Paternalism is for children. India has a grown up electorate
The Congress party has been desperate for some dramatic move to regain its credibility in time before the election. The promulgation of an Ordinance for the Food Security Bill exposes all the anxieties and phobias that the Congress has been subject to for decades now. The Bill comes from a psychology of mai-baap paternalism masquerading as socialism?a legacy of Indira Gandhi.
Few recall now that in 1971 Indira Gandhi coined ?Garibi Hatao? as a counter to the opposition slogan ?Indira Hatao?. She won and hence neither Indira nor Garibi were got rid off. Indira Gandhi?s contribution to the removal of poverty was entirely negative. She crashed the GDP growth rate and gave socialism a bad name by wholesale nationalisation of efficient private sector companies and by subjecting the remainder to blackmail and extortion by imposing an arbitrary Licence-Permit Raj.
She lost the 1977 election after six years of economic mismanagement but, thanks to the incompetence of her opponents, came back in 1980. At this stage, she abandoned socialism and went to the IMF to borrow money. Later, Rajiv Gandhi continued borrowing from NRIs. Neither, however, reformed the economy and so it crashed in 1991.
It was following Rajiv Gandhi?s tragic death that the Congress, by accident, had a non-dynastic Prime Minister for the first time since the brief tenure of Lal Bahadur Shastri. Then, as in Shastri?s time, the economic logic of Nehru-Gandhi socialism was abandoned. Shastri did it as a result of shrewd choice. Narasimha Rao had no choice but to plunge into the cold waters of economic reality. Thanks to Manmohan Singh?s boldness, India escaped from the disasters of Gandhian socialism. The economy was freed and growth erupted. India entered the 20th century 15 years after China and 44 years too late.
The next decade was a miracle one for India. Through two coalition governments and the BJP/NDA rule for six years, the economy reached new heights. Poverty declined faster than at any previous time during the halcyon socialist years. India became a part of the miracle formula of BRIC. National income, which had taken decades to double, speeded up its growth to double in a decade.
Alas, the BJP threw the election of 2004 partly due to complacency and also due to Vajpayee?s frail health. The dynasty returned to power. What followed was not only dual power of Prime Minister and the Congress president but also schizophrenia. Team Manmohan wanted to expedite growth and further liberalise the economy, the dynasty wanted to revive Grandma?s policies.
The UPA-1 was not bad. Growth rate stayed up thanks to the delayed fruits of NDA reforms and a thriving global economy. But even then the hunger for subsidies was not to be checked. So began the growth of subsidies, some tolerable and many regressive. India was soon spending more on subsidies than on health or education.
It was the UPA-2 which was worse. Team Manmohan was marginalised, or at best tolerated. The new prince was a socialist, a la Grandma. The economy slowed down. Scams and scandals erupted. Policy was paralysed. Inflation shot up and persisted for years. Now, the rupee is in free fall and RBI rightly refuses to oblige the government by cutting interest rates. Money is leaving the emerging economies and heading back home thanks to Ben Bernanke?s signals that the QE may end soon.
As of July 2013, there is not enough time left to gamble on an economic revival. The BJP may have thrown the last two elections by relying on ageing leadership. But this time around it has got its act together. Hence the new scenario. The Ordinance for the Food Security Bill. It is passed in the full knowledge that it would not have an easy time in Parliament. If the BJP cooperates in stalling the proceedings, there will be no scope for testing the vote in Parliament. Indeed, elections can be brought forward to November as is the latest gossip.
So, we need a Trojan Horse. The Food Security Ordinance is not meant to be implemented. Somewhat like the elephant?s tusks, it is for show not for any serious purpose. Indeed, one should hope that it will never be implemented. The new government can just let the Ordinance lapse. It is a gesture to garner votes not to be taken seriously as a policy move.
Hopefully, it will not succeed. It will not have time to be implemented before the election. The new young electors below 30 years of age will see that the resources they need for their skill development and their productive jobs are being siphoned away by a wasteful scheme. Kirana shops will face ruin if this policy of feeding 75% from PDS shops will take effect. Deficit reduction will be kissed goodbye.
Paternalism is for children. India has a grown up electorate. This will be the final hurrah of Gandhian socialism. Good riddance.
The author is a prominent economist and Labour peer