Aam Aadmi is not the reforming party India needs, Financial Times,January 26, 2014

The leadership is trapped in the ideas of the old left, writes Gurcharan Das

For the past six weeks Indians have been mesmerised by the stunning success of the Aam Aadmi party, which has propelled its 45-year-old activist leader, Arvind Kejriwal, to chief minister of Delhi. The AAP – or Common Man party – is only a year old but its popularity is challenging the supremacy of India’s two main political parties, the left-leaning Congress and the Hindu nationalist Bharatiya Janata party.

Yet despite its many commendable features, the AAP is not the party needed to revive investment and growth and unlock India’s potential. Mr Kejriwal’s gentle, charming rhetoric seems to hide illiberal instincts. His party, furthermore, could prevent the formation of a stable government in this year’s national elections if it diverts enough votes from Narendra Modi of the Bharatiya Janata party, the leading contender.

The AAP has rapidly given many Indians a wonderful sense of nationhood. Its transparent fundraising contrasts with the murky electoral financing of other parties. Its strident rhetoric has forced parliament to enact anti-corruption legislation that had been languishing for years. Its politicians’ frugality has embarrassed those of other parties who live in sprawling bungalows with gun-toting security brigades.

A young, aspiring middle class, sick of corruption, is largely driving the AAP phenomenon. Filled with hope and ambition, it wants jobs, opportunities and a better life for its children. But the party’s leadership is trapped in the ideas of the old left and could take India back to its socialist past, the pre-1991 days when it was a perpetual underachiever. Since the leadership is out of sync with the aspirations of its followers, the party may yet hit a wall and run out of steam. It is a fate that has been met by many populist movements before.

The AAP failed its first economics test this month when it disallowed foreign investment in Delhi supermarkets. It did not realise that its supporters would prefer to work in modern supermarkets rather than dingy localkirana stores. It forgot that, the world over, the “common man” shops in supermarkets where prices are lower because large retailers shun intermediaries to buy their produce directly from farmers, passing on the savings to consumers.

Instead of fighting supermarkets, the AAP should have scrapped a law that forces farmers to sell through

official “agricultural produce marketing committees” – in effect, wholesaler cartels. This would benefit consumers, curbing rises in fruit and vegetable prices. It would also, for example, allow supermarkets to buy directly from farmers, keep the produce fresh throughout the supply chain and save food from rotting in the field.

The man in charge of running one of India’s leading cities has the opportunity to transform it into an innovative services hub, and to lift his supporters to the affluence enjoyed in the Asian tiger economies. But Mr Kejriwal does not realise that, since the arrival of the metro over a decade ago, Delhi has changed from an old bureaucratic town of constipated civil servants to become a lively commercial city.

His first move was to give all households 20,000 litres of free water a month – a populist ploy that will not help the poorest 30 per cent of Delhi citizens who are without running water. This middle-class subsidy will lead to meter-tampering and destroy the finances of the publicly owned water authority, leaving scant funds for maintenance, or for laying new pipes in poor neighbourhoods.

What makes Mr Kejriwal unique is his obsession with corruption. But to tackle it he will have to go beyond his favourite idea, the Lokpal, an independent anti-corruption agency with the power to expose wrongdoing by officials. At a minimum, he must eliminate opportunities for official malfeasance by reforming the bureaucracy and the judiciary. He has shown little inclination for this hard work.

Indian voters, unfortunately, do not have a choice when it comes to economic issues. Every party is left of centre; hence, reforms take place by stealth.

The space at the right of centre remains empty. More than the AAP, India needs a liberal party that openly trusts markets and focuses on economic and institutional reform. But this situation might soon change. Mr Modi is openly right of centre. Even though his own party is confused on economic issues, his state of Gujarat has registered double-digit economic growth for more than a decade through his ability to attract private investment. He may not be the liberal reformer India needs but he is decisive, business friendly and gets things done.

No party seems capable of winning a majority in the forthcoming elections, and voters are reconciled to another coalition. The AAP’s role might well be that of a spoiler, which will mean instability in a country where decision making has been paralysed for the past five years under Congress party rule.

The writer is the author of ‘India Grows at Night: A Liberal Case for a Strong State’