Not reform vs populism
It is tempting to characterise the current impasse in Indian politics as a clash between reformers and populists. On this view, the government has, belatedly, woken up to reform and is now being obstructed by a motley crew of opportunists and populists. It would be terrific if the spectrum of Indian politics could be defined in these terms; at least, it will bring the focus back to economics. Many of the government’s decisions are welcome; a signal of intent was long overdue. Our economic situation is dire. A run on the rupee caused by bad fiscal management or the current account deficit may add colossally more to inflation than any diesel price increases. But it is still too premature to conclude that this is a contest between reformers and populists. It is still, at best, a contest over the marginal thresholds of economic rationality below which we will not fall. And these thresholds are determined by where you sit.
This is so for a number of reasons. First, the advantage of a crisis is that you have no option but to reform. Or else, you perish. The disadvantage is that your understanding of why a particular reform took place, and its extent, is limited by the logic of overcoming the crisis. ....
Second, the fact that these reforms are coming after four years of colossal mismanagement is making the reform narrative problematic. Admittedly, there was a global financial crisis that required a different policy response. But politically it is not easy for the government, after running all fiscal responsibility into the ground for four years, and after stoking structural inflation, to turn back and accuse opponents of being populist. ...
Third, one reason reform does not have as large a social base is that reform has come to be associated with reform for the big boys. We can debate the merits of FDI in retail. Even if its net benefits are uncertain, the fears it ignites are highly exaggerated. Making that a priority over other reforms may send out sound signals to other investors. But it reinforces the idea that you have to be big and organised to get a hearing. Despite two decades of reform rhetoric, small and medium business in India still feels trapped in the clutches of the state. ...
Fourth, the corruption story has also become part of the reform story. Open loot at the top lends credence to the idea that anyone should grab anything from the state that they can. But more importantly, the real intent behind reform will become more apparent if the state can go towards a rules-based working in its inner core. But as state institutions are being decimated one after the other, it is hard to inspire confidence that we are moving to a transparent rules-based system. This is still a system where, on everything from CBI investigations to company law cases, deals seem possible. ....पूरा लेख यहाँ पढ़ें
दूसरा लेख है सिद्धार्थ वरदराजन का।
A risky strategy, born of panic
Building ‘capitalism with Indian characteristics’ means decisions cannot ignore concerns of voters and communities
As the economy slows down and the rupee wilts, Manmohan Singh has bitten the ‘reforms’ bullet with both eyes on the credit rating agencies whose negative reports have done much to dampen the ‘animal spirits’ of investors, foreign and native.
Last November, when the Congress party made a push to introduce foreign direct investment in multi-brand retail, protests in Parliament forced the government to back off. Pranab Mukherjee, who was Union Finance Minister at the time, said the FDI plan was being put on hold until a political consensus emerges.
I asked a senior member of the Prime Minister’s Cabinet what had changed between November 2011 and September 2012. There is still no consensus on FDI in retail, yet a decision has been taken to go full steam ahead. “What has changed is the value of the rupee,” the Minister replied. Every rupee that the dollar gains adds Rs 8,000 crore to India’s annualised oil import bill. “Of course, Manmohan admitted to us that not even one dollar may flow into retail or airlines right now”, he said. But this decision to open the sector and raise diesel prices has to be taken in order to stop the rupee from going into free fall.
... Dr. Singh must not be fooled by the applause he has garnered from editorialists, TV anchors and corporate leaders for being “tough” and “decisive”. ...
There is no doubt that foreign capital inflows, including FII monies, have played a big role in India’s success story over the past decade. But the problem with the Manmohan Singh strategy today is three-fold. First, it leaves untouched the very structural imbalances in the Indian economy that are responsible for the onset of the slowdown and, worse, stagflation. Second, by pinning all hopes on the revival of foreign inflows, those imbalances will most likely get exacerbated. Today, instead of being used for productive investment, capital is getting locked up in property, gold and other ‘safe’ outlets. A revival of the Sensex on the back of renewed FII interest may breathe some life into the stock market. But the risk is that this may trigger speculative demand and have no impact on the real economy. The third problem with the Prime Minister’s current approach is that the appetite of finance capital will not be sated so easily. One concession must necessarily beget another in order for the foreign investor to keep the faith in the India story.
