Is Congress attempting what the BJP failed at in 2004?

FirstPost, 4 November, 2012

The hour has come. Congress heavyweights from across the country rally behind the FDI in the Capital today. On the rope having taken one blow after another on corruption, the party is apparently going all out to shift the stage in the hope that the next elections can be fought on economic grounds.

Advocates of reforms (and the party) are relieved. Even the officially non-affiliated among them, most eloquently represented by columnist Shekhar Gupta, have cheered the Congress for finally shedding its hypocrisy of socialism with this “coming out party for its new economics”.

For quite some time, the Congress has been ridiculed by well-wishing experts for apparently believing that the UPA was re-elected in 2009 not because of the economic growth it achieved during its first term but in spite of it. These pundits seek to make a case by pointing out how the party, after a string of so-called socialist measures such as NREGA, performed poorly in the states where majority of India’s poor live but fared well in upwardly mobile regions. The conclusion, thereby, is that the party must unleash no-holds-barred reforms to retain its constituency of the prosperous India, if it still entertains any hope of making a comeback in 2014.

It is always good for politics to be ideologically upfront. But hoping that a certain ideology will reap electoral dividends just because it is upfront is naïve. It is also stupid to assume that a party’s hypothetical acceptance among the prosperous Indians can keep it in power. That amounts to claiming that the prosperous outnumber the poor in India. Worse, a variation of this strategy was tried out by the BJP to disastrous effect in 2004. India was not shining eight years ago. It still isn’t.

Surely, the Congress strategists in and outside the party know better than to ignore a lesson still fresh in history? What they mean instead, one guesses, is that uplifting a good number of poor in the upwardly mobile category will help them in 2014 and the means to achieve that miracle is more reforms.

Unfortunately, there is just not enough time before the 2014 polls for even a miraculous spurt of growth to percolate and ease poverty. What is alarming though, given the experience of reforms over the last two decades, is the possibility that this desperate rush for growth will push still more Indians to poverty and a bigger number of poor to destitution.

If this sounds like frog-in-the-well paranoia, let me clarify that India has no room for the anachronistic Left which includes the rabid environmentalist. Wealth generation depends on individual skill and risk appetite. But the demand for a level playing field, a prerequisite to free market in theory, is mysteriously dubbed as socialist obstructionism. Even school kids know that nothing comes out of nothing. Natural assets have to be harvested for growth. But demanding optimal utilisation — which includes ensuring maximum return — is as much good economics as environmentalism.

Liberalisation was a promise of freedom from bureaucratic red tape. It was supposed to unleash entrepreneurship and limit corruption. It has made possible, the emergence of globally respected Indian IT brands. But the end of the licence-permit raj did not stem corruption, only the excuses for it.

Corruption is natural in an economic culture that thrives on wanton exploitation of natural resources. In the early 1990s, a bankrupt economy desperate for survival had to pawn the so-called family silver and gold. But two decades on, should we still need to sell our minerals and water and land dirt cheap to ensure growth?

The fact that we have failed to move beyond a subsistence economy and that we still depend on distress selling of non-renewable resources, underlines the policy deficit in the North Block and Yojana Bhavan. It is either bad economics over two decades or an artificial and unrealistic growth target that has belied the promises of liberalisation.

That is why we need a second set of reforms that does not require ‘pre-subsiding’ investment (foreign or domestic) by doling out natural resources. That is not free economy which, on paper, honours ownership of assets and eschews coercion. Our markets need money but money also needs to multiply. We don’t need to be on the top of the global sellout chart to coax investment. That is a corruption of policies from which all corruption flows.

Then there is the question of equitability. Socialism maybe passé but every time we fawn over a rags-to-riches story as a sterling example of enterprise, we should ask ourselves a few questions. The poor farmer’s son who reached Harvard through an IIT did not go to a private school. His village had none and his father anyway could not have afforded it, just like he could not have taken the son to a private hospital each time he fell ill.

While there is much room for debating the best delivery system, expenditure on rural employment, health and education are not subsidies but investment in a country that prides itself on its human resources and where at least one-third of the population are poorer than the poorest of the world. They live in the most resource-rich areas of the country. It is one thing to keep selling one’s family silver to buy a good life; quite another to rob others in the name of growth.

The lot of the upwardly mobile is not exactly rosy either. The recent events at the Manesar car plant exposed the pathetic working conditions and incentives of industrial labourers. The call-centre boom has created a generation stuck with a job profile for life without any professional growth. And farmers are committing suicide even in Punjab, the cradle of the green revolution.

Of course, there is one little India that enjoys the benefits of a free market but a general election cannot be decided by those few prosperous Indians who anyway hate to queue up and vote. Perhaps the government should look elsewhere for hope. More Indians have mobile phones than those with access to safe drinking water or toilet. That is one majority the Congress can bank on while ringing in reforms.