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Section : Economics
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India’s public planners couldn’t end poverty, but its private sector can
 
moribund governance blocked India’s entrepreneurial creativity through an invasive, abortive regulatory regime.

By MJ Akbar




Now that the last rites are being read over the corpse of the Planning Commission, perhaps it is time for an obituary.

Jawaharlal Nehru set up the commission in 1950 to guide India towards a “progressive widening of the public sector and a reorientation of the private sector to the needs of a planned economy”. Thus was created the licence raj. This philosophy was established as a prevailing religion at the 1955 Avadi Congress through the AICC resolution on socialism. There was some logic in this affirmation, for capitalism had been a handmaiden to colonialism with the help of tycoons who placed personal interests far above society. There was, moreover, lingering fear of economic dependence after Independence. But 64 years later, what is the story?

In 1950, it is estimated, some 60% or more Indians lived below the poverty line. This year, the Rangarajan report placed the figure at 30%. There are two options. If you have had a nourishing breakfast before reading this, you can be smug and congratulate yourself. Or you can consider the following facts.

It has taken 64 years to reduce extreme poverty from 60 to 30%: can we wait for another six decades to bring 30 down to zero? An Indian population larger than America’s teeters on the edge of subsistence, staring at nothing, bereft of hope, lost without literacy, uncertain about its next meal, blank about its future. Will Indian democracy be able to bear the burden of such despair for two more generations? We have managed to stave off the rage of bellies swollen not by obesity but starvation; but for how much longer?

What is the answer? It is not widely known that Article 399 (a) of our Constitution directs the state to ensure that “…the citizen, men and women equally, have the right to an adequate means of livelihood”. The term is, correctly, livelihood. This means jobs. Jobs, unlike dole, bring self-respect with individual and national growth. Where can jobs come from?

You have to be bizarre to believe that the public sector, once in charge of the economy’s commanding heights, can still deliver. Properly cooked socialism has failed; its undercooked Indian variety was always indigestible. The nation’s economy gradually degenerated because of some principal structural faults. After brief glory, the much-vaunted state sector fell into the grip of stagnocrats, a new plutocracy that protected its interests with the confidence of a class that knew the cost of its inefficiency would be met by the public purse.

This, in turn, made them partners of politicians who converted a stuttering doctrine into a vote machine. India, paradoxically, became a nation where socialism could never generate the surpluses needed for social welfare. Also, moribund governance blocked India’s entrepreneurial creativity through an invasive, abortive regulatory regime. Inevitably, since it was out of harmony with private sectordriven growth centres of the world, India’s economy was latched on to the coattails of a dying monolith like the Soviet dinosaur. The Soviet Union was a superpower which committed suicide through infection from toxins of a gangrenous economic model.

When, in the 1990s, we finally diagnosed our cancer, we thought a band-aid was sufficient to prevent fatality. It was only in his last year as Prime Minister that Manmohan Singh asked the Planning Commission to introspect. Maybe he was offering a pope’s absolution to a doctrine on its deathbed. It was too late for Dr Singh to do anything, but hopefully not too late for others.

Prime Minister Narendra Modi recognized the crisis in his first remarks to Parliament: the era of poverty alleviation was over, he said, and the age of poverty elimination had begun. Which brings us back to the basic question: where are the jobs going to come from? The private sector.

The body that will replace the Planning Commission must have a clear objective: its role will not be to command, but to enable the private sector to become the prime engine of development.

Primacy does not mean exclusivity. It also brings with it responsibility. India needs an honest business environment, not crony capitalism. The success of the private sector does not lie in the domination of a handful of empires, but in the harvest of small businesses and the multiplicity of new ideas, born in unknown minds, each with its fertile space in a vast and varied garden. The new body therefore has to be an incubator, and utilize information technology to sift the useful idea from the maverick weed. Every acorn cannot grow into an oak; but many seeds will flower if offered the sunshine of encouragement and the fertilizer of appropriate finance.

Of course it will not be easy. Nothing is easy in governance, but more is possible than we imagine if only we learn to believe in ourselves.

The writer is national spokesperson of the BJP

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