The regime of Narendra Modi, criticised by socialists as too pro-market and by capitalists as too incremental in reforms, shakes off its proclivity for piecemeal changes once in a while to announce big-ticket reforms and is yet met with a lukewarm response even by supporters of the government, a bulk of whom are unwittingly socialist themselves. The previous example was the Union Budget proposals presented by stopgap Finance Minister Piyush Goyal. The latest instance is the more than Rs 20 lakh crore stimulus package announced by the prime minister, which Finance Minister Nirmala Sitharaman divided into five tranches, detailing a few sectors of the economy at a time. Announcements made in the third instalment was historic while the fourth tranche will have far-reaching positive implications for the economy. When the tranches catered to the poor, including migrant workers, the critique was a tired advocacy of monetary bail-outs. It continued after the farmers were freed, with even some fans of Modi asking on social media how much money the cultivators received ex gratia. They said long-term reforms could wait!
State control over what farmers can sell at what price and in which market, while introduced to the Indian system of governance in the mediaeval era, did not discontinue even after Indians began ruling themselves in 1947 until 14 May this year. Due to the compulsion to sell the crops in the designated markets of the Agricultural Produce Marketing Committee at prices lower than the market value — a situation worsened by the Essential Commodities Act that forced edibles to be sold below the market rate on ‘humanitarian’ grounds — a majority of Indian farmers were impoverished. They had to depend on state doles such as the minimum support price and farm loan waivers. This not only devastated the country’s banking system but also created bad blood in Indian taxpayers who wondered why this section of the employment demography must be treated with kid gloves. While the glaring image of starving farmers — thousands of whom committed suicide, debt-ridden — moved a few state governments to amend the APMC Act, the variance in the law between one state and the next never let the farmer in one location enjoy the whole country as his market. Sitharaman has promised that a new law will ensure this. The free-market advocates should have burst into applause seeing the way paved for the farmer to transform into a businessman. Their reactions are but muted. Meanwhile, both red and saffron socialists say that the government has suggested a healthy regimen rather than feed a morsel to the patient who could die of starvation the next moment. They forget that reforms in India have happened only at times of crisis. Once we have survived the anti-coronavirus lockdown, there will be no urge left in the polity to free farmers from the clutches of mandi brokers who are none other than the apparatchiki of different parties.
The next day, when the finance minister proposed privatisation of a host of fields, the economic right wing did not cheer the reforms in technology, coal sector, defence equipment manufacturing, civil aviation, etc either. Whereas it is possible that their prolonged subjection to socialists across the political spectrum has pushed them into a frustrated silence, the alternatives the opposition and the section of media nurtured by it is ludicrous, given that their economics of freebies has taken the country nowhere while rendering the states in the east unattractive for investments. Even state help, for example in the shape of the funds created for non-banking financial companies and power distribution companies, did not impress the socialists whose economics is as asinine as taking cash out of a box with finite money with the hope against hope that the stock will never get exhausted. The philosophy of the Bharatiya Mazdoor Sangh, founded by red-turned-saffron Dattopant Thengadi, would, in this context, be as dated as that of the communist Centre of Indian Trade Unions. If asked whether they could operate airports and manage flights, they cannot, but they will oppose privatisation. If asked whether they could produce fighter planes or battle tanks within a stipulated time for the country’s defence, they cannot, but they will revolt against the idea of foreign direct investment. Ask why a coal-rich India’s industry has not flourished for a century, or why mineral-rich states are not economically well-off, they cannot explain, but they won’t allow coal blocks or mines of any element go into private hands.
When the knowledge of even the fundamentals of economics is so abysmal in the country that people do not know that every penny a government has comes from the citizens and it is immoral to divert the money of 100% adult population to a decimal percentage of people — which any given sector (like agriculture) or company (like Yes Bank) employs — change in the approach of a non-Congress government is not enough. When they do not know that money grows only from enterprise, expecting them to appreciate that the government is asking people to strive in an enabling environment is foolish. It is imperative that the BJP government led by Modi launches a mass economic education initiative, perhaps by introducing the subject at the secondary level of school education, after which students branch out in different academic disciplines. This programme would run the risk of stripping politicians of the opportunity for bravado, which they betray in every election, boasting of the money they spent on welfare schemes. People will then know that no politician bestowed on them the money from his or her own locker. But then, every government’s tax accountability will increase exponentially. People will question all fund allocations. They will realise that the best capital is what comes from a private source, the possible loss of which would be a private loss while gains from it spill over to the rest of society as the money multiplies. The media used to do this job of public education in the eras of PV Narasimha Rao and AB Vajpayee; now it advocates reforms first and then denigrates game-changing measures. If the government is scared and the media is made up of dishonest intellectuals, Indians will someday borrow from American history the slogan “No Taxation Without Representation” to begin a movement antithetical to pre-independence Gandhism, the JP Movement of the 1970s and the Anna circus of the last decade. Until then, the motley group of right-thinking Indians should not only promote the reforms announced last week but also push every Indian government and political party towards better economics.