Restart: The Last Chance for the Indian Economy
Mihir S Sharma
Restart is right. What Mihir S Sharma documents, in his well-researched, entertaining and well-written book, is the sad story of the Indian economy over the past 67 years and the need for Indian thinkers and policymakers to restart the growth and development process. The tearful story Sharma documents is akin to the peeling of an onion—as each layer of elitist policy is documented, you cry a little. You pause, and think that it possibly cannot get worse. It does, and as you unpeel another fact, you cry a bit more.
Examples. The documentation of the Kafkaesque Indian labour laws meant to protect the elite worker. Or the hydra that is the exclusive domain of the Indian Left—smug NGOs or new colonialists trying to civilise society. The book is organised around these little gems that demonstrate how the Indian state has gone wrong.
Let me confess. Throughout the book, I was nodding in agreement and cheering Sharma. Well-written; excellently argued. However, equally, and especially in Part V of the book, ‘The Only Way to Grow’, I felt that Sharma’s ideological blinkers were entrenched in the Left-field, and his ideas ran counter to everything he believes (and I believe) should happen to the Indian economy if it were to well and truly change.
Let me explain. Sharma is well and truly against the monstrosity of labour laws and the elitist workers they protect and the meddling state they handsomely reward (with corruption). But how should policy change? By “making generous severance compulsory” (p 289).
Now wait just a minute, Mr Sharma. Who is to define generous? The same labour leader who fought for the rights of the elite worker, and made sure India lost out in manufacturing to every state in the world, let alone to neighbours like Bangladesh? Or the same socialist state that profits so handsomely via “the nice, kindly government inspector”? And how would this be any different than the ‘half-reforms’ you so ably criticise? Yet another example of Sharma’s contradictions is his touching faith in welfare programmes like NREGA. “The rural employment guarantee scheme is practical; only those actually desperate are likely to do the back-breaking work for the poor pay that it offers.”
I cannot believe this line is in Restart. This book is brilliantly about the road to hell being paved with pious intentions, and in exactly the same way as NREGA.
While Sharma has researched (almost) everything else, did he not also find that only 10% of NREGA funds actually reach the poor? I presume that in India, according to Sharma, food distribution schemes like PDS should be continued indefinitely because only the hungry will buy from the ration shops. And why should we complain about fertiliser subsidies to the ‘poor’ farmers as Sharma eloquently does—one doesn’t eat fertiliser so only those who need fertiliser will get the subsidy; and how can one be against fertiliser subsidy if it enhances fertiliser production and reduces food prices and food subsidies?
We need a rewrite of our economic history, and Sharma does make a significant contribution in this regard. However, there is very little blame laid by Sharma on the start of it all. A truly objective historian (to be objective is to be cruel) would start at the beginning, and the beginning was Jawaharlal Nehru’s doing. For example, construction of elitist IIT temples to the neglect of primary and secondary education. Most developing countries, Communist and otherwise, first learnt to walk before attempting to sprint.
The education base was expanded, equal opportunity in early education was made a reality, and then steps taken in higher education. Like the Neanderthal labour laws, inherent Nehru-Gandhi elitism meant that you enacted in the name of the poor policies that achieved higher schooling and incomes for the middle-class bureaucracy, and rent-seeking among politicians. While Sharma ably recognises the failure of our elitist education policy, he does not mention Nehru as the inventor of this socialist monstrosity.
While on the subject of the origins of Nehruvian failure: why is profit a four-letter word in India? Why does Left-wing intellectualism still have widespread appeal in India? Would India have been the unfulfilled state it has been all these years if instead of the state restricting economic freedom (Sharma rightly wants to abolish the IAS), it actually encouraged and enhanced the functioning of the market? I would recommend this book, warts and all, to all students of the Indian economy. India needs a change of mindset, and Sharma has valiantly embraced that path as the salvation of our future.
The writer is chairman of Oxus Investments, an emerging market advisory firm, and a senior adviser to Zyfin, a financial information company