no Muslim cabinet minister. Akali Dal party from the Indian granary of Punjab is so far not represented in the cabinet after its severe defeat, so that the new government also has no representative of the Sikhs religious community, which is influential in rural areas. Mamta Bannerjee from the Bengali Trinamool Congress, responsible for the railways Incidentally, the only woman with cabinet rank.

The main ministers are: Interior Minister L.K. Advani, who has good relations with RSS, could succeed Vajpayee in an emergency. Foreign Minister Jaswant Singh, an exposed liberal and internally tough critic of the BJP's fundamentalist supporters, is responsible for shaping difficult relations with China and the USA (CTBT). Finance Minister Yashwant Sinha (BJP) explicitly advocates a second phase of economic reforms. He has good industrial contacts.

Defense Secretary George Fernandes will coordinate the increasing armaments efforts following the recent conflict with Pakistan. Dr. Murli Manohar Joshi is close to the wing of the BJP, which advocates extensive economic independence, and is actively involved in the "saffronization" of education. Manohar Joshi (Shiv Sena), Minister for Heavy Industry and Public Enterprises, is supposed to promote the deregulation of the public sector.

Murasoli Maran from Tamil Nadu is considered a determined modernizer. As Minister of Trade and Industry, he should also represent Indian interests on the international stage (World Trade Organization). The dynamic P.R. Kumaramangalam (BJP), an important Congress (I) politician until 1997, is still responsible for the energy industry, which is so important for infrastructure development. Ram Vilas Paswan (communications) and Sharad Yadav (civil aviation), both from Janata Dal-United and formerly determined opponents of the BJP, head ministries important to the modernization of India.

Among the seven ministers of state with their own responsibility are three women, including Maneka Gandhi (independents), Indira Gandhi's internationally known daughter-in-law. She sits down again as Minister for Social Justice and "Empowerment"Among other things, dealing with the rapidly growing army of millions of elderly people. The high-profile lawyer Arun Jaitley (BJP) is supposed to renew the state information and broadcasting system, which is threatened by competition. He is viewed by the prime minister as a politician with a promising future.


In the medium term, Indian foreign policy is essentially facing two challenges: How is the relationship with Pakistan shaping up, and will India succeed in improving relations with the USA in the long term?

In the spring of 1999, a noticeable relaxation of relations between India and Pakistan seemed possible. The visit of Indian Prime Minister Vajpayee to Lahore, Pakistan raised hopes that the patterns of conflict that had been practiced since the two states were founded could be overcome. In addition to the symbolic value of the meeting - it was the first visit by an Indian head of government to Pakistan for more than ten years - concrete steps to improve bilateral relations were agreed.

India had to feel betrayed by Pakistan when it became apparent in May 1999 that Muslim irregulars, supported by the Pakistani army, were advancing into Indian territory in Kashmir and occupying strategically important positions. After all, one of the confidence-building measures agreed in Lahore was to improve mutual information between the military in both countries. By mid-July, the Indian armed forces finally succeeded in repelling the infiltrants. The losses were particularly high on the Indian side; unofficial sources speak of up to 2000 fallen Indian soldiers. In its approach to the Kargil conflict, the Indian government imposed a relative restraint on its military; they were not allowed to cross the control line between India and Pakistan, i.e. the border in Kashmir, which was not accepted by either side as an international law. The strategic mix of a military response to the Pakistani aggression with strict adherence to the control line proved to be necessary and successful. Necessary because India and Pakistan were two nuclear powers facing each other. Successful as the international community, especially the US, welcomed and supported Indian reluctance.

The takeover of power by the military in Pakistan makes it difficult for the Indo-Pakistani relationship to relax. In addition, General Pervez Musharraf, who was responsible for the Kargil conflict, is now in charge of state affairs in Pakistan and Indian confidence in Pakistan has been severely disrupted. The response in New Delhi to announcements by the new rulers in Islamabad that they wanted to withdraw the Pakistani armed forces from the border was correspondingly cool.

Even if the new Indian government - like all its predecessors - refuses to make the Kashmir issue the core problem of the relationship with Pakistan, there will be no lasting improvement in bilateral relations as long as this conflict, which has existed since the two countries were founded, remains unresolved is. India would probably even be ready to accept the control line as a border that is binding under international law. In contrast, Pakistan, for which the "liberation of the Muslims in Kashmir from the Indian yoke" is an essential element. With the renewed seizure of power by the military in Pakistan, the chances of a real detente have fallen significantly for the time being.

