There's rationale in govt policies

The Indian economy has entered the second decade of the post-reform era. The past decade saw upswing and downturn in the economy, leading to a belief that perhaps we may have just traversed the first of new business cycles.

The decade also saw many structural changes including new forces of market competition, globalisation, and volatility of business variables, and not least of all policy evolution. Policy changes might well have been the most pervasive and impactful of these changes.

Policy changes have been evolutionary in nature and have been unpredictable; in a sense, they were excluded from sombre analysis thus far, and were taken as an event risk. Contrary to expectations that as reform took shape government intervention would peel off, the reality is that government in many ways has become indispensable!

Not only is its role in policy setting expected by the market more assiduously, but the government's financial support is becoming more important.

There are three streams of government -- the legislative, judicial and the administrative. Judicial discipline has contributed to the challenges of policymaking in its own way, but usually its role has been retroactive, rather than in shaping policies per se.

The administrative and the legislative streams have jostled valiantly within the political and bureaucratic sections. While the bureaucratic system is still predominantly in the control mode of operation, the political system's evolution has been rather more interesting.

While there is no attempt to downplay the role and impact of bureaucrats, perhaps it can be safely argued that the context of any new policy has been by and large set by the political system. It has been a rather excruciating journey over the past decade and promises to drag on into the foreseeable future.

The rationale behind political motivations and measures continue to baffle everyone who makes business decisions, and for whom it is very important to come to right conclusions on this score to be successful in business. Is there a method behind the political decision-making process? Can anything be done to make this analysis more deliberate and predictable?

There appear to be three types of politicians -- leaders (netas), lobbyists and professionals. The roles played by the different types of politicians are different, and indeed the methods they apply reflect the objective they seek to achieve. Therefore different analytical approaches have to be adopted in analysing their decision-making process.

When we look at the neta, he or she appears to be genuinely driven by consideration for the interest of his or her constituency. Such politicians realise that their success lies in their ability to deliver value to their constituency. They indeed are the most accountable in terms of performance measurement!

Therefore their decisions are motivated by their desire to serve their constituency in the best possible manner. Depending on the stage in the development of the constituency as perceived by these politicians, they would prioritise the constituency's needs into social, political and then the economic dimensions.

If in the perception of this politician, his or her people's needs are social recognition, a need to assert their own identity and basic survival needs, then economic reforms would be quite far from the mind. Whereas, if in the mind of these politicians, the service zone has passed the basic needs and is interested in greater economic advancements, pursuing economic reforms would make greater sense.

A politician whose constituency is largely agrarian is bound to ask for cheaper farm inputs, and would resist any reform that will remove or reduce subsidy. It is therefore important in analysing any decision support system in this context, to first make an assessment of what the politician thinks of his constituency and its needs.

The lobbyist's role is to find the balance in the system. Right from helping shape the coalitions that have now become the order of the day to scouting for support for their masters within and outside the political arena, lobbyists are the kingpins of the system. Their objective is to ensure sustainability of the political arrangement.

Even though they belong to a camp, they are not necessarily their master's voice. They are usually the arbiters who hammer compromises in the democratic system we have in our country. Theirs is an important role that is getting increasingly emphasised, as their ability to negotiate ultimately shapes the boundaries of decision making.

It is important to assess their ability and willingness to persuade their popular political support to sway from its natural position on any issue.

The professional politicians are the darlings of the so-called 'progressive' section of society. Undoubtedly they are credited with being objective in their decision-making process. Their objective is to gain respect in society by playing an important role at the highest levels of governance, and being seen as shapers of national destiny.

Their intellectual appeal to the worlds of business, external affairs, multinationals, intelligentsia, the fourth estate and so forth, makes them an important component in the political spectrum. To predict decisions emanating from them, one has to assess their predispositions and preferences and logically arrive at the positions they are likely to take.

Let us take an example. If the three types of politicians are asked, "would you support an increase in sugar prices?" the lobbyist's response is likely to be "yes" or "no" depending on whether they are supporting the sugar lobby or the chocolate manufacturers.

In case he belongs to the camp of a leader of an agrarian constituency, he is likely (if ever they speak definitively!) to support the price rise, unless he can get some tangible advantage by agreeing not to support. He is always in a deal mode! A professional politician, if convinced that the price rise is not justified on the basis of a study of input costs etc, may not support the price increase.

Now the lobbyist will be willing to try and convince his 'boss' not to push the price increase, if the professional is willing to drop some other proposal that is likely to have an even more adverse impact on the interest of the constituency of the agrarian leader.

Some may think the analysis above is an exercise in naiveté! Perhaps so. However, shorn of all the distracting noises that are usually made when politics is being discussed, a pattern clearly emerges when one examines the historical evolution of various policies. One is also able to see a good alignment between the interests and positions taken.

For those of us who feel all constituencies' interests will be served by higher economic growth, it is important to invest in the exercise to get that position bought in by the political class. Devoid of that exercise, the predictability of political decision-making system will always remain a subject of speculation.

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