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Economic liberalism: Lessons to learn
By Prof. A.C. Bose
The revolution that the then finance minister (the present P.M.) Dr. Manmohan Singh introduced in 1992 was no less important for the common Indian than the independence we achieved in August 1947. He, with the full support of the then, P.M. P.V. Narshimha Rao, just threw over board our commitment to the programme of building a 'socialistic pattern of society' adopted at the Avadi Congress in 1954 and started the process of replacing the 'licence-permit Raj' with a liberalised global economy.

Although many of us viewed this government-sponsored economic revolution with considerable trepidation the results were re-assuring. Corporate India and the upward-looking middle class were attracted by the opportunities the reforms offered, and for years we, especially the upper and the upwardly mobile middle classes enjoyed its benefits as well as the world's adulation for being the second fastest growing economy.

However, our attitude toward the economic reforms slowly got soured alongwith the slowdown in the global economy, since late 2008. Although India did not suffer like the more affluent countries of the West, and her economy continued to be just behind that of China, as before, the reforms unfortunately drew increasing criticism from various political outfits. The reasons for the visible loss of popular support for economic liberalism were not primarily economic but mainly moral and political.

The reason lay mainly in the explosion of mega scams that came to light, virtually, every few months, since the Commonwealth Games in late 2008. Then, to name a few, there were the high-profile scams relating to the Adarsh Building Society, the Sukna Land, the 2G, the Bellary Coal mines, the Delhi Airport Authority, the Coal Gate, and now the DLF involving the so-called 'first son-in-law of the nation'.

The common perception all these scams came to be associated with the liberalised economy that allegedly enabled many politicians and top bureaucrats to use the corporate India as their milch cow. If they were making go much in the form of cuts they charge the capitalists on the ground then how much profit the latter must be making, when those at the bottom received only a little share of it but suffered the agony of inflation and increasing social and economic disparity. The rage and contempt so far reserved mainly for politicians now came to draw in their loop virtually all capitalists who are making hay while the sun shines.

Certainly, neither are all politicians and businessmen corrupt nor are most of them totally insensitive to the sufferings of the unfortunate. But, in popular perception, all businessmen and industrialists have come to be viewed as corrupt and cronies. That made them and the neo-liberal economy, in the eyes of many articulate groups, the villains to be punished or, at least to be controlled in the interest of social justice.

The fight against corruption came to direct its fire on virtually everything related with the liberalisation being recently initiated by the centre-- be it the opening of the retail sector to F.D.I. the imposition of a cap on the supply of subsidised LPG cylinders, and the reduction of subsidies on the prices of petrol and diesel. Now Arvind Kejriwal and his India Against Corruption are demanding that the handing of natural gas should be the sole prerogative of the state. So, just when the government seeks to complete the process of economic reforms to meet the challenges of the impending future, those aghast with the stories of corruption are trying to sabotage their effort by virtually equating reforms with corruption, and are giving a fresh boost to the advocates of leftism and of the 'licence-permit raj'. This is really very unfortunate.

One should assess and criticise the reforms in terms of their contribution and cost to the society and its economic growth, but must not condemn those as being the main cause of rampant corruption. One should not throw away the baby along with the bath water.

Corporate India too has to bear their share of burden for ensuring moral legitimacy for the system that ensures their primacy as veil as profit opportunities. Unfortunately, however, barring a few industrialists known for their philanthropy, corporate India on the whole gloats in joy over every regulation that helps them earn more even when these immediately hurt the common man's purse. Deregulation may be good for our economy in the long run, but consumers in general, particularly the poor majority, are more concerned with their monthly bill than with the prospects of future well-being, which they fear may just bypass them. So, both in their own interest as well as of that of the nation, the capitalists of India should try to ensure that profit, in public perception, is not equated with graft, deception and exploitation. Any healthy system must acquire moral legitimacy, and it is the duty of the politicians, capitalists, and the media to help the new system acquire and retain it.

Our recent experience with fast development in a liberalised economy has also pricked a babble of popular belief. It is generally believed that growth in free economy is achieved mainly through the rich and the well-equipped, and helps them grow richer at a fast pace while, usually, leaving the poor and the unprepared comparatively deprived.

In short, it pushes up the GDP and widens economic disparity without ensuring the welfare of the poor. Since Gujarat, Maharastra, Haryana, Punjab, Tamil Nadu and even West Bengal, were and still are better off than the so-called BIMAHU states it was expected that they would progress faster than the less fortunate ones who lacked capital, experience and the essential infrastructure.

However, the achievements of the Indian states in the last three years, 2009-12, prove the opposite. The fastest growth rate at 12.5% per annum has been achieved by Bihar and Uttarakhand, while the highly rated Gujarat has come third. Even backward M.P. has fared better than Maharastra, the most industrialised state of India with the financial capital of India as its capital. The fact is that a determined and enlightened administration that can ensure peace and an atmosphere conducive to attracting capital can achieve a very high rate of growth, while states plagued with labour militancy, social turmoil, and laws impeding easy acquisition of land and short-term economic concessions lag behind.

These suggest the crucial role that the administration and society, in general, can play in ensuring fast economic growth which demands not just capital and technology but, more importantly, peace, a focused administration, patience, and the willingness to make some sacrifice today for a better tomorrow.
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News Updated at : Wednesday, November 21, 2012
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