Editor ji goes hyperbolic over one budget speech to sweep away the miasma of failed economic policies, and horrendous disasters, to hail the dawn of a new era. Amit Shah continues to termite his way through the nation’s foundations in West Bengal. The Chinese have won their argument and reinstated their 1959 claim to our territory which we have contested for last 60 years. And probably won it as Lt Gen. Panag explains. We have a pandemic ongoing, and hundreds of thousands of farmers at the borders of Delhi, clamoring for a hearing.
Is there a case to consider Editor ji’s rather pernickety vision of el Dorado as an elaborate diversion from objective reality to something more phantasmagoric in order to distract and amuse the gullible?
The point is Editor ji pulled a similar trick in the run up to 2014, lending the emperor robes of reform that he never had. So, this would not be the first time.
SG: Indian politics, generally since 1947 but particularly since Indira Gandhi’s hard Left-turn in 1969, has been unipolar economically. First Nehru serendipitously got rid of the Right in his party and then his daughter carried out a full purge. In the same period, using her brand of social-populism soaked in nationalism, she destroyed the one opposition party of the libertarian Right, Swatantra.
SR: The cheap rhetorical legerdemain of using straw man arguments need not detain us. The proper context for Modi’s alleged reformist impulses is the 90/91 package of economic reforms put into place by PVNR and Dr Manmohan Singh. Has Modi moved the process forward? Or diverted it from the beginning of a road to market-based reforms, to crony capitalism.
Much water has flowed down the Ganges since Indira Gandhi left the scene. Fact is Editor ji would have a rather hard time showing how Modi has moved the needle forward since 1990/91. So, he sets up a straw man to beat to show his messiah in better light.
One expects this kind of chintz dodgery from party quacks, not erudite editors, with some claim to objectivity and relevance.
SG: Her most vocal rivals since were also various socialists, Lohiaites and Communists. She was so smart, and the Communist parties so torn between Moscow and Beijing, she split them as well. The pro-Moscow CPI backed her fully, even over the Emergency.
SR: Irrelevant gibberish. Indira Gandhi is the “straw man” here for the Editor’s argument.
SG: There was little scope left for an ideological polarisation in India’s political economy. It was essentially a challenge of which side could be more socialist. This pull became so irresistible even the Jana Sangh, and later BJP, walked into the same tent.
SR: Continuation of the rubbish straw man argument. If have the courage, try comparing Modi with Dr Manmohan Singh, and Modi’s reforms with those of 90/91. And let us see if your contrived thesis holds up.
SG: For five decades each side fired at the other from its own socialist trenches. Meanwhile, they all talked of reform. Reform with a human touch, inclusive reform, reform with socialist flavour. Mostly reform by stealth.
SR: What is Modi’s Farm reform Bills if not reform by stealth and deception, carried out in the middle of a pandemic, without discussion or consultation, and rammed through parliament without a proper vote?
Has Modi dared explain why prices of cereals must be brought down to reduce cereal production and diversify into other crops? Or has he plied lies upon lies? How is deception & outright lies better than stealth?
SG: Or, as the late Sitaram Kesri had said to me in an interview why he thought the Chinese communists were like DTC bus drivers: “They signal left and turn right.” The sad fact is, we were not even turning. We were moving straight, at a crawling pace, straddling multiple lanes, which is typical of driving with Indian characteristics. This also describes Modi’s first six years. If anything, he had put the clock back on even the post-1991 reform. India’s economy had stalled, as did its politics.
SR: “This also describes Modi’s first six years. If anything, he had put the clock back on even the post-1991 reform. India’s economy had stalled, as did its politics.” I marvel at the persuasive powers of Modi. One speech, and the Editor ji is gushing all over the place in awed reverence.
SG: That’s now changed. One side has declared itself to be an unabashed backer of private enterprise and the other socialist. Let’s not be confused by whataboutery in terms of who’s coming from where. Let’s pick up the thread from this session.
SR: Hallelujah. Here is the moment of chamatkari epiphany!
One speech that says private sector has a role to play in development of the economy makes Modi the Capitalist’s champion, never mind the fact, that India has always had a robust private sector since Nehru’s era. In fact, Nehru even went & created developmental banks, that Modi has only thought of now, so that the private Capitalists could borrow long term public funds to finance their businesses.
