Middle class fear at rise of Luddites

Richard Orange
21 Apr 2009

What had the Mumbai chattering classes aggravated last week was the Samajwadi Party's manifesto, which wants to cut the use of computers, farm machinery and the English language. Voting in the world's biggest general election started last Thursday, and will move to both Uttar Pradesh, where democratic socialist Samajwadi has its stronghold, and Mumbai, this Thursday.

The final result is announced 16 May. The Samajwadi manifesto would be funny if it weren't so scary. “The use of computers in offices is creating unemployment problems,” Samajwadi argues. “Our party feels that if work can be done by a person using hands, there is no need to deploy machines.”

This is India's fourth-largest party, and since the ruling United Progressive Alliance broke with the communists last year, it has been instrumental in propping up the government. In India's messy coalition politics, it is likely to play kingmaker again. This election could see the return of the previously apathetic middle class to politics. But it could also see some of India's most irresponsible populists getting power.

What's causing the middle class nightmares is the prospect — unlikely but possible — of Samajwadi and other regional parties actually leading a winning coalition, teaming up with the communists, for example. If that happens, all bets are off.

* “Is the bear market over?” is the question Udayan Mukherjee, CNBC India's news anchor, almost always asks his guests. In the last six weeks, the Indian stock market has seen a remarkable turnaround — the Sensex is now up some 40% from its March lows.

The suavely smiling economist became the face of India's 2007 market bubble. At the end of 2007, when the Sensex hit 21,500 (having risen from 14,000 in less than a year), Mukherjee was still cheerily betting on 26,000 as the next year's peak. Instead, the index slumped relentlessly until it hit its low of 8047 this March. For now, Mukherjee is understandably still hedging his bets.

* A team from Tech Mahindra arrived in Hyderabad yesterday to take up the reins at Satyam, the fraud-hit IT Services company, which they won the bidding for last week.

Given the vast uncertainties about Satyam's real profitability and looming class-action lawsuits, the $1.1 billion (£756 million) valuation for the company is good going and neatly brings an end to a saga that was wreaking havoc on India's corporate reputation. It could also be a good deal for Tech Mahindra — it picked up the company at less than one seventh of last year's peak market value.