The Gold Standard | Never believed in free-market

This article talks of India losing ground to China in exports to Bangladesh. I have no doubt that two-way trade with Bangladesh should improve. But, what I am not sure is if the volume should improve via Indian exports to Bangladesh. India and China should be importing relatively more than they export, from LDCs in the region.

With Pratap Bhanu Mehta, Sekhar Gupta and Surjit Bhalla complete the trio of commentators to have commented on the Supreme Court pronouncements on neo-liberal economics and on tax-evasion by the upper class, etc. I can only say amen to all three of them although I am not sure why Shekhar Gupta had to say that even during the NDA period there was no attempt to influence the ideological composition of the Supreme Court. In the post-Independence history of India, such things have happened only under Congress rule, if at all.

I have read this piece by Prof. Narendar Pani of NIAS Bangalore twice. He is on to something here but I still think that something is missing. He seems to be careful (too careful) not to make his piece sound normative except for this one inexplicable remark:

Unfortunately, it could also privatise where some individuals in power saw the potential for personal financial growth.

In India, the State engaged in genuine privatisation only under Dr. Arun Shourie and, so far, no one has been able to point an accusing finger with any substance or credibility at him. So, I fail to see the point of that sentence.

Other than that, his thesis that the Indian State has never really believed in free-market principles and that it acted in the 1990s only to remove constraints on growth that have grown over time is a rather interesting one. He points out that agriculture and labour laws have not been reformed since there was no clamour from either group to change the status quo. Aren’t industrialists calling for relaxing the labour laws? I am not saying that they are. I am prepared to believe that they have not done so voiceferously. If so, I wonder why they have been muted on it. That is an interesting subject of study in itself.

His concluding paragraphs too are too cryptic for me:

The consequences of such an alternative interpretation of the economy since 1991 are not merely academic. This interpretation helps us recognise that several of the features of policy-making over the last two decades are not accidental. In particular, the rapidly growing divide between a fast-growing non-agricultural sector and a stagnant agriculture is built into the nature of the reform process.

This difference affecting a majority of Indians is growing too rapidly not to have political consequences. Dr Manmohan Singh as Prime Minister has the challenge, and opportunity, to demonstrate that he has the skill, and the will, to deal with the consequences of the direction he gave the economy as Finance Minister in 1991.

So, what should India do? what should the Prime Minister do? Should he pursue genuinely free-market reforms? Or, should he continue with the existing modus operandi? Even within that framework, should he unleash agricultural reforms? If so, would it be free-market reforms or just business-friendly reforms? What does the author think of the ‘reform’ framework of the 1990s, in the first place? Good or bad or inefficient?

Well, it is a thoughtful article and that is why it has raised so many questions. I am waiting for the sequel.


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.