THE BLOG

A Clean Sweep

06/01/2014 11:20 GMT | Updated 07/03/2014 10:59 GMT

These are tough times in India. The nation faces its lowest GDP growth rate in the last decade. Unemployment rates have jumped to 4.7%, from 3.8% in 2012. Voters are disheartened by failed reforms and record corruption. Now, India's political future depends on how power negotiations in the nation are distributed and negotiated. If the Aam Admi Party (AAP) is able to fulfill citizens' expectations regarding participation, social justice, and due process, a shift in India's democratic paradigm is to be expected.

Caste and religion based politics have long been an active playing card of regional parties in India. Championing the cause of their respective regions, regional parties tend to be ideologically fickle. Initial party dialect and promises can readily swing back, depending on the political opportunities that become available, the ambition and convenience of their leaders, and by a need to further bolster electoral prospects. The incorporation of backward caste elites and members of the scheduled caste into Indian political passion has done little to reduce the enormous economic disparities that persist in India's social order. A 2013 report published by Credit Suisse reveals that 50% of India's GDP, and 90% of India's employment, is informal. Previous social welfare programs to reduce tax burdens and labour-market restrictions, such as the National Rural Employment Guarantee Act (NREGA), have been marred by corruption. An increase in the size of the informal sector negatively affects growth: first, by reducing the availability of public services for everyone in the economy, and, second, by increasing the number of activities that use the existing public service less efficiently, or not at all.

The key to the AAP's inclusion strategy lies in its social activism, and its citizen-centric governance approach. Kejriwal's quest to improve the quality of government institutions by enacting development policy dialogue is not a new approach in Indian politics. The AAP represents a deepening of democracy, however, because it measures and monitors governance by listening to the people, and not the interest groups. A growing demand for citizenship rights by common Indians has given rise to numerous needs for power and resources. The AAP meets both demands by actively involving voters as stakeholders in funding and party management. The utilization of social movements has been another key strategy in including voters, regardless of identity, as active participants in change. These movements have been formalized with the AAP's rise to power and the creation of a complaints commission launched post-December 28th. Class-like divisions within castes and religions, and the failure of the Indian state to provide public goods such as primary education and health, have eroded the power of identity-based politics, releasing new actors ready for political and social mobilization on grounds of national inclusion.

The impact of this deepening of democracy is likely to change the economic landscape in India. Numerous economic interest groups within India have long fought for a share of the nation's resources. According to academic Pranab Bardhan, the more the government satisfies these groups, the less it has to undertake crucial investments that require public money: the economy meets a bottleneck. The political accommodation of various castes and religions, through a variety of quotas and reservations, have impaired India's development and diminished government performance. The AAP model has created an accountable and well-organized local government, which increases the scope of democracy in the nation via responsiveness and responsibility. This move beyond symbolic politics is likely to ease particularistic pressures and increase economic growth in the longer term.

It the shorter term, however, the winner of next year's national election will have to deal with popular anger, as well as a noxious fiscal deficit and sluggish economic growth. Kejriwal's neo-liberal economic policies have been met with criticism, particularly with regards to proposed interference in the free market. This juxtaposition between an equitable agenda - the creation of a Lokpal, universal education, healthcare - and the profit of market capitalism, has long been in crossfire of India's growth prospects. It is clear that Kejriwal's goals regarding the reduction of corruption, and the creation of strong institutions where roles of countervailing formal and informal institutions of accountability are respected, are likely to make India a more attractive investment partner internationally. A survey on bribery and corruption conducted by KPMG in 2011 revealed that of 100 leading domestic and foreign business, 68 believed that India could achieve more than 9% of GDP growth if corruption was controlled. Corruption negatively impacts capital markets, decreases FDI flows, increases volatility in the stock market, and prevents institutional investors from investing in India on a longer-term scale. In terms of development, corruption reduces access to public services by diverting public resources for private gain. The stakes are high: if Kejriwal's focus on rebuilding private sector integrity and improving socioeconomic outcomes gains traction, writers such as Akash Kapur have argued that India will create a new, more equitable model of growth that can serve as an example for troubled economies across the world.

In the past, political culture in India has consisted of deep-rooted and enduring orientations. Movements that mobilized identities have, on occasion, established themselves as national movements, often through electoral mobilization. Yet the AAP represents a shift to movements that engage the state directly. The party has created an enabling environment to 'do the right thing', that is, it promotes and delivers services consistent with citizen preferences. It mediates conflicting interests, focuses on consensus building, and ensures a sense of participation and protection with fiscal prudence. In time to come, it is likely that this governmental stability will increase the trust of India's polity, triggering spillover effects for India's economic, social, and political health.

Nikita Malik has two master's degrees from the University of Oxford. Her research interests lie in South Asian and Middle Eastern politics. She currently divides her time between New Delhi, Amman, and London.