Raising growth rates as the single most important goal

THE PUZZLE OF INDIA’S GROWTH RATE The post-1991 economic reforms in India has been ridden with quite a few crises. Achin Vanaik busts the myth of their so-called ‘success’ The author is professor of international relations and global politics, Delhi University telegraphindia.com Thursday, June 22, 2006

In India what made the Nineties and the early years of this millennium different from the Eighties was a profound ideological shift greatly influenced of course by the collapse of the Soviet Union and the ‘socialist’ project. The new ideological-philosophical elements were an obsession with raising growth rates as the single most important goal of economic policy and the master key to development; and the subordination of all considerations regarding inequalities of consumption, income and wealth to the priority of raising growth rates.

In any case, belief in the validity of the Kuznet’s Curve (a disputed and criticized technical claim that high growth rates increase inequality to begin with, but eventually it decreases it) could provide a good conscience to those who might be embarrassed by this issue of growing inequalities. A belief that bad as market failures are (in the neoclassical economic tradition this is always a feature and is behind the concerns of such thinkers as Amartya Sen), they are much less of a problem than government failures. Hence the new ‘logic’ of systematically withdrawing the state from economic activity via steady and cumulative privatization of public assets, reduction of public investment and abandonment of Keynesian type macro-economic policies and the thinking that went behind them.