After the low in Indian-American relations as a result of the Indian nuclear tests in May 1998, bilateral relations have recently improved noticeably. The United States honored India's relative reluctance in the Kargil conflict and also obviously recognizes that its Asia policy had focused on Pakistan (and China) for too long. For some time now, both sides have intensified their bilateral dialogue. Indian Foreign Minister Jaswant Singh and US Vice Foreign Minister Strobe Talbott met for a total of eight rounds of talks over the past 18 months and will continue their talks shortly. The US is pushing for India to join the Comprehensive Test Ban Treaty (CTBT). Furthermore, India is to stop the production of fissile material and further tighten its export controls for uranium and nuclear technology.

The Indian government does not want to negotiate under pressure. In doing so, she points out that, from her point of view, the economic sanctions imposed after the nuclear tests must first be fully withdrawn before the CTBT can be signed. In addition, the government wants to decide on the basis of a broad, bipartisan consensus.

President Clinton's visit to India in the spring of 2000 (the first visit by an American president to India in 22 years) is now considered safe, even if official confirmation is still lacking. In addition to questions of nuclear disarmament and bilateral economic relations, measures to combat international terrorism will also be discussed. A visit by the US Secretary of Energy, Bill Richardson, to Delhi at the end of October was apparently so successful that the US government announced the withdrawal of most of the economic sanctions against India.


The new government undertakes to continue and accelerate the process of economic reform. It is true that the current government program does not lack the indication that in the future one wants to rely more on one's own strength than in the past (Swadeshi). However, the concrete steps taken by the government in the first few days after taking office suggest that the reform process is gaining new momentum.

Structural weaknesses in the Indian economy, however, massively limit the government's room for maneuver. The government budget deficit is a particular cause for concern. The reduction of the budget deficit from six to four percent of the gross domestic product announced for this year will certainly be missed by a long way. The old and new finance minister Yashwant Sinha speaks of an "internal debt trap", since 60 percent of the total state revenue of around DM 42.5 billion has to be raised for debt servicing. As early as the spring, there was a ten percent increase in income and corporation tax and important indirect taxes, such as the excise duty, are in effect. In future, however, tax increases should only be used as a last resort. The same applies to tariffs, as these would primarily affect the manufacturing sector and the competitiveness of India Industry deteriorated.

A ten percent reduction in government spending was announced. A 35 percent increase in diesel prices has already been implemented. The government also promised to massively reduce the state's share. For the time being, publicly controlled companies still employ a good two-thirds of the total of 30 million employees in the formal part of the Indian economy (while over 90 percent have to find employment in the informal sector). The targeted privatization volume of the last household, which is extremely optimistic, is around DM 4.3 billion.

The government's economic strategy will focus on three key areas: infrastructure, agriculture and information technology. Whether the targeted growth rates of six to eight percent a year can be achieved depends not least on the extent to which the completely ailing physical infrastructure can be improved. One of Prime Minister Vajpayee's favorite projects is the ambitious plan of a two-lane super-highway from India's north to the southern tip and from the far west to the Burmese border in the east. This may be unrealistic in the near future, as it corresponds to the distances from the North Cape to Tunis and from Glasgow to Moscow. Nevertheless, the privately financed road project in the Mumbai-Pune industrial belt, for example, which will be completed in record time, has shown that it is also possible in India to implement projects on time and even more cost-effectively than planned if they are removed from excessive bureaucratic controls and administrative mismanagement are.

The same applies to the area of ​​power generation and distribution. Electricity demand cannot be met, especially in industrial centers. In addition, "commercial losses" - a bureaucratic euphemism for stealing electricity by illegally tapping power lines - cause enormous voltage fluctuations. Many industrial companies are therefore forced to make costly investments in a power supply that is independent of the public grid. The new government has the need The state of Andhra Pradesh shows that it is possible to win elections despite unpopular decisions. Despite extensive privatization of electricity distribution combined with massive price increases, the Party of Chief Minister Chandrababu Naidu win the state parliament elections. Voters evidently recognized that the quality of public services had noticeably improved under Naidu and were willing to pay a price for it.