...On Friday, Ms Banerjee delivered on her threat to withdraw support to the UPA. She deserves applause, if only for being one of the few politicians to stick to her stand even at the cost of surrendering her share of power in Delhi. Her other faults need not detain us today — most notably her intolerance. Nor should too much time be spent wondering whether the UPA government will survive her departure. It will survive, and do so handsomely, thanks to the outside support it receives and will continue to receive from the Samajwadi Party and the Bahujan Samaj Party. ... What happens after that, of course, is anyone’s guess. It is one thing to master the tactics of survival on the battlefield, and quite another to have a strategy that can win a war. No Congress minister sees the party winning more than 150 seats if general elections were to be held today. Dr. Singh hopes to compensate for this dwindling public support by courting investors. This constituency, of course, is happy to be courted. Whether they deliver what the Prime Minister wants is the 272 seat question. पूरा लेख यहाँ पढ़ें
हिन्दू के प्रकाशनगृह की पत्रिका फ्रंटलाइन के रूपाकार में कुछ बदलाव करके उसे रिलांच किया गया है। साथ ही उसकी कीमत भी बढ़ा दी गई है। फ्रंटलाइन अपने ढंग की बेहतरीन पत्रिका है। इसकी इस बार की कवर स्टोरी है In The Service Of Capital. आवरण पृष्ठ कहता है Of the rich, by the rich, for the rich. यानी भारतीय राज्य पर हावी पूँजीवाद। यह पूरा अंक पठनीय है। फ्रंटलाइन मूलतः वामपंथी खेमे के लेखकों को प्रकाशित करती है। इसमें यदि दाएं बाजू के और मध्यमार्गी लेखकों का समावेश भी हो तो यह राष्ट्रीय विमर्श का मंच बन सकती है। दिक्कत यह है कि कुछ लेखक इंडियन एक्सप्रेस में ही प्रकाशित होते हैं और कुछ फ्रंटलाइन में। इससे पत्रिका का मूल स्वर तो उभरता है, पर वह व्यापक बहस का मंच नहीं बनती। बहरहाल इस अंक की आवरण कथा मार्क्सवादी अर्थशास्त्री प्रभात पटनायक ने लिखी है, जिसका मूल स्वर यह है:-
The hallmark of a neoliberal regime is that the state which had earlier appeared to stand above classes, not concerned exclusively with the interests of capital, now becomes exclusively concerned with defending and promoting the interests of Big Capital, and with it of the globalised capital that domestic big capital gets integrated with, to the detriment of the other domestic classes. The relentless drive to open up multi-brand retail to foreign direct investment (FDI); the strenuous effort to open up the insurance sector to FDI; the proposal, just about kept in check, to privatise (including leaving to foreign control) the nationalised banks, are all manifestations of this new trend, as are actual “achievements” such as handing over coal blocks gratis to a bunch of private capitalists.The other side of the coin is the removal of all fetters on primitive accumulation of capital through the withdrawal of state support from the petty production sector and the encouragement to Big Capital to encroach upon this terrain. In agriculture itself, domestic prices have got increasingly linked to world prices, with the removal of quantitative restrictions and the non-use of tariff bounds (that could even under the present regime provide some protection to peasants); input costs have increased through the reduction in subsidies; institutional credit for agriculture proper (as opposed to other uses that get spuriously defined as “agriculture”) has dried up, forcing the peasants to approach a new class of moneylenders; public extension services have collapsed, with multinational seed, chemical and agribusiness firms establishing direct contact with the peasants; public research has dwindled; and even procurement operations were on the verge of being wound up until the 2008 inflationary upsurge gave such operations a fresh lease of life. Agriculture, as is widely recognised, given such adverse policies, ceased to be a profitable operation. पूरा लेख यहाँ पढ़ें