Indian business takes aim at AAP’s economic policies

January 16, 2014 1:46 pm

Indian business takes aim at AAP’s economic policies

By Victor Mallet in New Delhi

India’s upstart Aam Aadmi party, the champion of the “common man” propelled unexpectedly into power in Delhi by December’s state election, has enchanted millions of voters from all walks of life with its single-minded campaign against corruption.After less than three weeks of AAP government in the capital, however, Indian business leaders and urban liberals are growing uneasy. They find themselves dismayed by the party’s leftist economic policies, which they say are either incoherent or hostile to the free market.

According to these increasingly vocal critics of the AAP, Arvind Kejriwal, the former tax inspector who founded the party, is an old-fashioned ideologue who could reverse reforms that liberalised the sclerotic Indian economy two decades ago if he were to wield power at the national level. “Join the revolution” urges the AAP website.

“I’m just afraid they are going to take us back to an India before 1991,” says Gurcharan Das, a prominent businessman and economic commentator. “He [Mr Kejriwal] has to worry about growth, jobs and sustainable prosperity – investment in infrastructure – and he’s never talked about that.”

Surjit Bhalla, chairman of Oxus Investments, a financial advisory company, takes a similarly jaded view, calling the AAP “even more populist” than Sonia Gandhi, the leader of India’s governing Congress party. “They have really zero clue about how the world has changed. Their economic policies hark back to the 1960s or 70s.”

AAP leaders argue that in Delhi they have simply begun to implement their campaign promises – for example by granting increased subsidies for household electricity and water, and banning foreign investment in supermarkets – and that at the national level they are still preparing a policy manifesto, due by the end of March.

After winning 28 of the 70 seats in the Delhi assembly and being pushed into forming a minority state government with the backing of Congress, the AAP is now setting its sights on the national stage with plans to field candidates in most constituencies for the forthcoming general election.

“What we forget in all our excitement and media coverage is that this [Delhi] government is not even one month old,” Yogendra Yadav, one of the AAP’s leaders, told a news conference on Thursday. The party had gathered about 1.5m members and inevitably they did not all think alike, he said.

They are Jurassic. They smell of anarchy. They are a real threat to our system . . . AAP has some of the worst, third-grade people across the country

– Salman Khurshid, foreign minister

The AAP was formed just over a year ago, but its sudden popularity means it could threaten the dominance of the two main parties in India, the left-leaning Congress and the Bharatiya Janata party, the Hindu nationalist opposition whose leader Narendra Modi

 is regarded as more business-friendly.

Resentment of the AAP among established politicians was underlined by harsh criticism this week from Salman Khurshid, the urbane foreign minister and senior member of Congress. “They are Jurassic. They smell of anarchy,” he told NDTV television. “They are a real threat to our system . . . AAP has some of the worst, third-grade people across the country.”

AAP members dismiss such attacks as sour grapes. “We are not left of left, or for complete nationalisation of everything, we are not saying those things, we are not against FDI [foreign direct investment],” says an official party spokesman who asked not to be named. “It will be a pragmatic approach to the economy.”

Until the AAP surged on to the political scene, Mr Modi and the BJP were expected to be the main beneficiaries of public disenchantment with Congress, which has been in power for nearly a decade and overseen a halving of economic growth to less than 5 per cent annually.

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Mr Das, who used to run Procter & Gamble in India, predicts the new party will “self-destruct” when the aspiring urban young who voted for it in Delhi realise what the party stands for. “The first test they have flunked is FDI in retail. Those aspirers want jobs in supermarkets, not in kirana [small grocery] stores.”

Amitabh Dubey, director of India research at consultancy Trusted Sources, said in an analysis of the AAP this week that there was a danger it could become reflexively “anti-business” and damage the investment climate.

But he played down fears over the AAP’s penchant for subsidies: “The up-and-coming AAP’s potential damage to the cause of economic reform in India has been overstated. Indeed, there is no serious political force in India that does not use handouts as a political tool.”