A Midsummer Night’s Dream

A Midsummer Night’s Dream
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First Published: Wed, Apr 29 2009. 09 09 PM IST
Updated: Wed, Apr 29 2009. 09 09 PM IST
As the world comes to grips with the enormity of the economic crisis, what’s the critical difference between the Congress and the Bharatiya Janata Party (BJP)? One wants to sell rice to the poor at Rs2 a kg, because the other has promised rice at Rs3 a kg. It doesn’t matter which is which. At such an unsustainable price, not only does it ensure that high-quality rice will not reach the poor, but that middlemen will become rich. Don’t expect average calorie intake to rise; meanwhile, the two major parties will continue haggling, like vegetable vendors in Jyotiba Phule Market, bragging that their prices are better.
And yet, no traditional party has made the economy—or its mismanagement—a major plank in the elections. It is left to an independent candidate like my friend Meera Sanyal, on sabbatical from her job as country head of ABN Amro Bank, to raise tough questions about economic mismanagement. May she win today in Mumbai South.
The BJP may claim to be more market-friendly, but its key campaign plank has nothing to do with the economy. Instead, its peculiar obsessions—the uniform civil code, the special status accorded to Jammu and Kashmir and the Ram temple it hopes to build in Ayodhya—recur. Again, an independent, Mallika Sarabhai, is challenging the BJP’s projected prime minister, Lal Krishna Advani, with difficult questions about his priorities. May she emerge victorious in Gandhinagar.
Our leaders are so old that they seem to think the low, “Hindu” rate of growth is the norm for India. The scorching pace of reforms since 1991 has passed them by, and they probably think the projected growth rate this year—5%—is a good thing. But to borrow a Keynesian phrase, that’s suboptimal equilibrium. At this rate, Indian income will double after 15 years and not eight. In stark terms, it means that this year some 10 million jobs will be lost. No party has an idea, or plan, to deal with the upheaval and unrest that might follow.
The lack of economic vision in party manifestos is stunning. Each party is desperate to assume the role of the nanny state, to take charge and distribute wealth, instead of creating conditions to help increase wealth. The tools available for the government are predictable: impose import quotas on some products (for example, Chinese toys), offer higher guarantee prices (to farmers), retain subsidies (on fuel) and lavish more resources on unproductive schemes. Deficit be damned—now estimated to be 12-14%. Inflation—which will hurt the poor more—is inevitable.
What’s next? Print more money? In fact, Indian politicians might even go one better: They are notoriously profligate with others’ money—recall the loan melas (fairs) of former minister of state for finance Janardhan Poojary—and it needn’t be different this time, if these manifestos accurately reflect the parties’ thinking.
Then there is Advani’s quixotic war on Indian money held abroad. Citing spurious data sourced from user-generated websites on the Internet, he has asked the government to bring that money back home. Even if one assumes that the figures are accurate, it is entirely possible that some of that money is held abroad legally; only some may belong to Indian citizens—and if they reside abroad, they need not owe taxes on that money; some accounts may be of people of Indian origin who are foreign nationals; and some may have a perfectly innocent explanation. In other words, it is a complex issue, and not an election slogan. Finally, it is not the government’s money: think of rule of law, due process and property rights.
Instead of expecting such a bonanza, the government should promote entrepreneurship by removing hurdles Indians must cross before starting business. India continues to rank poorly in the annual survey of the International Finance Corporation. No party has plans to reduce the number of days it takes to obtain all licences before starting business: In Orissa, it takes 160 days, in Bihar, 520 days. Commercial disputes take four years to settle in India, one year in China; bankruptcy court proceedings last a decade on average in India, but two years in China.
Politicians hate giving up control— think of the babus who issue those licences in Bihar—and they like to avoid making tough choices. Making rational choices implies selecting between two or more options. Deciding on one means giving up on the other. It is hard to choose, but as the late Nobel laureate Milton Friedman showed, left free to choose, most people will make sound, rational choices in their interest; Naila Kabeer, the Bangladeshi development expert, says respecting that right to choose will empower the poor. So let the people, not the government, choose.
Maybe in five years, or sooner, our politicians will listen more, talk less, and let our people be in charge. They haven’t taxed, or banned, hope yet.
Salil Tripathi is a writer based in London. Your comments are welcome at salil@livemint.com
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First Published: Wed, Apr 29 2009. 09 09 PM IST