Sunday, September 23, 2012

Rousing a sleeping giant without moral authority


By Swapan Dasgupta

Reflecting on the spread of the British Empire to which he was passionately committed, Lord Curzon once remarked that “We have often blundered into many of our greatest triumphs.” Many Indians who cherish a vision of a vibrant India but were nevertheless disappointed by the prolonged drift in public policy could well be wishing that what Curzon held to be true for the Empire will also turn out to accurate for the Indian Republic.

Contemporary India has rarely conducted itself with a sense of mission. The economic deregulation initiated by P.V. Narasimha Rao and Manmohan Singh in 1991didn’t happen because the two were conviction politicians made by the same firm that created Lee Kwan Yew and Margaret Thatcher. India turned its back on an inefficient socialistic path at gunpoint. Likewise, the second wave of liberalisation was prompted by the NDA Government’s desire to offset the possible adverse consequences of the sanctions imposed on India by the West after the nuclear tests of 1998.

If Prime Minister Singh was indeed the great reformer he is portrayed to be, he would have unleashed India’s “animal instincts” immediately after his May 2009 victory when he had little to fear but fear itself. Instead, he waited till GDP growth had fallen below 6 per cent, the rupee was fragile, inflation soaring, the fiscal deficit out of control, politics vitiated by corruption scandals and business confidence at an all-time low. What would have been bold initiatives in 2009, grudgingly digested by a dispirited opposition and accepted by a people anxious for more of the good times, has become a last-ditch, cynical gamble three years later.

The public discourse in India cherishes boldness and decisiveness. To the extent that the Government has been propelled into a burst of activity, there is critical appreciation of the fact that there is more to the Prime Minister than the ridicule that was heaped on him for the past year. Industry bodies have rallied enthusiastically to his support, stock market speculators have given their thumbs-up, the editorial classes are awe struck and even a demoralised Congress appear to have convinced itself that it is better to have fought and lost than not to have fought at all. On the face of it, a sleeping and indolent giant appears to have been aroused.

However, as the old colonials used to remark, for everything that is true of India the opposite is also true. For the past 20 years, market economics has become the new consensus. With the exception of dinosaurs in West Bengal and Kerala and ideologues who nurture a visceral hatred of what they call ‘neo-liberal’ economics, mainstream India is committed to the idea of reform. However, like vocational education which is always good for the neighbour’s child, reform is also expected to be detached and morally uplifting at the same time. In the 1990s, reforms implied dismantling controls and opening up large chunks of a fortified economy to the private sector and global forces. This liberation from Nehruvian dogma unleashed entrepreneurship and put an end to the shortage economy. Some people got very rich but a larger number of Indians moved into the middle class and ceased to be impoverished. It was win-win situation.

Today, the situation is different. The Government is asking people to lower expectations, make sacrifices, to reconcile themselves to the erosion of subsidies and to tighten their belts—all for a larger cause. Unfortunately, for the past few years this larger cause has become both hideous and blurred. After repeated scandals, some involving unimaginable sums, the earlier mood of expectancy has turned to cynicism and disgust. The Government stands discredited; the political class is equated with venality and brazenness; and India Inc. is increasingly being seen as the nesting ground of cronyism and dodgy practices. Almost all the institutions associated with public policy have become objects of disrepute.

In an India overwhelmed by disgust and despondency, the Government’s plea for a sense of national purpose may well end up being viewed as a cruel joke. It has become necessary to refurbish the moral authority of the economic order first. Unfortunately, that is beyond the scope of economists.

Sunday Times of India, September 23, 2012

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