Does UPS and policy rollback show coalition weakness?

On Saturday evening when the cabinet announced the new Unified Pension Scheme (UPS), there was an immediate and polarised reaction on social media. One reaction straightaway was, “another U-turn” or “rollback” by the newly elected NDA government. The U-turn/rollback reaction had some legs to it. After all, the government had within two months of coming back to power taken back some of its key decisions: the plan for lateral entry into the government, the freezer boxing of the Waqf Board amendments by sending into the Gulag a committee and now the alteration of the one-size-fits-all New Pension Scheme (NPS) into the UPS.

The other pole of reactions said that UPS was a reform that should have happened earlier. Some said that the issue was not whether it was a reform or not but this was a government (and party) reacting to the signal from the ballot box, which reduced the BJP from a massive majority to a middling minority.

But the term that was common to both poles was this: coalition government. Call it coalition dharma, a term coined by the BJP legendary Atal Bihar Vajpayee or coalition pressure. Beyond the temporary rhetoric of social media, this phrase lays out a larger question: are coalitions bad for the economy and reforms (as we know them)? 

It’s not as if full majority governments have not rolled back plans for new laws, despite having the numbers. Take Modi’s record. Despite having a full two-term majority government, he did have to back down on the land acquisition and farm reforms acts. Of course, the government pushed through other laws and reform measures. But these two will stand testimony to the fact that numbers in Parliament don’t always turn plans into successes.

Let’s just quickly look at the last two months, which are the first two months of this coalition government, to get a snapshot of the coalition. 

The two biggest allies who are in support of the government are the TDP and the JDU. The TDP is led by Chandrababu Naidu, who is fairly well-recognised as a forward-looking and reformist kind of politician, the first ‘CEO-CM’ as some called him in his earlier stint. Nitish Kumar of the JDU has a reputation of being ‘Sushasan Babu’ or an able administrator and is unlikely to be much of an opposer of reforms. The other partner from Bihar, Lok Janshakti Party and its leader Chirag Paswan have been gently objecting to certain caste-based adjustments which in the end went in their favour – namely, the lateral entry issue.

It is the JDS, with two seats in Lok Sabha, which first openly questioned a government policy, with steel minister H D Kumaraswamy raising some issues about subsidies given to certain industries. It is not an entirely bad thing, to hear a minister criticize a policy of his government – a rarity in the last decade. None of these coalition partners have made any outrageous demand that would debilitate the government. At this point, these partners will create some checks and balances which will also resonate ground-up politically. 

So, to come back to the key question: is it necessarily a handicap to have a coalition government?

The best way to figure this out is to look at data as a comparison. The preceding 10 years saw two full majority governments. The decade before that saw two coalition governments. What were these two decades very different from each other by way of reforms, performance of the economy and political stability? 

Worse than the UPA?

The last part first. The 10 years of UPA were most definitely a bit of a house of cards. The drama of being elected to power unexpectedly, the appointment of Manmohan Singh as PM, the withdrawal of the Left’s support over the Indo-US nuclear deal, followed by the DMK bidding goodbye over the Indian government’s ‘soft stand’ on the then-Lankan government. 

It was indeed a kitchen manned by several cooks, but did that spoil the broth? If the proof of the pudding is in its eating, the UPA government did pass some enduring policy decisions: MNREGA, Right to Education, the civil nuclear deal, kicked off the Aadhar project, to name a few things. The next decade also saw some big policy decisions: GST, UPI and digital public infrastructure, a new foreign policy approach and so on. 

But what do the hard numbers say? The growth of the economy, the reduction of poverty, the increase of overall wealth and well-being of the country? Take a look at these numbers put together by The Hindu newspaper of the Union budgets, split into blocks of five years, to coincide with each term of the UPA and NDA governments. The top-line numbers, you will see, are almost the same, give or take. (The green ones show some of the variations, the yellow ones are the closely similar ones). There are a few outliers, yes & there was no GST collection during the UPA but there is very little difference. Remember, both regimes had to deal with two major economic downturns, one in 2008 with the global subprime crisis and one in 2020-22 with the Covid pandemic. Out of both, India emerged relatively unscathed.

Now, the final arbiter of the health of a nation’s economy and the success of a government’s policies: macro indicators and GDP growth. These are the numbers of the two decades. Here as well, there is no great variation in the values. All the numbers, again with a few exceptions, are more or less around the same range. These numbers are all from the government’s own data and statistics ministry, by the way.

In the end, the conclusion is pretty much clear: there is very little to say that a coalition government is going to be any worse for the country in the larger scheme of things than a full-majority one. But one thing is for sure: as far as observers and analysts of politics are concerned, it is far more exciting to watch a coalition navigate the complexities of a country like India, than a government with a full majority.