Indian Independence: 70 years

Q1. What does the report card of the last 70 years read like – have we done enough to make India an economic power?

 A1: The first 30yrs of independence were wasted in socialist economic experimentation as Indian economy fell further behind the world (average). With gradual reversal of anti market policies since 1980 & then in 1990s we have started catching up with the Rest of the world. 

Q2. Where are we headed in the next 30 years, going by the present indicators?

A2: In the next 30yrs India will grow faster than the slowing Chinese economy, and therefore close most of the economic gap(%) which has opened with China in the last 30yrs.

 Q3. What specifics do we need to undertake if we are to become the world leader in the next 30 years – in economy, technology, strong institutions?

A3: Sustaining fast growth for next two decades requires both policy and institutional reform: The former includes Public Sector units(PSU), Public sector Banks(PSBs), land & labor markets to increase the flexibility & mobility of factors among different uses. Institutional reform includes legal, judicial, police, political & bureaucratic reform.

 Q4. Have the political leadership and the economic decision making and leadership served the country well in the last 70 years?

A4: Economic decision making by political leaders has been affected more by ideology than by data based economic analysis, showing what policies & programs solve problems & which create more problems than they solve. This started changing in phases: The first phase was in the 1980s, the second in the 1990s and the third has started in the 2014-15.

 Q5. Has economic democracy been concomitant with political democracy in the country?

A5: Constitutional democracy is the only system consistent with modern concepts of equal rights for all humans, and we must all work together to constantly improve its functioning. In my view it is a convenient evasion to blame all problems on bureaucrats & politicians. The failure is of Intellectuals, & all varieties of experts who propound on economic development policy. Their lazy use of ideology as a substitute for facts, data and analysis of problems, solutions & outcomes, shares much of the blame for bad policies and failed programs.

 Q6. How do you look at agriculture, manufacturing, services in the last 70 years? How do you look at their evolution in the next 30 years?

A6: The socialist control model of development of Agriculture and manufacturing through controls, public sector as drivers & domestic protection was a failure and is primarily responsible for Indian growth lagging behind World average till 1989. Import liberalization, particularly of capital goods(earlier restricted to USSR) in the 1980s and in the 1990s along with FDI was a major driver of productivity & growth acceleration in manufacturing. Agriculture sector remains shacked by controls and regulations, and consequently remains a repository of low productivity jobs. Two good monsoons provide a golden opportunity for abolition of import, export, trade & GM seed controls along with R&D, extension & spilling to spur productivity growth

 Q7. What have been the three biggest decisions of the last 70 years in the space of economic decision making?

A7: One, the removal after 1980 of production, investment, trade & Export-import (Exim) controls imposed during 1950-80, Two, the liberalization of the foreign exchange regime (which I recommended in a PC note in late 1980s & subsequently wrote the paper on "Dual exchange Rate" in November-December 1991), Three the constitutional amendment replacing many indirect taxes by GST

 Q8. What has been the role of the private enterprise in the overall growth of the country? What more can the state do to encourage private enterprises?

A8: It's a misunderstanding to think the License-Permit-Quota Raj has been dismantled. Controls & control mentality is deeply embedded in our political-bureaucratic-intellectual systems of governance. The "Ease of Doing business" (EoDB)  & "Tax Terrorism" elimination initiatives are another effort to identify & remove these oppressive controls. Agriculture & Education are two areas where controls remain oppressive & dis-functional? Both education & health sectors could benefit from modern, rational regulations

Q9. Can the right to food, right to health, right to education, and right to work become fundamental rights in the next 30 years, as India turns 100, in 2047?

A9: In my view the Indian adoption of "Rights approach" represents a gross failure to recognize and reform failed governance institutions corrupted by the ideologically driven LPQ Raj. The democratic constitution and our democratic polity defined development policy objectives have always focused on public welfare since independence. The reason they haven't been accomplished so far is bad policy, corruption & bad governance. Without reforming these there cannot be a sustained improvement in child malnutrition, health, education & employment creation. Passing of rights laws just serves to salve the conscience of Intellectuals.