Capital goes to the credible. The sad fact is faith in Govt in Nehru’s era was high, and private sector low. Since the British were anything but socialists in India, the lack of faith in private sector had nothing to do with ideology. Tycoons for the most part then, with the exception of a Ghanshyam Birla, largely were happy to do business with the British and made their fortunes under them in such diverse things as opium trade with China, to textiles mills in Mumbai.
Consider the close connection between Capital, tycoons, all invaders since the dawn of history, you couldn’t blame the public for not trusting them. Capitalists will always back power, and all power will back Capitalists. Even Xi will do so, his problems with Jack Ma notwithstanding. The crucial thing is how does power control the Capitalists.
When you use free markets, based on open competition among them, to control the excess of Capitalism, the system works fine. On the other hand, when you use power to insulate Capitalists from the discipline of competition, you get crony capitalism – a run-away, predatory sort of Capitalism, where firms gouge consumers to make profits and depend on the state to make business cozy for them.
Modi is doing both: protectionist tariff walls to protect firms from competition, and using coercive power of the state to make farm produce available cheaper to trade.
SG: First of all, the budget talked of privatisation and not disinvestment. I said on budget day that it was the first time an Indian government had unapologetically used the word privatisation instead of disinvestment or some other euphemism. For the record, Yashwant Sinha messaged me to say that he had also used the word in his 2001 budget speech. But still, it wasn’t stated as a formal policy and used in that sense.
SR: A rose by another name is still a rose. But I will concede the point. The word privatization was used. So what?
Most of the public sector in the last 6.5 years, and even earlier, has been systematically not only denied additional capital, but has also had its internal surpluses drained, to finance Govt. regardless of where they were need to be deployed. This shows in the pathetic PE multiples that these firms command even at the top of a booming market.
Policy has been to kill off the public sector by stealth for a long time. Many have been allowed to perish unsung, starting with Scooters India & the famous Bicycle Corporation of India.
But the rapturous Editor ji forgets his history. Modi has used the word privatization. And more importantly RG as opposition leader, opposed him. So that makes Modi pro-Capitalism and RG the detested socialist. Why should facts come in the way of a rhapsody to the Messiah?
SG: Second, the prime minister made the most forthright case for the private sector. He said it needed respect and the days when calling entrepreneurs names got you votes are over. He said if the whole world is gratefully buying Indian made vaccines, it is because of the private sector. He also gave us a view on the public sector hitherto not spoken by anybody at top levels in power. Why should IAS officers run businesses, he asked? If they are Indian, so are private entrepreneurs. They also contribute to building the nation. Don’t diss wealth creators, he said. Because, if wealth is not created, what will you distribute?
SR: When Gorbachov came visiting to India in the 1980s, he had a specific query for Rajiv Gandhi. Show me how and why the private sector works so well in India. So, presentation on the topic was arranged for him by two people. One was the Chairman of Hindustan Lever. The other was an upstart entrepreneur named Narayan Murthy.
So, forgive me if I cast a skeptical eye over the editorial balderdash. Such gobbledygook belongs in political rhetoric not an editorial column.
Private sector has always enjoyed the respect it deserves. In fact, India’s socialism was always more crony capitalism in its real treatment of capital. Redistributive justice was mostly lip service, largely because crony capitalism never produces sufficient economic surplus, [as opposed to profits that can be siphoned away abroad & recycled back as capital in another firm] to enable effective redistribution.
Instead, price controls & black markets went hand in hand, making empty socialistic rhetoric possible in tandem with much money making in black markets by Capitalists.
It is this duality that was ended by 90/91 reforms. And the duality will be duly back under Modi as the protectionist tariffs & PLI kick off smuggling, over & under invoicing, linked deals abroad etc. But who can explain economics to an editor who is determined not to remember?
Has there been a Narayan Murthy under Modi? How many Narayan Murthy have been chased away to Singapore under Modi?
Editor ji should ponder such deep questions before selling us the same old poisoned chalice of crony capitalism as the new “Capitalism.” If one looks carefully, the same old Bombay Club has changed its name. Nothing else has changed; except that under the old dispensation, all comers were welcome, but now only two are.
SG: Now, you might argue with good reason that while saying this he is taking enormous taxes out of the pockets of the middle class by way of petrol-diesel taxes and distributing it to the poor. But that is a secondary argument in the larger debate today.