The book rightly champions reforms and the benefits of market economics, says Gautam Mukherjee
INDIA’S TRYST WITH DESTINY
Author: Jagdish Bhagwati, Arvind Panagariya
Publisher: Collins, Rs 599
It is an irony that defies common sense; why a country with a massive population should stubbornly defy market economics that affords it the only chance to prosperity. And yet, right from Jawaharlal Nehru’s ‘Tryst with Destiny’ speech at Independence, we have persisted in trying to redistribute inadequate wealth to alleviate the sufferings of our numerous poor, according to the romanticism, if not the wooliness, of Fabian Socialism. Today, 66 years later, there are in fact competitive narratives, both from the Right and left.
The results of reform, such as they are in India, have been nothing short of dramatic, despite much second-guessing and hesitation. But the power that must be surrendered to the people when thickets of regulations and oversight are dismantled has been the sticking point for our political masters.
Eminent economist and Professor of Economics at Columbia University, Jagdish Bhagwati, and his distinguished colleague and collaborator Arvind Panagariya, also a Professor of Economics and Indian Political Economy at Columbia, have written a useful book championing reforms and the benefits of market economics. India’s Tryst with Destiny is a well-researched and structured primer designed to debunk many of the propagandist positions adopted by the left against the perils of liberalisation. It uses Nehru’s words to assert that the economic tryst with destiny remains far from fulfilled, even now.
It is encouraging, however, to see the optimistic tone of the book, in chapter after succinct chapter, where the line “Contrary to what the critics assert”, or its variation, appears repeatedly, before proceeding to explode yet another popularly held but negative belief, such as, there is an accelerating trend in “farmer suicide rates from 2002”. Or that the post-1991 reforms have led to increased corruption. Bhagwati and Panagariya assert: “Corruption broke out, not with the liberal reforms of the 1980s, but under the licence-permit raj that peaked in the 1970s”.
The authors contend that the “mega corruption cases” witnessed lately are because the “success of reforms has opened up new opportunities in several areas to make profits”. There are “pre-reforms-type arbitrary and opaque allocations of the rights to extract minerals and the acquisition and resale of land. The 2G scandal offers a dramatic example of how the success of past reforms (in opening up new opportunities to make profits) and the failure to extend them to cover these new opportunities have combined to produce a mega scandal”. So, the “most effective course of action available to the Government to curb corruption, therefore, is clearly the deepening and the broadening of the reforms to new areas”.
The authors’ view, often seen as the intellectual inspiration for the systematic reforms process commenced in 1991, is at loggerheads with the arch-leftist/ Welfarist Amartya Sen/Jean Dreze vision, even as the latter have recently written a book together too. The Sen/Dreze viewpoint has influential followers particularly in the National Advisory Council (NAC), chaired by Sonia Gandhi. They are very persuasive too. Jean Dreze had this to say, for example, on the virtues of the Food Bill: “Statistical hocus pocus has been deployed with abandon to produce wildly exaggerated estimates of the financial costs of the Bill.” Sen said: “Every week that the Food Security Bill was not passed was causing 1,000 deaths.”
Bhagwati, ever true to his market-friendly principles, has not hesitated to critique the anti-liberalisation, pro-socialism book written by Sen and Dreze: “The put-down of attention to multinationals misses the point that India’s economic reforms require precisely that India join the Global Age and that India’s inward direct investments were ridiculously small in 1991.”
Is the Bhagwati/Panagariya line winning outIJ After all, Bhagwati in particular is credited with being the intellectual mentor of India’s economic reforms. And for the populist dreams of the left to come to fruition, the Bhagwati-Panagariya style market economics must be allowed to grow the economy.
To date, the sway of the reformists is admittedly somewhat patchy, but despite that the difference already made to our economy and standard of living across the board is indeed compelling. It is also tantalising because of what we have accomplished despite the ambivalence and adverse propaganda. How much more can be accomplished provided we stop prevaricating and follow the market-friendly prescriptionIJ
This book is written in the style of a manifesto or political pamphlet, with a huge reformist passion though affable. It is careful not to sink into dry jargon even though the academic depth of both its authors could easily have pointed them in that direction.
They, and their views, may well enjoy greater acceptance in the event the Right-of-Centre Narendra Modi comes to power in 2014, with enough strength to adopt more of their formulations for the benefit of our economy, and our rightful place in the world.
The reviewer is an entrepreneur