BAD ECO­NOMICS MR GANDHI

India Today - - SIGNATURE - by DHI­RAJ NAYYAR

Rahul Gandhi’s in­tro­duc­tory ad­dress at a pub­lic lec­ture to cel­e­brate the 20th an­niver­sary of the Ra­jiv Gandhi In­sti­tute of Con­tem­po­rary Stud­ies on Oc­to­ber 18 pro­vided a rare in­sight into the Congress heir ap­par­ent’s world­view. It also laid bare the Congress party’s con­tin­ued, and dam­ag­ing, am­biva­lence on eco­nomic pol­icy. Mak­ing per­haps his most de­fin­i­tive state­ment on eco­nomic pol­icy to date, Rahul said, “Glob­al­i­sa­tion ex­cludes as much as it in­cludes. There are mil­lions left out of the process, mil­lions who do not ben­e­fit from glob­al­i­sa­tion.” The clear em­pha­sis was on those left out, a kosher left-of-cen­tre stance. That world­view would have fit in well with Indira Gandhi’s pro-poor Congress party. It may, how­ever, be out of sync with his­tory as it is un­fold­ing in 2011. Now is the time for In­dia to em­brace glob­al­i­sa­tion more strongly than ever be­fore.

Thirty years af­ter this wave of glob­al­i­sa­tion was un­leashed by the Rea­gan-thatcher rev­o­lu­tion in the early 1980s, the ad­vanced economies—the US, Europe and Ja­pan—are in se­ri­ous, if not ter­mi­nal de­cline. The global bal­ance of eco­nomic power is shift­ing to­wards the emerg­ing economies—in­dia, China, Brazil, Rus­sia and South Africa. In­vestors earn­ing mea­ger re­turns in the West are look­ing to move else­where. China and In­dia, as the two largest and fastest grow­ing emerg­ing economies, are the ob­vi­ous ben­e­fi­cia­ries. Rahul Gandhi is ab­so­lutely right when he warns that In­dia’s suc­cess is not in­evitable. How­ever, the most se­ri­ous ob­sta­cle to In­dia’s suc­cess is not glob­al­i­sa­tion, but an old-fash­ioned, con­fused and un­cer­tain Congress party rul­ing at the Cen­tre.

Modern par­ties of the cen­tre-left, which have rein­vented them­selves over two decades across the world, view free mar­kets and glob­al­i­sa­tion as a largely pos­i­tive force. The way to ad­dress ex­clu­sion is not to block glob­al­i­sa­tion but to use cal­i­brated in­ter­ven­tion to en­sure greater in­clu­sion. The Congress party’s ba­sic in­stincts are to block the forces of glob­al­i­sa­tion as is ev­i­dent in the UPA Govern­ment’s re­fusal to al­low greater FDI in re­tail, in­sur­ance, avi­a­tion among other sec­tors even with­out the chains of the Left that shack­led it in UPA 1. In a dif­fer­ent sphere, the Govern­ment, in col­lab­o­ra­tion with the RBI, has done noth­ing to lib­er­alise In­dia’s fi­nan­cial sys­tem which means that the av­er­age In­dian consumer or busi­ness pays sig­nif­i­cantly more in­ter­est on a loan than his coun­ter­part else­where. The ex­clu­sion of mil­lions of In­di­ans from ac­cess to cheap fi­nance is a fail­ure of Govern­ment, not free mar­kets.

The logic of glob­al­i­sa­tion should ben­e­fit even the less skilled in In­dia. Global man­u­fac­tur­ing is con­stantly look­ing for cheap labour. Un­for­tu­nately In­dia’s re­stric­tive labour laws send global man­u­fac­tur­ers to China depriv­ing mil­lions of poor In­di­ans of a fac­tory job. That is a fail­ure of Govern­ment. That there are not enough In­di­ans with the ed­u­ca­tion to get high skilled jobs cre­ated by glob­al­i­sa­tion is also a fail­ure of the Govern­ment—its fail­ure to evolve bet­ter de­liv­ery sys­tems for pub­lic goods like ed­u­ca­tion and health. It is con­ve­nient for politi­cians like Rahul Gandhi to blame the face­less forces of the free mar­ket and glob­al­i­sa­tion for the poverty of In­dia’s mil­lions. It would be more fruit­ful if the young Mr Gandhi was to rein­vent his party’s ar­chaic think­ing on eco­nomics.

THE MOST SE­RI­OUS OB­STA­CLE TO IN­DIA’S SUC­CESS IS NOT GLOB­AL­I­SA­TION, BUT AN OLD­FASH­IONED, CON­FUSED AND UN­CER­TAIN CONGRESS PARTY RUL­ING AT THE CEN­TRE.

SAU­RABH SINGH / www.in­di­a­to­day­im­ages.com

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