Unwanted and illegitimate?

Wednesday, 15 August 2001
Parth J Shah
Economic Times

The tenth anniversary of India’s liberalisation program came and went. Mostly unacknowledged and uncelebrated, like that of an unwanted child, a child forced upon by the unpleasant circumstance that one rather not remember. It’s not just unwanted but also illegitimate. The father prime minister has disowned it. Even after ten years of birth, its intellectual, political, as well as bureaucratic parentage is in debate.

India’s 1991 reforms were a product of an act without commitment or passion. There was no vision for the future of the child, let alone a strategy for nurturing and raising it. Its continued illegitimacy would undoubtedly undermine the full potential of its success.

This is all due to the fact that our mindset has not changed. The mindset is still of mai-bap sarkar* and of dirigisme. It says that only the state intends good of the people and that only the state is capable of fulfilling it. People cannot take responsibility for meeting their needs without the direction and management of the benevolent state.

Our actions may have changed a little, but the mindset is the same. As Kanwal Rekhi says, India was a half-hearted socialist (nationliser), and is a half-hearted capitalist (liberaliser). Deregulation, privatization, liberalization, and free enterprise are chanted as mantras without much understanding of their meaning and implications. Or they are worn as talismans, as if their presence would sanctify any and all government action.

How else can we explain the creation of the new ministry of information technology in the era of liberalisation? The IT sector had made incredible strides without a special minister being in charge of its advancement. It was precisely the lack of government concern and support that put India on the global IT map. Nonetheless, why should there be any preferential treatment for IT? Isn’t the government determined preferential treatment of one sector of the economy over the others sine qua non of central planning? Central economic planning, even the bureaucrats incessantly remind us, is discredited and outdated. Why apply such pernicious method to the blooming sector?

The bullock-cart industry is also critical for the people, as they exist today, not as they would or are expected to sometime in the future. Won’t the people be free to decide on the allocation of resources into the IT or bullock-cart industry? Why should they be nudged or directed towards a particular industry? Doesn’t free enterprise mean allowing people the freedom to make these decisions on the basis of their preferences and knowledge? Should the judgement of the millions of people be sacrificed in favor those who happen to run the government of the moment? How else can we explain the continued existence of the Foreign Investment Promotion Board? Why should the judgement of a few men supercede those of thousands of Indians and foreigners who put their own money at stake? Does that promote or prevent investment?

Good infrastructure is crucial for economic growth. The government guarantees fixed rates of return to companies that invest in it. The contracts for such fixed rates of return on mammoth investments are negotiated by the bureaucracy that is still learning to write contracts for the purchase of garbage collection services from the private sector. The government does not promise fixed return on investments in education and healthcare. How else can we explain such guarantees for investments in electricity and roads except through the dirigiste mindset? A liberal government would make simple rules that apply to all investments and leave the people free to profit or suffer by their decisions.

The poignant paradox of the overflowing godowns of the Food Corporation of India with people dying of starvation has angered many to call for massive food-for-work programmes. We already have a gigantic bureaucracy of FCI to mop up grains from the people and we now urge for a new bureaucracy to distribute those grains back to the people. Remember Rajiv Gandhi’s memorable observation that only fifteen paise reaches the target group out of every rupee spent by the government, that is, eighty-five paise is swallowed up by the bureaucracy. If the observation is remotely accurate, just imagine the negative value added by the double whammy—one collecting grain and the other distributing it! How else can we explain the advocacy of creating a second bureaucracy instead of scrapping the first one except through the mai-bap sarkar mindset?

Use of education curricula for propaganda is an art perfected by the state all through the human history. The Congress used them to preach the glories of the Nehruvian socialism; BJP is now restructuring them for the benefit of Hindutva. Educationists are up in arms against saffronisation. But none is challenging the role of the state in determining the curricula. It is beyond the purview of the debate that the state has no role in this area, and that as long as it does maintain the control, it’s impossible to expect it not to use it to satisfy its supporters. To paraphrase Milton Friedman, a dog cannot be expected not to bark. How else can we explain the unchallenged role of the state in education curricula except through the mai-bap sarkar mindset?

Millions of children are without school and the quality of education is abysmal. But any one proposing to open a new school is required to obtain an Essentiality Certificate. The grant of the Certificate is dependent on education authorities’ judgement that a school is necessary in the proposed locality and that the new school would not adversely affect the existing schools. How else can we explain this license-raj in education except through the dirigiste mindset? As a first step in changing the mindset of mai-bap sarkar and dirigisme, we should drop the word “socialism” from the Constitution. This would remove the stigma of illegitimacy from the ten-year old liberalisation programme. It would be the best birthday gift on the eleventh anniversary.