24 Jul 2016

Best gift to the nation is to give economic reforms in current form quiet burial on silver jubilee

Discoursing on reforms in a deformed democracy is like being risqué in a morality play. For India’s Les Misérables, the markets are as alien as the latest iPhone. Yet the ruling establishment doesn’t miss an opportunity to ascend the soapbox to shout for economic reforms, which has only widened the gap between the rich and the poor. The Supreme Court judgments attract ire and fire of the moneyed class, who claim that these affect the investment environment. Recently, when the court directed deregistration of 15-year-old diesel vehicles in Delhi, a senior law officer moaned it will drive away investors. Past judicial pronouncements against corporate greed have been berated as excessive judicial activism.
For the last few weeks, India’s elite is toasting 25 years of economic reforms. Some have written books of praise and gained generous royalties. Others bestowed iconic status on personalities they credit with making India an economic power. Some proclaimed Temporary PM Chandra Shekhar, aided by finance minister Yashwant Sinha, as the unsung pioneer of liberalisation. For those with pronounced political and ideological affiliations, Manmohan Singh, working as P V Narasimha Rao’s finance minister, opened up the economy to foreign investors and started the process of disinvestment in PSUs. A calamitous coincidence was both Shekhar and Rao lost the elections after their tenures ended. Voters also rejected leaders who followed in their footsteps.

It is no fluke that economic reforms that incentivised the corporate classes are promoted only by the unelectable, unelected and unaccountable cabal of buccaneers. From 1991 to 2016, the increasing infiltration of foreign-educated market economists in the system have made reforms in India the only viable mantra for faster development. It is a revolving door. Come to India. Enter the establishment. Promote crony capitalism and move out once the dispensation changes. Get friends to occupy the chairs vacated to ensure continuity of thought and influence-peddling.

Naturally, notwithstanding an open arms policy, India ranks 10th in FDI inflows, according to a latest World Investment Report, much behind Brazil and China. Despite troubles in other parts of the globe, the Indian economy is expanding at maximum

speed and has become the third biggest in the world. The number of Indian billionaires has multiplied 10 times during the past 25 years. The number of private super jets owned by Indian tycoons has gone up by 500 per cent. More Indians are flying overseas and patronising luxurious hotels today than in 1991. Indians travelling aboard spend the most among all foreign travellers. Indian students studying overseas spend over $7 billion a year—more than the budget of the HRD ministry. Perhaps Indians have to thank liberalisation for being able to flaunt credit cards instead of fumbling with traveller’s cheques in foreign cities.

We have come a long way since 1991. Perhaps blinded by the dazzle of the expense account economy, no questions are asked about why during the same period India’s foreign debt rose. Most Indian banks are staring at bankruptcy. Millions of homes languish unsold all over the country, giving a bad name to the realty business. Over `7 lakh crore of bank loans are locked up as unproductive assets. There is hardly any tycoon whose company hasn’t defaulted on loans, while their personal net worth bloated in comparison with the inverse profitability of their companies. Yet they clamour for more reforms. They lobby with the government to relax every rule in book to make public money available at lower interest rates. Even political leaders plead in favour of rate reduction on bank savings so that the middle class is forced to invest in the massively manipulated stock markets. Corporate hawks and their angel investors, instead of squaring off their bank debts, push for legislation, which facilitates the raising of money from the market free of cost.

Reforms are both politically correct and lucrative for the gilded class. Any slogan can be justified, any ideology amended and any law can be rewritten in its name. For the past few months, international lobbyists are using every trick in the book to force the government to relax the upper investment limit so that more money from the Employees’ Provident Fund flows into the markets. Though the Sensex has risen manifold since 1991, the number of retail investors hasn’t grown proportionately because people have lost faith in market managers due to multiple scams.

In terms of the Human Development Index, the country is way behind on many parameters. The truth is, Indians have been borrowing heavily, internally and externally, to keep the pro-rich reform process going. India’s foreign debt stood at $485.6 million by end of March 2016—over 10 times of what it borrowed 25 years ago. Statistically, every Indian is `43,000 in debt. Concerning HDI, India ranked 130 among the 188 countries studied by the UN Development Programme. Its report says India’s 2014 HDI of 0.609 is below the average of 0.630 for countries in the medium human development group. Among South Asian countries, it stands above the average of 0.607. But therein lies the rub. The report says, “however, when the HDI for 2014 value is discounted for inequality, the HDI falls to 0.435, a loss of 28.6 per cent due to inequality in the distribution of the HDI dimension indices”. 

India ranks 154 in per capita electricity consumption. Even in war-torn Syria, a citizen consumes thrice the amount of power than an Indian. The number of unemployed and under-employed youth has grown vertically in the Reforms Age. India can boast of world-class hospitals, but they don’t release the bodies until relatives settle the inflated bills. In many private schools, students are detained beyond class hours because their parents fail to pay fees on time. Meanwhile, the aspirational bourgeois and corporate czars are sending millions of dollars abroad to give their children an Ivy League education. More than half of the households in rural India are without water and toilets. The best gift to the nation is to give economic reforms in the current form a quiet burial during its silver jubilee. A regime that practices an exclusive economic model will only lead to the destruction of inclusive democracy.

Follow by Email