FE Editorial: Republic of entrepreneurs

Written by The Financial Express | Updated: Jan 27 2010, 04:28am hrs
Much of the conventional academic literature on democratisation, past and present, doesnt place a high probability on poor, under-educated developing countries establishing a consolidated system of liberal democracy. India chose to defy the conventional wisdom when it adopted a democratic constitution, based on universal adult franchise, and other freedoms, including the guarantee of fundamental rights of citizens, on January 26, 1950. Barring the brief inglorious period of an attempted subversion of the Constitution between 1975 and 1977, Indian democracy has held out well, even if the quality of institutions of various arms of the state has been undermined on occasion by meddling politicians. That the state has often failed to deliver on what the Constitution expected it to do, especially on the matter of economic welfare and social upliftment, is a reality. But the people of India have over 60 years learnt to distinguish between voting out ineffectual governments and overthrowing the constitutional system that underlies government in general. In fact, in recent times, as the Indian voter has become more aspirational, governments that are seen to perform have been re-elected, debunking the anti-incumbency hypothesis that had been built up over the last two decades.

Unlike in the political sphere where the Constitution served as a vanguard of freedom and political rights, where we went horribly wrong in the first 40 years as a Republic was in not according similar freedoms to individuals in the economic sphere. There is no milder way to put it than to say that India stagnated badly and fell behind many other emerging economies, particularly in Asia, in its quest to be a socialist economyinterestingly the term socialist as a description of the Republic in the Constitution was only added by an amendment in 1976. The last two decades, beginning with the economic reform of 1991, have done much to free the economy from the stranglehold of the state. Entrepreneurship has blossomed, economic growth moved to a higher plane and poverty has declined. All the fears of not being able to compete in the global economy have been proved decisively wrong. Unsurprisingly, India has emerged with great resilience from the global economic crisis. Still, much remains to be done to bring economic freedom on par with political freedom in India. The state still overregulates the economyRBI is perhaps the best example of an institution of the state holding back enterprise and further acceleration of growth. The public sector, despite recent noises on disinvestment, is still too large and employs far too many people to be efficient. On the 75th anniversary of the Constitution, 15 years from now, how much the country has achieved in terms of eradicating poverty and scaling up economic growth even more, will probably depend on the states ability to grasp the need for economic freedom to accompany the much admired political freedom we already have.