| Poll blues for Cong make markets see red |
| More assertive state players to leave UPA with less manoeuvrability on economic reforms |
| BS Reporter / New Delhi March 7, 2012, 0:42 IST |
Regional parties tasted spectacular victories in the two most crucial state Assemblies out of five whose election results were declared on Tuesday, bruising the Centre and damaging the fragile consensus on economic reforms.
The outcome enhanced the ‘veto’ power of state governments on further reform — whether disinvestment or financial sector reforms, such as those involving pension, insurance, etc, or even the creation of the National Counter Terrorism Centre.
It made the Congress-led United Progressive Alliance (UPA) government virtually hostage to the states, making it incumbent upon the Centre to evolve a more federal outlook.
| UTTAR PRADESH | |||||||
| Total 403 | SP | BSP | BJP | Cong | RLD | Others | NCP |
| 2012 | 225 | 79 | 47 | 28 | 9 | 14 | 1 |
| Change* | 128 | -127 | -4 | 6 | -1 | -3 | 0 |
| PUNJAB | ||||
| Total 117 | SAD | Cong | BJP | Others |
|
2012 | ||||
70
The Samajwadi Party managed to get a stunning 225 seats in the 403-member UP Assembly, unseating the 206-member Mayawati-led Bahujan Samaj Party government. In Punjab, the Shiromani Akali Dal (SAD) government, along with ally Bharatiya Janata Party (BJP), won 68 seats in the 117-member House.
| THE TALLY | |
| Party |
Seats |
Manipur returned the Congress to power for the third time, with 42 seats, but to the Congress’ dismay was the emergence of the Trinamool Congress with six seats. Goa saw the defeat of the incumbent Congress government with the installation of a BJP alliance government, with 21 seats of the BJP and three of the Maharashtrawadi Gomantak Party. Uttarakhand was wrested by the Congress, which got a one-seat edge against the BJP, possibly because of the defeat of outgoing chief minister B C Khanduri by more than 4,000 votes.
Sources in the Prime Minister’s Office said the government would get on with pushing critical policy decisions, including that on FDI in multi-brand retail. “For how long can we postpone it? You need to take hard decisions. There is no easy way out,” said an official. He added the results would not impact the Budget.
| WHAT THE MANDATE MEANS |
| For the UPA government |
| * The Congress has done badly, which will affect its will to push reforms |
| * It may be tempted to resort to populism next year when the countdown begins for the general elections |
| * Mamata Banerjee and Mulayam Singh Yadav could form a compact in Lok Sabha, slowing down reform further |
| * With 58 MPs to be elected to the Rajya Sabha, and a large number from UP, it will need the support of both Mulayam and Mayawati |
| * Its manoeuvrability will improve if it can play Mayawati against Mulayam |
| FOR BUSINESS |
| * A coalition government on the defensive may hold back key reforms |
| * FDI in retail unlikely. Mamata and Mulayam both opposed to it |
| * Big-bang reform Budget unlikely, baby steps on fiscal consolidation at best |
| * Sugar decontrol possible as Mulayam and UP sugar mills support it |
| * FDI in aviation possible if the proposal passes muster with Trinamool Congress and SP |
But, the newly empowered naysayers were equally quick to react. “We cannot betray our voters, especially after the stellar victory in Manipur and after gaining a considerable share of votes in Uttar Pradesh. We will never allow FDI in retail or pension reforms to happen and we will also be against the government on issues like price rise,” said Partha Chatterjee, top Trinamool Congress leader and the commerce and industries minister of West Bengal.
“The industry has no option but to wait and watch now, and it seems like we can bid adieu to FDI in retail for the time being. Mamata (Banerjee) was an influential force in the UPA. Now, she will not just retain her position, but will stonewall other reforms as well,” said a Kolkata-based industrialist.
In UP, one of the important features of the Samajwadi Party manifesto was a blanket ban on all land acquisition ‘except in emergency circumstance’. The party has also promised a commission to probe corruption issues spanning the past five years. This means tension between Mulayam Singh Yadav and Mayawati is likely to increase, and street clashes might follow.
Though the result sapped the Union government of confidence and weakened it politically, its Lok Sabha majority got a prospective boost. The Congress-led UPA will now be able to play the Bahujan Samaj Party (BSP) against the Samajwadi Party, which it would not have been able to had it joined the government in UP. Similarly, for all the talk of the emergence of a third front, it will be hard for politically disparate forces to come together with nothing binding them but antipathy to the Centre.
The hardest hit was Congress general secretary Rahul Gandhi, who came out for a brief public appearance and accepted the blame for his party’s disastrous performance in UP. He said the weakness in the party organisation in the state let it down. A top Congress general secretary said controversial statements by Congress ministers ev
