Two of India’s most distinguished political leaders addressed a gathering of the country’s leading businessmen last week. The intersections and divergences in their views tell us a lot about the reform climate in the months leading to the next national elections.
The divergences are partly because of their current political status. Prime Minister Manmohan Singh focused on the immediate task of dousing the inflation
fire. He gave a sermon to the business audience, asking them to absorb higher costs rather than pass them down to consumers. What this means is that investors in public companies were asked to accept lower returns for their risk taking. We are quite sure that the economist Prime Minister knows this could harm the investment climate and the longer battle against poverty. He also repeated his message that lavish lifestyles of the rich can be a social problem.
Illustration: Malay Karmakar / Mint
Prime ministerial candidate L.K. Advani took a few potshots at the government. But, the Opposition leader also had the advantage of taking the slightly longer view. Though his speech did not get as much media attention as the Prime Minister’s did, he made an important observation: “…the soaring ambitions, aspirations and expectations of the Indian people, especially India’s youth, make it obligatory on any government to work with matching ambition.”
There were intersections as well. Manmohan Singh’s homilies on simple living and the social responsibilities of companies were part of a larger concern with growing inequalities. Advani, too, slipped into a similar mood in his speech, saying that it does not gladden him that India will have more billionaires than any other country by 2017.
There is little doubt that inequality is rising in India and that the growing gap could threaten both social stability and the legitimacy of further economic reforms. But what is disappointing is that these two perceptive leaders did not go beyond saying they are concerned about the problem. What bothers them more — inequalities in income, wealth or well-being? Are inequalities because of differences in skills, lack of competitive markets in some industries, poor infrastructure or some other factor? Should inequality be reduced by helping people stay on the farm or trying to move them out through labour-intensive growth?
These are the questions that matter. Tarring wealth creation in the name of inclusive growth will not suffice.
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