In a recent blog, Prime Minister Narendra Modi asserted that India has replaced ‘reforms by stealth and compulsion’ with ‘reforms by conviction and incentives.’ That may true in the specific context he discussed—that is, relating to Centre-state relations and the incentivization of reforms—but in general conviction has been lacking ever since liberalization began in 1991. We never had statespersons like Margaret Thatcher and Ronald Reagan: the leaders who not just opened up the economy but also believed that open economy was organically related to individual liberty and democracy. This absence has had economic and political consequences.
Few politicians, if any, are celebrating 30 years of liberalization, the decision that boosted growth, galvanized development, removed the most baneful features of socialism, ushered in unprecedented general prosperity, and lifted millions of people out of poverty. In fact, there isn’t even an important constituency of reformists. The champions of liberalization are a microscopic minority, found mostly in the salubrious environs of the exclusive salons like the India International Centre and the India Habitat Centre in the Capital.
This, however, is a discourse among the converted; pro-reform economists, experts, technocrats, politicians, and bureaucrats discuss the finer points of economic reforms; there may be differences over details, but all of them are convinced that liberalization is good and inevitable. Unfortunately, this consensus is restricted to either these elite gatherings or the chambers of business like the CII and Ficci.
Further, public discourse and political debate remain mired in Leftist clichés and shibboleths; this makes the climate of opinion toxic, as it gets contaminated by dangerous and discredited socialist ideas. For instance, reforms are still regarded as pro-rich and anti-poor; this is despite the fact in the last 30 years tens of millions of people have been lifted from poverty. Since the politician cannot ignore the climate of opinion, they are not keen to embrace liberalizing measures.
In the UK and the US, this was not the case in the early 1980s when capitalism was re-established. The Conservative Revolution that began in the UK under the stewardship of Thatcher was preceded by decades of intellectual revolution. Thatcher was personally involved in the activities of the Conservative think-tanks. Similarly, Reagan was regularly in touch with Rightwing thinkers and institutions. A climate of opinion was created for carrying out economic reforms; capitalism did not re-establish itself in an ideological vacuum; only after combating Leftist rhetoric in the public domain was it possible to bury socialism. In India, nobody has bothered to address this issue.
Not surprisingly, liberalization in our country has been carried out under duress and by executive fiat. As is well-known, reforms in India were carried out because fiscal profligacy and the Gulf War had generated an unprecedented crisis. There was a dramatic fall in foreign exchange reserves because of the spurt in international oil prices. There was a danger that India might fail in its commitment to service foreign loans. It was in these circumstances that the Indian government decided to seek the assistance of the World Bank and the International Monetary Fund. The assistance did come, but with conditionalites—which, in essence, prodded India to initiate economic reforms, give up its disastrous socialist policies, and embrace free market. In what the champions of liberalization have called “the golden summer” of 1991, India practically gave up socialism as official economic policy.
What these champions have missed are three facts. First, free market was imposed on India, and that too by the West that is still regarded by many intellectuals as ‘neo-imperial’ in attitude and intentions. While socialism—with all its ideas and ideals and consequent policies—was debated, discussed, and critiqued before and during its high noon in India, free market managed to sneak into the country, with the help of the World Bank and the IMF. For this reason, it has always been seen as a ploy of the scheming West to re-conquer India. When Thatcher liberalized the economy, nobody castigated her at least on this count; for, Britain was not captured by a foreign company. Further, Britain had a tradition of market philosophy; in fact, it is the cradle of free market and individual liberty, with the benefit of home-grown philosophers like John Locke, Adam Smith, David Hume, and John Stuart Mill. In India, however, history as well as intellectual tradition suspected the motives and wisdom of market economy.
The second fact, tremendous intellectual hegemony of the Left, has also been largely ignored. This hegemony has so much perverted the nature of public discourse that kinky conspiracy theories pass off as well-established truths, clichéd pamphleteering as erudition, and sloganeering as analysis. In general, Leftist theory rules the roost.
Thirdly, the Left’s economic philosophy has been imbibed and internalized by the so-called Right—Sangh Parivar. Whether it is the issue of globalization or privatization, foreign investment or patents, there is hardly any difference between the views of the Left and the Sangh Parivar.
Against this backdrop, it was never easy for the ruling party, whether it was the Congress or the Bharatiya Janata Party, to carry out major reforms. The result: pre-liberalization abominations like regulations (now called compliances) and price controls get resurrected on one pretext or the other, impeding economic growth and development and thus checking employment generation. Low growth or stagnation occasions social unrest and disruptive politics.
There is no point holding political leaders responsible for sluggish growth and lack of reforms; the real responsibility, however, lies with thought leaders who must detoxify public discourse and flush out the poisonous socialist ideas from it. But would they do it? Well, that is the 5-trillion-dollar question
Views expressed above are the author’s own.
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