The expansion of the infrastructure will not be possible without the participation of private capital - including foreign capital. The government is targeting annual foreign direct investment of up to US $ 10 billion. This is an extremely optimistic plan, however, because since the beginning of the economic reforms in 1991 the total amount of foreign direct investments in India has amounted to just under US $ 12 billion. The first quick decisions by the government were therefore also aimed at restoring the confidence of foreign investors, which had recently been shaken.

Particularly noteworthy is the announcement that private companies will den Access to the Indian insurance market to open; Foreign insurers are to be given a stake of up to 26 percent in Indian insurance companies. This will also have a positive effect on the financing of long-term, costly infrastructure projects. The necessary amendment to the law is to be passed in Parliament's "Budget Session" in February / March 2000. According to the chairman of the Indian Insurance Regulatory Authority (IRA), it will take around nine to twelve months to grant licenses to private providers issue, the first private insurers - with participation from abroad - could be on the market by the end of 2000.

in the Telecommunications sector there is a lot of catching up to do. Only two percent of the population have their own telephone; only one in 1000 Indians has a mobile phone.This very wide-meshed, also outdated telecommunications network stands in strong contradiction to the Indian efforts to become a "superpower" in the digital age and also forms an important obstacle for the further development of the Indian software industry, exports of which over the next ten years, see above At the same time, the telecommunications sector has enormous potential for development: experts estimate that a one percent increase in the density of the telephone network would lead to a three percent increase in the gross domestic product.

Deregulation in the telecommunications sector has only been approached half-heartedly in the past. While private operators can set up mobile phone networks in the larger urban centers, they have to pay extremely high fixed fees to the Department of Telecommunications (DOT). Due to an overly optimistic assessment of the market potential, all providers made significant losses. In the meantime, the private mobile phone companies and the new government have agreed that in future no fixed fees will have to be paid, but that DOT will participate in the providers' income. With the recently adopted new telecommunications policy, the procedure comes into force, with the previous providers still having to pay almost US $ 750 million in outstanding debts in order to be able to participate.

The government sees further need for action in the redefinition of the division of labor between DOT and the Telecommunications Regulation Authority of India (TRAI). In the meantime, DOT has a hybrid role as the largest provider of telecommunications services and as a regulator who sets prices and distributes licenses. In order to create equal opportunities for all competitors, i.e. in the future also private companies in the telephone sector, DOT is to be split into several independent companies (corporatisation).

Immediately after taking office, it was also announced that the legal basis for trading via the Internet (e-commerce) would shortly be created.

The measures announced so far met with a largely positive response abroad. If they are actually implemented, according to the American ambassador in New Delhi, India could expect more than six billion additional direct investments from the USA alone.

India's economy is still strongly characterized by agriculture; the official figures for the sectoral distribution of the national product (agriculture: 27 percent; industry: 30 percent; services: 43 percent) underestimate the importance of agriculture and rural areas. Three quarters of the Indian workforce find employment there. The degree of urbanization in India was only 27 percent in 1997, i.e. more than 700 million Indians live in rural areas.

Against this background, it is hardly surprising that the new government promises to continue massively promoting agriculture. 60 percent of the budget that has not been committed is to go to agriculture, rural development and irrigation. On closer inspection, however, this turns out to be an empty election promise. In the past few years, the planned expenditure for agriculture was not used. Despite an eleven year period of good monsoon rains, which are extremely important for Indian agriculture, agricultural development has lagged behind industrial development for some time. Here, too, the poor condition of the infrastructure is responsible for the fact that large parts of the harvest do not reach the consumer, but rather rot in the fields, in warehouses or on the street. The annual losses are estimated at almost 150 billion DM.

Indian agriculture ostensibly benefits from massive government subsidies, which are given with the aim of supporting the millions of small farmers in particular. Fertilizers, seeds, but also electricity and water are made available below market prices or completely free of charge. India's experiences are similar to those of the European Union: it is the large farmers who benefit in particular. Since the prices of many agricultural products are also administered and thus kept artificially low, a paradoxical situation arises. The effective subsidy rate is negative, i.e. the farmers receive state subsidies, but these are more than offset by the lower income due to the low prices. Due to the voter potential of the rural population, the government's announcement that all subsidies will be subjected to a thorough review with regard to their effectiveness is generally received with skepticism.


