It is through the collusion of political parties with ideological intellectuals, for over six decades, that the fundamental belief of an average Indian has been that the state is the sole solution to most of our problems.
There’s an urgent need to change the way our society thinks. Only when there’s a broad consensus for reforms can we anticipate a series of big-ticket reforms that will truly transform our economy.
The headline may attract a lot of attention and some may even troll me for putting it out in the crudest manner, but it is important that someone gives us a reality check. By us, I mean the society in general and the way we’ve been wired over a prolonged 60-odd-year period of exposure to bad ideas.
There’s a reason why Indian policymakers have historically leaned towards socialist policies. By policymakers, one doesn’t really imply ministers or the political leadership but instead the permanent executive that formulates our administrative system.
A major problem repeatedly highlighted by Dr Anand Ranganathan has been of socialism delivering electoral results, which acts as an incentive for the political executive to let the permanent executive continue with status quo.
I, however, disagree with Dr Ranganathan as India is no longer a poor economy and therefore, we’re moving towards a more aspirational society. Sooner or later, the aspirations of people will lead them to realize the consequences of socialism and eventually, we’ll reward reformist governments.
A recent book on Indian elections by Dr Surjit S Bhalla, Citizen Raj, had argued precisely this as it forecasted a thumping majority for Mr Modi way back in January even before Pulwama happened (and this without any opinion or exit poll).
In many ways, the mandate of 2019 could be considered as a mandate for reforms, as India experienced one of the most reformist governments thanks to GST (Goods and Services Tax), Insolvency and Bankruptcy Code etc. However, the other underlying factor behind the success of the BJP (Bharatiya Janata Party) in 2019 was the micro- delivery of essential services at an unprecedented scale across the country.
With over six crore LPG connections, 100 per cent village electrification, one crore houses being constructed and over nine crore toilets being built — people could see the government delivering essential services. Moreover, with DBT (Direct Benefit Transfer) the government managed to reduce all leakages and ensure that money reached the beneficiaries directly.
All of these were contributory factor towards the 2019 mandate and the impact of any of these is something that would require a deeper investigation.
Nevertheless, it is in general believed that reforms don’t result in electoral success, or at least the big-ticket macro-reforms don’t benefit the incumbent government. To some extent, this belief is true due to the irresponsible nature of our political parties and ideological intellectuals.
A consequence of this is that often the confluence of political parties combined with ideological intellectuals influence the minds of average people against progressive reforms.
It is through such collusion for over six decades that the fundamental belief of an average Indian has been that the state is the sole solution to most of our problems. Therefore, if there’re no jobs then we want the government to provide us with jobs, if there’s increase in food prices we want the government to control it through price controls.
If the cost of a service increases, we want the government to subsidize it irrespective of whether we can afford it or not. The core mentality has been that government is the sole solution to our problems.
‘Government is not the solution to the problem; government is the problem’, this famous quote by US President, Mr Ronald Reagan, is very appropriate in the Indian context. Be it the issue of price control, of subsidies, of government regulation or of provisioning of goods through PSUs, wherever there’s government involved, there’s a problem. Yet, we continue to believe that it is the government that will find solutions to all our problems.
The misguided understanding is not so much as the fault of the society, but it reflects our failure as commentators to convince citizens regarding the importance of reforms. More than our failure, it reflects the problem with India’s political set-up and intelligentsia that often views policies through ideological lenses rather than its merits.
A consequence is that every pro-market reform that benefits our economy is shot down by the left-leaning commentators without really understanding the benefits of the reforms.
Due to this constant shooting down of reforms by the Left, most of the advocates of pro-market reforms have acknowledged it and found solutions to potential costs that these reforms may have on certain groups — and yet, there is a very strong resistance against these reforms.
Consequently, while the quality of reforms proposed by pro-market economists and commentators have improved, the quality of criticism of such reforms has become laughable at best. Despite this, we fail to create a conducive environment for big-bang reforms which causes political costs rather than rewards for undertaking such reforms.
A good example is land and labour reforms. The government rightly brought in the land acquisition ordinance and we saw the entire opposition oppose it. In fact, the issue was politicized to the extent that we saw agitations against the bill as political leaders managed to generate fear among citizens.
The fact that we saw our ‘leading thinkers’ oppose the act further made the task for the opposition Congress easier. In the process, those who were agitating forgot that they would have been the real beneficiaries of the land acquisition act!
It is well known that India has an over-dependence on agriculture as a source of livelihood. The only solution is to move people away from agriculture and towards manufacturing.
Doing so requires land for industrial units to be set up and therefore, what is required is a simultaneous shift of land and labour from the agrarian sector to the manufacturing sector. This would have resulted in providing better jobs to labour that was stuck in low-wage peasantry jobs while reduced pressure on agricultural sector would have benefited the farmers income.
But, alas, politics and misguided campaign of our thinkers ensured status-quo. Two subsequent droughts and three years later, these thinkers began to ask questions regarding the agrarian distress but they themselves are responsible for the destruction of generations due to their love for status quo.
The same issue would be true for even labour reforms as we will see some backlash regarding the same from labour unions but what people don’t understand is that labour laws may protect existing workers, but this protection comes at the cost of those who’re currently unemployed.
Stringent labour laws only dissuade companies from hiring new workers, so the question worth asking is if we want to provide additional protection to existing employees at the expense of young workers remaining unemployed? Yet, those who champion labour issues are the first to raise the issue of unemployment not realizing that labour-intensive manufacturing hasn’t taken off in India solely because of their mindless activism!
It is sinister, evil and even criminal, how our thinkers have robbed India of every opportunity to transform itself due to their ideological comfort.
More than that, it is frustrating because despite everyone being aware of the need for reforms, we’re unable to push for them as aggressively as some of the other nations. A consequence of this is that we end up growing below our potential rate of growth and keep discussing on how to grow at 8 per cent or above.
I am in no way absolving the responsibility of the government to undertake reforms. It must absolutely undertake such reforms in the interest of our country, and it has undertaken some of these reforms over the last five years. In all probability, it will continue to undertake such reforms in the future too.
But there’s an urgent need to change the way our society thinks. The government has the mandate to deliver such reforms, but we should do our bit by helping people understand the importance of some of these reforms.
Only when there’s a broad consensus for reforms can we anticipate a series of big-ticket reforms that will truly transform our economy.