Economic reforms in India must be seen touching lives of people
October, 25th 2012
Every government in India, since 1991, has espoused the cause of economic reforms. This has created the impression that reforms are now widely accepted across the political spectrum. This is erroneous and recent events only confirm this.
We must remember that we did not embrace reforms voluntarily but did so under duress in 1991in the wake of a severe balance of payments crisis and, therefore, the 21-year old history of economic reforms in India is chequered.
It has been an era of stop, go, sometimes no-go. The constituency for reforms is limited to the government of the day, the economic commentators, the corporates and the English language newspapers. Most political parties remain staunchly opposed to reforms.
Why have economic reforms not become acceptable in India even after 21 years? Firstly, the East-India Company's experience is deeply rooted in the Indian psyche.
This may sound strange but it is true. Until the British Crown took over governance directly, for about a hundred years India was ruled by a company. Conquest through commerce is, therefore, deeply etched in the Indian mind. So, all foreign enterprises and foreign investments are looked upon with suspicion.
Secondly, the majority of our people still live in utter poverty, misery and deprivation. Sixty five years of independence and twenty one years of economic reforms have made very little difference to their wretched lives. If the people have no employment, no potable drinking water, no roads, no sanitation, no schools or hospitals, you can hardly expect them to stand up and clap when the government announces 51 per cent FDI in multi- brand retail!
Thirdly, economic reforms are responsible for accentuating regional disparities, income disparities and class disparities. The unrest that we see in the rural areas, including Left Wing Extremism, can be directly ascribed to this sense of deprivation. A major weakness in our planning process has been the top down approach- Delhi knows best.
The fact of the matter is Delhi knows nothing. The rural areas were neglected in the socialist era; they remain neglected even in the era of liberalisation. The slogans have changed over the years; the latest war cry being inclusive growth, but without much effect. The only difference is that these disparities were tolerated when India was growing at the Hindu rate of growth. It has become unacceptable when India is growing at 8 per cent.
Fourthly, the pro-reformers have also damaged the cause of reforms by always identifying economic reforms with foreign investment and foreign investment alone. The recent announcements of the government of India are a case in point. They have been hailed as historic, path-breaking and earthshaking. The common people do not have any interest in them.
They will only feel the pain of the diesel price hike and hold reforms responsible for that pain. Fifthly, though the share of agriculture in the GDP is dwindling day by day, about 60 per cent of India's population continues to depend on agriculture and allied activities.