India trains more engineers per year than China and South Korea combined. At the same time, half of the Indian population can neither read nor write. This dualism points to the elite orientation of the Indian education system. Although since the adoption of the Indian Constitution in 1999 it has been promised again and again that everything will be done to overcome illiteracy, the political reality was different. Instead of investing in comprehensive primary education, all previous governments have massively promoted secondary education and university education at the expense of primary schools. The female population in particular has to suffer from this; six out of ten Indian women can neither read nor write. In this context, the government's announcement of free schooling for girls up to college level is to be welcomed. At the same time, it would be more than surprising if this plan were actually implemented.

Closely linked to the question of (female) education is the problem of population growth, which the World Bank reports as almost two percent annually, and this on the high pedestal of a total population of around one billion. Population growth, in turn, makes development efforts difficult; India’s poor population is 400 million and corresponds to the total population of the European Union.

More than seven million Indians enter the labor market every year. The likelihood of finding employment in the formal part of the Indian economy is extremely low. Almost 30 million people work there, less than ten percent of the total workforce, while more than 350 million have to seek a livelihood in unregulated employment, i.e. in the informal sector. Even if the government has announced ambitious plans to promote the informal sector, such as the establishment of a development bank for the informal sector, it can be assumed that this part of the economy will continue to grow in importance. India's economy will continue to be characterized by an extreme duality of the informal (subsistence) economy and modern, formally structured sectors.

One of the dominant election campaign topics was the question of domestic political stability, the lack of which has severely impaired economic development in recent years and, not least, deterred foreign investors. Already in the debate about the vote of confidence in April, the A.B. Vajpayee lost with one vote, the old and new Interior Minister Advani pointed out that the German model of a constructive vote of no confidence was preferable to the Indian one, according to which the head of government resigns after a vote of confidence without having to appoint a successor from the ranks of the opposition. The government is now planning to introduce the constructive vote of no confidence. At the same time, she wants to make it clear that Parliament cannot be dissolved during an electoral term. For the necessary constitutional changes, however, it needs a two-thirds majority, and it cannot be assumed that the opposition, from which around 60 votes would have to come, will agree to these plans without further ado.

The Vajpayee government is obviously serious about its plans to reserve a third of all parliamentary seats at the central and state levels for women. Such a reservation is already in force in the local parliaments and, as mentioned, has been sought several times in the past for the Lok Sabha and the "state parliaments".

The reservation of training and public service jobs for members of the "Scheduled Castes and Scheduled Tribes" is being extended for a further ten years. At the same time, a ministry for affairs of the indigenous population has been established.



Prime Minister Atal Bihari Vajpayee proclaimed after the election democratic stability, economic development and national unity as the main priorities his government. The transformation of the BJP into the most representative party with a considerable presence in almost all states favors the tendency towards bipolar structures with mandatory coalition and thus towards potentially greater domestic political stability. It seems that the political systemic crisis predicted by some observers could be averted.

The BJP, in the opinion of some critics "a party with fascist potential" (Jaipal Reddy), will have to keep its fundamentalist supporters, who are directed against the West and too much modernization, in check The temple in honor of the Hindu god Ram on the ruins of the former Babri mosque in Ayodhya can only be sustained politically through high economic growth.

For the first time since 1979 there is a government not led by Congress (I) with a clear majority. The mandate for continuity with change also forces a balance of interests in the ethnically so heterogeneous multi-ethnic state. A cultural hegemony in the sense of the hard core of the BJP and RSS, combined with a personnel policy infiltration of central state institutions, could seriously endanger this mandate.

India's leading industrial representatives expect the economy to develop favorably with good profit prospects in the coming half-year. The economically liberal BJP wing, which dominates the levers of power, responded to this optimism with its desired second phase of economic liberalization. The approval of foreign companies in the insurance sector - a future market worth billions of dollars is opening up there - will soon be the upcoming test. The maturity of parliamentary democracy will show, among other things, whether the Congress opposition, which agrees with government positions on a number of issues, is willing to cooperate. In addition to the consensus on fundamental foreign policy issues that existed in the past, agreement on important economic policy issues could also contribute to the stability of the political system in the future. India would then have the chance to establish itself as one of the leading powers of the international system in the 21st century.


© Friedrich Ebert Foundation | technical support | net edition fes-library | September 2000