Because India remains one of the last citadels of confused statism
JAITHIRTH RAO The Indian Express Monday, July 25, 2005 The Berlin wall fell sixteen years ago. Free market communism of the Deng variety has been in place in China with vim and gusto for about two decades. Latvia and Lithuania, parts of the erstwhile Soviet socialist paradise, have the lowest tax rates in the world! India, unfortunately, remains one of the last citadels of confused statism or shall we say statist confusion. There has been no khullam-khulla acceptance that socialism, or for that matter the socialistic pattern of society, the public sector from its commanding heights or lows, the “navaratnas” and their kin, counter-productive price controls pandering to middle class appetites for diesel and LPG and so on are, in fact, the principal reasons why we remain a poor country. We seem to believe that we will muddle through in a state of schizophrenia where we embrace market-friendly moves on Monday and revert to the socialist womb on Tuesday gifting high interest rates to the labour aristocracy and going round and round in endless hair-splitting about twenty-six or fifty-one per cent of phantoms of the Indic mind. Clearly we need an unambiguous platform that calls for a minimalist non-predatory state, a platform that recognises that but for Avadi, we would today be as rich as Korea or Malaysia. We would not have barefoot children begging in the horror-stricken moonscapes of contemporary urban India. We would not have two hundred million citizens, or shall we correctly call them “subjects” of our socialist state, going to bed hungry each night. We have no money for a well-paid police force or a well-staffed court system or for well-paved roads or for working schools or for employment for the rural poor giving them wages, mind you not doles! We have plenty of money for Ministries of Steel, Fertilisers, Coal, Chemicals, Petroleum, Civil Aviation and Banking with dozens of ministers, scores of secretaries, hundreds of joint secretaries and thousands of deputy secretaries. We never have shortage of funds for growing malignant government cells, but are always short of money for pursuing the proper ends of government. Chinese communists have no problems with flexible labour policies in SEZs. Our stalwarts of Alimuddin Street have to be more catholic than the pope. They oppose in India what they approve of in China. One wonders if they are being paid and guided by Chinese capitalists with the diabolical purpose of keeping India uncompetitive and backward! Can the BJP be the right of centre progressive political party we desperately need in this country? The prognosis is not too sanguine. When they headed the NDA government, only at the fag end of its term did they start to move on privatisations. They reversed the sensible policy inherited from their Janata predecessor and reverted to government tinkering with prices of petroleum products. They indulged in statist patronage in silly matters like licensing petrol pumps. Their sister organisation, the Swadeshi Jagran Manch, aired shrill diatribes against free trade. Once out of power, they have opposed platforms for free trade and VAT reform which they had themselves initiated. Their commitment to free markets seems to lack sincerity. The Congress under Rajiv Gandhi had a touch of modernism and when faced with a BOP crisis, Narasimha Rao turned out to be a pleasant surprise. I remember Manmohan Singh’s first budget where he quoted an Urdu poem offering to sacrifice his head, but not budge from his market-friendly plans. It was exhilarating. We all know that radical reforms make an impact only after some lags. We are today reaping the benefits of the reforms of fifteen years ago. But the Congress party seems to be shifting back to weak-kneed socialism. It is as if the embrace of reforms was entirely under duress, not a matter of conviction. Keeping Luddite coalition partners happy seems to take precedence over economic sanity. The intellectual descendants of Avadi, they who would have collectivised us then and who would throttle the nation’s productivity now, are both within the Congress edifice and hovering around it. The danger is that with half-baked reform, we may revert to the Hindoo rate of growth. And reform, rather than its inadequate implementation, becomes the scapegoat. The various versions of the Janata in different states take their lineage from Congress Socialists, the PSP and the SSP — all hysterical non-constructive political forces committed to stealing from the rich before they get rich and not distributing their meager pickings to the poor, but throwing them into vapid fires of pointless noise. They may on occasion have an affair or two with crony capitalism, but a healthy appreciation of free, fair markets, respect for property rights and enforcement of contracts — these are not matters high on their agendas. I am not even dealing with the politics of these groups — the nativist, revivalist platforms associated with the BJP, the dynastic nature of the Congress and the caste obsessions of the Janatas. One cannot move them towards conservative, quasi-libertarian political goals if they do not start with a healthy love for markets and a minimalist state. The Swatantra Party got a great deal of its support from the erstwhile princely order. Indira Gandhi knew this, which is why she defanged the maharajas. The danger of relying on business and industry to drive a new party is obvious. It will almost certainly degenerate into a den of crony capitalism. What, then, is the alternative? We are in desperate need of a Thatcher-Reagan revolution. We must be able to republish the 1962 manifesto of Rajaji and Masani and honestly embrace the market, not play footsie with it surreptitiously. Is there hope for this? I see a glimmer... a mere glimmer of hope, in a coming together of pragmatic regional parties. Now if the NCP, the Telugu Desam, the BJD and a few others came together and transformed themselves into a pro-growth, pro-freedom, anti-state tyranny platform on a national scale, would they pull it off? An intriguing thought — is there a Maggie Thatcher lurking among them? For the sake of our homeland, let us pray that there is one. The writer is chairman & CEO, Mphasis. You can write to him at jerryrao@expressindia.com
