India stayed with inward-looking policies leveraged on State centralisation and missed in the late 1960s, the bus of manufacturing relocation and broadening global trade, the one that took on board South Korea, Hong Kong and Singapore. And missed the bus once again in the early 1980s, on which rode South-east Asia and China. Having clambered aboard in the nineties, there is a tide of opinion that wants us to get off, and remain splendidly still as the world rushes by.
It is quite remarkable that with over a decade since 1991 behind us, the political voices raised against economic reform are so much more numerous than those of its advocates. Even more puzzling is that the rhetoric of the anti-reformers is sizeable in volume, while its advocacy consists of one-liners, such as ?we need more reforms?. Or apologia like ?reform with a human face?, as if reform typically comes with an innately cruel visage, or as if State-control is congenitally kind. It is a truism that the marketable will sell, the unmarketable will not. Little surprise that our political dialogue which has accommodated such hot-selling items as caste, religious and ethnic prejudice has had little place for the advocacy of economic reform.
What is this ghost that so haunts our politics? Is it that Indians favour State control over free enterprise? Perhaps the prolific activities of rent seeking corrupt officialdom, their counterparts in private business, and the unprincipled greed of many private agencies (such as schools and colleges which extract large donations etc) have come to symbolise free enterprise in many eyes. Rent seeking is perhaps viewed as free enterprise, and the dilution of governance standards and absence of suitable regulation evokes a desire for State activism. So, however complex the business of better governance might be, it is central for a functional society, and even more so when fundamental change is afoot in the architecture of an economic system.
At one level, it is easy to dismiss the ?Return of East India Company? platform. Voiced today most effectively by the right wing of the ruling BJP, the unifying theoretical formulation that links reform, foreign investment, multinational companies and World Trade Organisation, is a simple rehash of some early 20th century Marxists. Specifically, the under-consumptionist version, which believed that the central crisis of capitalism was its never-ending need for new (geographical) markets. Incidentally a formulation that Lenin dismissed for being too simplistic. Not so, think our latest swadeshis, who have borrowed ? I am sure unknowingly ? from the detritus of history. Or perhaps, they discovered it independently. It is difficult not to be reminded of what Marx once wrote, ?history always repeats itself ? the first time as tragedy, the second time as farce?.
But unlike visionaries, rarely are politicians fully out of touch with the pulse of the people. If so many of them are so loudly raising the scare of neo-colonial resurgence, and that too against their own political leadership in government, surely they are on to something. One part of which is the fact that economic reform has never been made an honest product. Reform was smuggled into the house of State at dark of night. The Congress in 1991 did not make a clean breast of matters and say that the State-centred, protectionist model of economic development had outlived all utility after 1970. Instead, it carried on as if reform was a natural outgrowth of the policy that had come before. Perhaps it felt that a break with economic policy continuity might be perceived as disowning its political heritage ? arguably its most valuable political asset.
But what is surprising is that, the BJP too has avoided restating reform as a break in economic policy. Worshipping at two altars is dicey business; people start suspecting the piety of State policy. Contemporary politicians are perhaps restrained by the chasm they perceive between the credibility of the politics and politicians of decades past, and their own, so they collectively claim the past.
All the more reason to come clean with why we need reform and how it relates to the everyday aspirations of the Indian people.
The author is economic advisor to ICRA (Investment Information and Credit Rating Agency)