With a raft of elections scheduled for
2006, Latin America's potential further shift to
the political left is capturing the world's
attention. The same economic, political and social
factors that are inspiring Latin America's
leftward shift are being replicated in India. But
rather than Latin America, developments in India
could provide the biggest political surprise in
2006.
Latin America's leftward political
shift, which began in Venezuela in 1999 and soon
spread to Brazil, Argentina and Uruguay, looks
certain to gain further traction in the months
ahead. The probability of leftists coming into
power after upcoming elections
in
Bolivia, Peru, Nicaragua, Ecuador and Mexico is
high. Arguably, the impetus for this political
shift has been the region's prolonged period of
weak economic growth, which has provoked
significant deterioration in social conditions.
India does not appear to have suffered
from Latin America-style economic weakness in the
past 15 years. Between 1990 and 2004, India's
average annual rate of real gross domestic product
(GDP) growth was about 6.5%. This compares to
average annual real GDP growth of less than 2% in
Latin America over the same period. However,
India's economic growth has been extremely uneven.
The real annual average growth rate of
India's agricultural sector was about 2% between
1990 and 2004. In sharp contrast, real average
annual growth of the country's industrial and
services sectors was about 7% and 8%,
respectively, over the same period. The uneven
nature of India's economic growth over the past 15
years stems from the fact that the agricultural
sector accounts for about 65% of the country's
employment.
While strong economic growth
since 1990 has benefited one-third of India's
population, weak growth in the agricultural sector
has strongly undermined social conditions for the
other two-thirds of the country's population. But
the deterioration of social conditions in India is
difficult to observe directly. India's official
poverty statistics, last published in 2000, showed
that the poverty rate declined by 10% to about 25%
between 1990 and 2000.
The apparent sharp
decline in poverty and its absolute level have
inspired considerable controversy. The decline in
poverty depicted in the 2000 statistics was
created by a minor change in census methodology.
In addition, many outside analysts have called
into question the government-calculated cost used
for defining the affordability of basic food
needs. Independent estimates of India's poverty
rate range from 30% to 75%. One thing both India's
government and independent analysts agree on is
that most of India's poverty is concentrated in
rural areas where agriculture provides the only
opportunity for income.
Apart from
statistical indicators, recent political and
social developments argue that growing income
inequality and poverty are inspiring a backlash
against India's government. This was very clear in
the aftermath of India's 2004 general election.
Despite the strongest rate of economic growth in
16 years, the incumbent National Democratic
Alliance was trounced in the polls.
More
significantly, India's far left political parties,
led by the Communist Party of India (Marxist),
reversed their long-term political decline,
becoming the third-largest block in the
legislature. Such is the strength of India's far
left parties that the current coalition
government, led by Prime Minister Manmohan Singh,
depends on their fading support to remain in
office.
Another indicator of looming
political change is escalating social unrest. At
its most modest, social unrest has taken the form
of politically motivated labor strikes across
India. Unlike industrial-related disputes, India's
politically motivated labor strikes have sought
change in the Singh government's economic and
foreign policies. Such strikes, which included a
nationwide protest attended by 50 million people
in September, have become increasingly frequent in
2005.
A much more disturbing form of
social unrest has also escalated in 2005 - India's
extreme left or Naxal insurgency. The Naxal
insurgency has garnered recruits from India's vast
number of poverty-stricken lower-caste members.
From just nine states in 2003, Naxalites had
spread their operations into 15 Indian states by
the third quarter of 2005. According to India's
Home Ministry, Naxalites have perpetrated over
2,000 violent attacks this year, killing nearly
800 people. This places the Naxal insurgency on
the same scale as the Kashmir insurgency.
Increasing social instability is applying
enormous pressure on India's coalition government.
Its relations with the left front alliance of
parties are deteriorating. Meanwhile, momentum
behind the creation of a political third front in
India is growing. Chances that India's
increasingly fragile coalition government could
disintegrate in 2006 in favor of a new leftist-led
coalition are increasing.
Jephraim P
Gundzik, president, Condor Advisers, Inc.
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