NEW DELHI — India does not reconcile contradictions so much as inhabit them. Is there one god? Three? Gods? Without number? Yes, yes, and yes. Visitors are instructed to leave their Cartesian logic at passport control. This is contrary to my all-too-binary nature. But after two weeks in Delhi talking to people about the wrinkled, lumbering, battle-scarred pachyderm that is the Congress Party, I have begun to accept that it may be precisely Congress's capacity to live blithely with contradiction that accounts for its astonishing persistence (that, and the Gandhi family name).
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The other day, I went to speak to Meenakshi Natarajan, a parliamentarian and one of the party's bright young stars. Congress, she explained to me, had lost its way when it embraced economic liberalism in the 1990s but now had reached the right balance: growth-oriented policies to generate surplus to spend on massive schemes for the poor. Now, this makes no sense: A paternalistic welfare state, unless it sits on an ocean of oil, will eventually stop generating the growth that funds its generous outlays. And yet this is pretty much what the Congress has done since gaining power in 2004. If Congress has any prospect of winning the elections next year, it will be thanks to what the party calls "inclusive growth."
The budget speech which P. Chidambaram, the deft finance minister ("Harvard-educated," as the papers here like to note), gave earlier this week would have fit right in at, say, the 1984 Democratic convention, when U.S. liberals were beholden to its various special interests. He began by talking about the projected 12.5 percent increase in spending over the last year on Scheduled Castes -- or untouchables, as they used to be stigmatized -- and so-called Scheduled Tribes. Then the minister detailed new spending on women, on children and minorities, including a new bank for women. He had, he said, set aside $2 billion for a program to distribute food to the poor -- a plan which even some party officials thought might better be put off in the name of fiscal discipline. Chidambaram had goodies for every one of India's needy groups. The speech took almost two hours, in part because he had so many gifts to distribute.
And yet the speech also satisfied the business community, which wanted to see government investment in infrastructure as well as a commitment to reducing the deficit, which is now 5.3 percent of gross domestic product. Chidambaram appears to have crafted a growth-oriented budget which would generate surplus to spend on schemes for the poor. I still don't understand how he nailed this double-somersault so cleanly; it may have had something to do with an extremely aspirational growth projection which assumed an increase in tax revenue equal to the expenditures he proposed. In that case, of course, the miracle will vanish soon enough, though hopefully not before the 2014 elections.
Congress Party officials will tell you that their policies are "pro-poor," an expression which denotes not only the redistribution of wealth from haves to have-nots, as in most welfare states, but the use of direct state programs to supply food, work, power, fertilizer, and other essential goods to the poor as well as the middle-class. To put it simply, the Congress is a socialist party at a time when the West has abandoned socialism. But the government also commissioned Raghuram Rajan, a former senior official with the International Monetary Fund, to write the government's Economic Survey, which called for precisely the kind of reforms in labor market and land acquisition which party regulars stoutly resist. The survey came out the day before the budget speech. As Shekhar Shah, director of the independent National Council of Applied Economic Research, notes, it's impossible to imagine Barack Obama's Treasury Department issuing a major report so completely at variance with his own views.
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