JAITHIRTH RAO The Indian Express Monday, July 25, 2005 The Berlin wall fell sixteen years ago. Free market communism of the Deng variety has been in place in China with vim and gusto for about two decades. Latvia and Lithuania, parts of the erstwhile Soviet socialist paradise, have the lowest tax rates in the world! India, unfortunately, remains one of the last citadels of confused statism or shall we say statist confusion. There has been no khullam-khulla acceptance that socialism, or for that matter the socialistic pattern of society, the public sector from its commanding heights or lows, the “navaratnas” and their kin, counter-productive price controls pandering to middle class appetites for diesel and LPG and so on are, in fact, the principal reasons why we remain a poor country. We seem to believe that we will muddle through in a state of schizophrenia where we embrace market-friendly moves on Monday and revert to the socialist womb on Tuesday gifting high interest rates to the labour aristocracy and going round and round in endless hair-splitting about twenty-six or fifty-one per cent of phantoms of the Indic mind. Clearly we need an unambiguous platform that calls for a minimalist non-predatory state, a platform that recognises that but for Avadi, we would today be as rich as Korea or Malaysia. We would not have barefoot children begging in the horror-stricken moonscapes of contemporary urban India. We would not have two hundred million citizens, or shall we correctly call them “subjects” of our socialist state, going to bed hungry each night. We have no money for a well-paid police force or a well-staffed court system or for well-paved roads or for working schools or for employment for the rural poor giving them wages, mind you not doles! We have plenty of money for Ministries of Steel, Fertilisers, Coal, Chemicals, Petroleum, Civil Aviation and Banking with dozens of ministers, scores of secretaries, hundreds of joint secretaries and thousands of deputy secretaries. We never have shortage of funds for growing malignant government cells, but are always short of money for pursuing the proper ends of government. Chinese communists have no problems with flexible labour policies in SEZs. Our stalwarts of Alimuddin Street have to be more catholic than the pope. They oppose in India what they approve of in China. One wonders if they are being paid and guided by Chinese capitalists with the diabolical purpose of keeping India uncompetitive and backward! Can the BJP be the right of centre progressive political party we desperately need in this country? The prognosis is not too sanguine. When they headed the NDA government, only at the fag end of its term did they start to move on privatisations. They reversed the sensible policy inherited from their Janata predecessor and reverted to government tinkering with prices of petroleum products. They indulged in statist patronage in silly matters like licensing petrol pumps. Their sister organisation, the Swadeshi Jagran Manch, aired shrill diatribes against free trade. Once out of power, they have opposed platforms for free trade and VAT reform which they had themselves initiated. Their commitment to free markets seems to lack sincerity. The Congress under Rajiv Gandhi had a touch of modernism and when faced with a BOP crisis, Narasimha Rao turned out to be a pleasant surprise. I remember Manmohan Singh’s first budget where he quoted an Urdu poem offering to sacrifice his head, but not budge from his market-friendly plans. It was exhilarating. We all know that radical reforms make an impact only after some lags. We are today reaping the benefits of the reforms of fifteen years ago. But the Congress party seems to be shifting back to weak-kneed socialism. It is as if the embrace of reforms was entirely under duress, not a matter of conviction. Keeping Luddite coalition partners happy seems to take precedence over economic sanity. The intellectual descendants of Avadi, they who would have collectivised us then and who would throttle the nation’s productivity now, are both within the Congress edifice and hovering around it. The danger is that with half-baked reform, we may revert to the Hindoo rate of growth. And reform, rather than its inadequate implementation, becomes the scapegoat. The various versions of the Janata in different states take their lineage from Congress Socialists, the PSP and the SSP — all hysterical non-constructive political forces committed to stealing from the rich before they get rich and not distributing their meager pickings to the poor, but throwing them into vapid fires of pointless noise. They may on occasion have an affair or two with crony capitalism, but a healthy appreciation of free, fair markets, respect for property rights and enforcement of contracts — these are not matters high on their agendas. I am not even dealing with the politics of these groups — the nativist, revivalist platforms associated with the BJP, the dynastic nature of the Congress and the caste obsessions of the Janatas. One cannot move them towards conservative, quasi-libertarian political goals if they do not start with a healthy love for markets and a minimalist state. The Swatantra Party got a great deal of its support from the erstwhile princely order. Indira Gandhi knew this, which is why she defanged the maharajas. The danger of relying on business and industry to drive a new party is obvious. It will almost certainly degenerate into a den of crony capitalism. What, then, is the alternative? We are in desperate need of a Thatcher-Reagan revolution. We must be able to republish the 1962 manifesto of Rajaji and Masani and honestly embrace the market, not play footsie with it surreptitiously. Is there hope for this? I see a glimmer... a mere glimmer of hope, in a coming together of pragmatic regional parties. Now if the NCP, the Telugu Desam, the BJD and a few others came together and transformed themselves into a pro-growth, pro-freedom, anti-state tyranny platform on a national scale, would they pull it off? An intriguing thought — is there a Maggie Thatcher lurking among them? For the sake of our homeland, let us pray that there is one. The writer is chairman & CEO, Mphasis. You can write to him at jerryrao@expressindia.com
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