New reality

New reality

As early elections seem increasingly likely, this is a good time to ask once again whether pro-market electoral platforms are necessarily signposts on the road to eventual defeat.

Received wisdom has it that unless the Indian state splurges on big welfare schemes, the poor will continue to remain poor. The result is that fiscal profligacy marches in step with electoral democracy, as governments try to bribe voters with profligate spending. These past few weeks, too, have seen several vote-grabbing populist schemes being announced by the government.

Perhaps liberal politicians should take heart from a recent survey—and do what is right. A 47-nation survey of global attitudes conducted by the Pew Research Centre, based in Washington, DC, throws up some interesting facts.

Some 76% of Indians surveyed (most of them in the cities) believe in the benefits of free markets, up by 14% since 2002. A huge 89% of the respondents thought that free trade is good for the country. The fear of multinationals, too, is a thing of the past: 73% of those who answered thought these companies had a positive impact on India.

This is a piece of evidence that should not be ignored. The relatively small sample size and its urban bias should not be allowed to make specious, statist arguments.

If such arguments are made, pause and think. Evidence from some very poor countries in Africa and elsewhere shows that people there are in favour of free markets and free trade. These are countries where damaging socialist experiments have been carried out. Like Indians, they have been chastened.

This is a glimpse of a new urban India that has seen high growth and rising wages in the past decade and more. That has happened because the state has backed off and let entrepreneurs, consumers and workers do what they think is best. This attitudinal shift is welcome, and should hopefully force political parties to move beyond their tired statist electoral messages.

In spite of this overwhelming urban evidence against it, follies in the name of creating equality (these days it’s fashionable to call it “inclusive growth") continue unabated. In the heat of these debates, genuine equality of opportunity has been buried as a policy goal. The more devious political parties try to disguise attempts at equality as measures to promote equality of opportunity. This is false.

Steps such as reservations in jobs, low-interest, almost free loans, gigantic anti-poverty schemes, may have had some rationale in the past. Now they are nothing but one big vote-grabbing exercise. If serious attempts at creating equality of opportunity are made, such policies would lose their rationale.

It is easy to dismiss the evidence by saying that it does not apply to the real India, living in poverty-stricken villages that have been untouched by economic growth. This is not quite true, going by the drop in rural poverty rates in recent years.

And rural India would be much better off with the creation of some basic infrastructure such as good roads, markets with real-time crop price information, big entry of private players and strong efforts to educate farmers about how markets work. India’s hardy farmers can meet any challenges after that.

Equally, the poor are by now much more aware of what they want and what they need. Good quality education, loans for starting enterprises, incubators to guide and nurture ideas and the freedom to pursue these goals, are public goods that very few politicians are interested in delivering.

If this is done, there would be less poverty and dependance on the state. Rural India would then gladly vote for free markets and free trade.

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