Home >Opinion >Online Views >The failure of India’s economic reforms

I’ve been writing on economic policies for many years now. Not that I am an expert in any sense of the term, but, well, one has to make a living, and people have been kind enough to pay me for writing on economic policies. I came into journalism six months before the liberalization process was inaugurated, so I suppose one can say that to some extent my career has been a by-product of economic reforms. And I am part of that Great Indian Middle Class, which apparently gained the most from reforms, made it to the cover of international magazines, and has been punished relentlessly for the last few years, for sins we must have committed, though we can’t remember what, how and when.

I have come to believe that reforms don’t matter. Economic policies don’t matter.

The story of Indian reforms, in Twitter-length statements, can be summed up thus:

1991-1993: Open up the economy, change mindsets, catch up with the world

1993-1995: Stop liberalization, even if that hobbles Indian industry just when it’s ready to take off

1996-2004: Liberalization at a steady, measured pace

2005-09: We don’t need to do anything more. We are rocking

2009-13: Indira Gandhi knew how to win elections.

This government, by all appearances, is committed to the poor of the nation. Let us assume that it is sincere. In fact, why should we assume otherwise, given the amount of money it is pledging for cheap food and education? In fact, in a country such as ours, any government should be spending most of its energies on the impoverished, the voiceless, the oppressed, the disenfranchised—not only in monetary or calorie intake terms, but in many other ways (the list will be long, and most of the items on it are common knowledge). There seems to be a lot of ways to achieve this end, and there are enough excellent economists pushing every different way, and backing up their stances with amounts of data, mathematics and rhetoric that numb the mind.

My mind is numbed.

In India, in this country, this nation, we have tried mostly everything, from Soviet-style socialism to welfare state to 50% laissez-faire. Has anything worked? All these heated debates about poverty figures—how does it really matter if the percentage of poor Indians is 18 or 36? The fact remains that we have the highest level of poverty in any economy of our size. Why do we still have so many poor Indians?

It’s not due to economic policies, whether we tilt towards a free market or towards more state control. It has nothing to do with whether we follow Hayek or Marx. Trillions of rupees have been spent by our governments over 66 years (whether socialist or liberalizing) to make the poor un-poor. We have failed because our system is corrupt, from top to bottom, from the most powerful minister to the lowest clerk in a tehsil office. We have failed because the money did not reach the people it was intended for. Thousands of our village schools exist only on paper, our primary health centres are dysfunctional, our mid-day meal schemes dole out food that is inedible, devoid of any nutrition, and sometimes lethally poisonous. And we know this, each one of us, but nothing changes. That is the basic problem. A shift in policy outlook does not affect it in any way.

We are a corrupt nation. In fact, as we have seen, when the disenfranchised gain power, they too very often focus immediately on looting, as if to make up for lost time.

The sort of detoxification that our nation needs to make it more equitable, just and, yes, actually richer, is beyond all economic theory. When the Cheshire Cat faded away, its smile still hung around in the air. In India, corruption is that smile. That smile needs to be wiped out. Everything else is mere detail.

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