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Saturday, July 21, 2018

Epic struggles

The Congress has refashioned itself (as advised by Cambridge Analytica?) as a liberal Hindu party led by a pucca Brahmin. It is not clear if it has yet developed a new economic philosophy committed to deep structural reforms that will be growth-friendly.

Written by Meghnad Desai | Published: March 25, 2018 3:21:50 am
The question is: who is better equipped to deliver deep reforms and steady income growth with low inflation? Narendra Modi or Rahul Gandhi? The question is: who is better equipped to deliver deep reforms and steady income growth with low inflation? Narendra Modi or Rahul Gandhi?

The RAMAYANA is a morality tale, simple and linear. The Good characters are totally good and the Bad are evil. The Mahabharata however is a complex non-linear story. Whoever told Rahul Gandhi to cite the battle at Kurukshetra as an analogy of the upcoming electoral battle should have been careful. The Pandavas were winners in the battle but in no way morally superior. It was Yudhishthira who lied (Ashvatthama) to eliminate Drona. It was Arjuna who hid behind the hermaphrodite Shikhandi to strike at Bhishma and broke the code of war to hit Karna while he was repairing his chariot. Krishna guided Bhima to smash Duryodhana’s thighs contrary to the rules of duels with mace. The Kauravas broke no rules. They just lost the war.

The battle was never about Truth and Falsehood. The dispute was about who rules in the territory where Indraprastha and Hastinapura stood. In 2019, it will once again be about who rules in New Delhi. It will be about who will be decisive in taking India to the level of a middle-income country within this generation. China and India were at the same level of per capita income in 1975. Since then, China has moved much faster than India. By the time the UPA rule ended in 2014, China was the second richest country in the world. In the 43 years since 1975, the Congress was in power for 29 years, the BJP for 10 and coalitions made up the rest of the time. Thus the failure to develop India has to be the principal responsibility of the Congress.

In the forthcoming months, the battle will be about the economic philosophy of the two main parties. The Congress has refashioned itself (as advised by Cambridge Analytica?) as a liberal Hindu party led by a pucca Brahmin. It is not clear if it has yet developed a new economic philosophy committed to deep structural reforms that will be growth-friendly. Repeating the old and failed nostrums about being concerned with poverty can no longer convince. They failed previously to solve the problem. Entitlements may be increased and subsidies offered but these do not solve the persistence of poverty. Only sustained high growth of per capita income over the next two decades will help.

There is no doubt that the Narasimha Rao government with Dr Manmohan Singh as Finance Minister broke away from the old and failed economic model of the earlier Congress years, that had ground the economy down to a level where India had to pawn its gold reserves to borrow from the IMF or starve. But even the Rao-Singh reforms did not go far enough. Foreign trade was liberalised but not the domestic economy, least of all the public sector. We have lived through the disastrous consequences of Indira Gandhi’s decision to nationalise the banks. Non-performing assets, inefficient management, cosy relationship with crony capitalists have meant a huge burden on the poor taxpayers. Whoever wins the election must proceed to restructure these banks.

There are no differences in economic philosophy across the Indian political spectrum. The one ideological difference concerning secularism versus Hindu nationalism has now disappeared with the repositioning of the Congress. The question is: who is better equipped to deliver deep reforms and steady income growth with low inflation? Narendra Modi or Rahul Gandhi?

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