A Search For India In Economics—II
Dr R Balashankar
There is some truth in the expression, “hoist with one’s own petard.” I am quoting from Finance Minister P Chidambaram’s book A View From The Outside. Politicians write and speak one language when they are in the opposition and another when in power.
Chidambaram’s book is a collection of his articles between 2002 and 2004, when he was out of power and the NDA was in power. Between the two formations, with the Left playing the “character” role, we have the entire gamut of reform and globalisation– which we are discussing in this search for India in economics. Sad to say, no one looks saintly, and they are all past-masters in eating the crow. Out in the opposition they plead for the common man. In power, cronyism rules the roost. Then Chidambaram wondered truly pompously, what glue is it that keeps diverse parties together and answered, self-servingly, “I think it is the unabashed pursuit of money…virtually every Minister is reported to be building a personal fortune.” He is so appropriately quotable on his own government.
Chidambaram’s book is the best sample of doublespeak indulged in by politicians. He is not alone in this. The time however has come for both the ruling party and the opposition for a re-look, not only because of the contradictions in their words and deeds, but mainly because, the experience of the last two decades has proved that the model adopted from the West is a hypothesis whose shelf life has long expired. The BJP was initially right in opposing the WTO regime—though they later embraced it and implemented it—now the Doha round talks stumped, because of the recalcitrant developed world. The BJP has been opposed to privatisation of water, which is a divine bounty, which should not be left for corporate exploitation, but its opposition lacks conviction when in some cities under its control such experiments go unchecked. Soon even Delhi will fall prey to this whimsical extravagance.
Privatising national wealth like water, coal, forests, land or spectrum for corporate monopolization will only increase the suffering of people. Few years after Margaret Thatcher privatised social services citing public sector failure, UK had to rethink. After the 2008 meltdown the West has witnessed massive private sector collapse, the state had to bailout, holding major stakes in banking, insurance and industry that some economists predict that the US will be a socialist state in the next two decades.
The turning point in India’s post-independence economic thinking was the foreign exchange crisis in 1990 when India had to pledge its gold reserves and agree to IMF conditionalities to undertake reforms to get a loan. Have the European countries, now experiencing debt default crisis, faced any such humiliating regulations for the repeated bailouts now the IMF is offering? Rather the developing countries are being prodded to loosen their purse strings to help them. A prudent Germany is being riled and chided for not being lenient enough towards the recalcitrant welfare states to continue their splurge.
The chief votaries of reform in India are those who immensely benefit from it both nationally and internationally. The voice of India is less heard for two reasons. One, the Left which should have offered an intellectual alternative stands discredited. ( A recent Times of India report said the CPM stood at the top in corporate donations). They continue to be the bug bearers of UPA. Secondly, the nationalist swadeshi camp is confused with its political wing getting accommodated into the reform lobby. So along with the lobbyists selling the reform agenda became both their profession and pastime. It is nobody’s case that India needs no reform. The question is where are the reforms needed and the question is, if the reforms being propounded will actually benefit India or transnational conglomerates.
Chidambaram’s book has a subtitle, ‘Good Economics Works for Everyone.’ Has that been the case in the last eight years when the UPA has been in the saddle? Inflation, interest rates, infrastructure, income disparity, insecurity and inability to lead a life of dignity are the common Indian’s concerns the UPA failed to address. Stock market depression has shaken the investor’s faith.
As he attempts to kick-start the economy and “release the animal spirit”, remember what he said when he was in the opposition. “Foreign investment” he wrote in January 28, 2004, “is vital but what matters to the poor is investment in agriculture.” He criticized the NDA effort to allow FDI in the consumer goods sector. Will Chidambaram remember his own words when he plans, (canvassing opposition support) to bring FDI in retail trade, banking, insurance and pension fund? In December 2002 Chidambaram wrote “Before the year 2003 is out Shri Vajpayee must ensure that at least two dozen PSUs (including some banks) are privatized and that totally redundant jobs in the central government are abolished.” In the last eight years, his government has not been able to sell any PSU or their share divested. The privatisation talk foolishly made by some top NDA ministers then earned the coalition a bad name as a pro-rich government and contributed to its electoral rout.
Of course, now Chidambaram can at least redeem himself by abolishing redundant jobs like NAC, Planning Commission etc. which are white elephants in a post-Socialist economic environment.
Indian economic thinking is opposed to the state control of factors of production. Private initiatives and enterprises should be allowed a level playing field is also innate to this approach. Unfortunately some of our politicians who swear by Swadeshi often confuse this with free market economics. Under free market economy it is money that will rule the economics.
It is now widely accepted that market needs to be regulated for its own health. Fifty years of economic folly, when the West lived beyond its means, which most contemporary economists from that region are highlighting should teach India something. That, the choices are limited. The market driven consumerist greed which discourages saving, promotes high spending, with easy loan availability and crazy financial instruments which created the debt economy of the developed world cannot take us anywhere.