 Q10. Where will be role of the private enterprise in the country, in the next 30 years?

A10: In a 2002 EPW paper I proposed a "New Development Paradigm." That Government, Private & Non-profit sectors must focus on areas they must and can do most effectively. Thus govt. must focus on Macro-economic policy, "Public Goods" & public goods infrastructure & social security nets, private sector on production & distribution of all goods & services, and NGOs/NPOs on social reform & social needs. I am hopeful we can reach this ideal in the next 20-25 years.

 Q11. Any concluding thoughts on when India turns 100 (in 2047) and where we are in 2017, when India turns 70?

A11: According to my definition of "Great Power" & "Super Power" India will likely become a Great power around 2035 (joining China in this category) and a Super power around 2050. Thus on India's 100th anniversary we will be celebrating the arrival of India into a Tri-polar World with two other super powers USA and China.

An edited version of this interview appeared in Business World on 24 August 2017, at http://businessworld.in/article/Connect-And-Collaborate/24-08-2017-124735/

Modi (anti-) intellectual Icon?

Socialist Ideology

     Since the ascendance of Shri Jawharlal Nehru, our intellectual discourse has been dominated by various versions and adaptations of Socialist ideology. The high priests ('Brahmins') of this ideology are the "left intellectuals" who dominate the public debate.  Many of us thought that the 1990s reforms, their success in accelerating growth and the consequent reduction of poverty would gradually change the discourse.  This optimism was premature, as the "left intellectuals" successfully fought back and re-established their primacy during the UPA regime (I & II).  The "socialist ideology" is so pernicious because it crowns the "left ideologues" as the arbiters of public morality (the prosecutor, judge & jury).  Their narrative is so widely believed, that if you oppose the left you risk being typed as uncaring of the poor, the weak and the humble!  Thus even 'conservative' or so called 'right wing' political parties have internalised the "left intellectual" narrative.  This uniformity of intellectual and political narrative is not good for the country. The Monopoly needs to be broken.

Competition

      A recent book on the role of institutions in economic welfare and growth concluded that "Competitive Politics" are as important as "Competitive markets" for sustained economic development and growth. This is particularly so in an Open Democratic country like India. India needs an alternative narrative of economic growth and welfare, that politically challenges the monopoly of the "left intellectuals." Though it is dangerous for a poor country to simple copy what advanced countries have done, the interplay of competitive markets and social policy in Scandinavian countries is instructive, provided we clearly understand the difference in institutional conditions and circumstances.

Iconic Challenger

    From my perspective, the most interesting thing about the rise of Shri Narendra Modi on the National Stage, is the challenge that he poses to the "Socialist ideologues."  The seriousness of the challenge that he poses, can be gauged by the minute dissection of his every statement and action and the virulence of the "left intellectuals" attack on everything that he has said and done.  Being from a poor family, a backward caste, an uneducated child who educated himself as an adult, a self made man, free of the corrupting influence of family rapacity, who has never used his humble background or caste to win votes (though he has used his religion). More than any other potential candidate for PM a man of the people. A Chief minister of one of the richest and faster growing States in India, who has been re-elected three times. A non-intellectual, virtually an anti-hero in intellectual context. 
    In sum, Narendra Modi is almost an iconic challenger to the "left intellectuals" and their ideological dominance of the political discourse. The question is whether this non-intellectual will be the leader who overthrow the monopoly of the "left intellectuals" and create a new "governance and growth," "right of center" national narrative to compete with the "socialist ideology"?

Conclusion

  From the very limited information available till now (opinion polls, media stories of writers' interaction with public) I conclude that Shri Modi has a better than even chance of becoming the next Prime Minister of India and of changing the political narrative of National welfare, governance and growth.[1]  What else he may do (good or bad) needs much more detailed analysis.

[1] For the possible direction in which the narrative may be changed see, Virmani, Arvind, "A New Development Paradigm: Employment, Entitlement and Empowerment, Economic and Political Weekly, Vol. XXXVII No. 22, June 1-7, 2002, pp. 2145-2154. [  NewParadigm4nf ]