Promising Green Shoots Of Policy Discontinuities In Congress’ Economic Resolution
Overt clues that ‘Rahul’s Congress’ may be biased toward a more modern and competitive economic architecture.
I’ve just finished reading the economic resolution adopted by the AICC Plenary Session, and I was forced to read it again to ensure that I hadn’t skipped these stock Congress phrases from the past, like ‘garibi hatao’, socialism and ‘poverty alleviation programs’.
Yes! My eyes had not been deceived. These tired shibboleths from Congress’ geriatric history did not find even one mention in the crisply written and expertly curated (no typos or unseemly para misalignments! A welcome whiff of professionalism) 12-page document. There was a young and modern turn of phrase here.
Instead of copy pasting “state control, subsidies, social ownership of the means of production”, I was almost excited to encounter confident, assertive phrases (the italics are mine to emphasise what I believe are green shoots of promising discontinuities):
Good, productive jobs can be created in large numbers by India’s private sector driven by trade, manufacturing, construction, and exports… The Indian National Congress resolves to win back economic freedom for India’s entrepreneurs…
Sustained economic growth is the path toward becoming a middle-income developed country. It is the path to lifting the poor out of poverty. It is the path toward creating a large, vibrant, and productive middle class. It is the path to creating wealth…
Primacy To Private Sector!
Whoa! The primacy given to the private sector in creating jobs (the omission of the public sector in this context is a refreshing acknowledgement, via the silence, about the abysmal productivity of government equity capital in commercial activities); the focus on wealth creation by a vibrant middle class, not as an after-thought or anonymous footnote to “the struggles of millions living below the poverty line”, but as a vocal and upfront ambition …clearly, there’s a welcome, incipient attempt to discard clichés.
Now now, let’s not get carried away believing it’s a revolutionary document which is completely abrogating the past and taking off on an entirely new flight of entrepreneurship and privatisation. It simply cannot, and more importantly, should not advocate such an abrupt reversal. That would be catastrophic.
For one, there are huge swathes of India’s economy, especially in the social and agrarian sectors, where the state must increase its capacity to intervene and force accelerated targets.
For another, you cannot have U-turns in a plural, noisy democracy like India (please attribute this gem of wisdom to former Prime Minister Narasimha Rao, the architect of the most discontinuous economic change in independent India when he unflinchingly/politically backed Manmohan Singh’s ‘brutal’ twin rupee devaluations, de-licensing, and globalisation of India’s autarkic economy in 1991).
Gentle Steering And Instinctive Accelerating/Decelerating To Effect U-Turns
As any Formula One driver knows, you have to very gently turn the steering wheel, and use a highly sensitive foot on the pedal to accelerate/decelerate at the right, instinctive moments if you want to do a U-turn without toppling over, ie, the ‘U’ can only be a very wide, meandering, almost ‘W’ like arc, when you change lanes on a democratic race-track.
On that note, I am willing to make the promising bet that M/s Rahul Gandhi and his team of youthful economists who have crafted this resolution, are learning the art of U-turning India’s overtly state-regulated (if you would rather not use ‘dominated’) economy on to a freer, more entrepreneurial trajectory.
While the document is understandably awash in a stinging critique of the National Democratic Alliance government’s economic fault-lines, it is also replete with homilies about creating a welfare state to protect the poor. Both are par for the course. But equally, there are overt clues strewn about, which give hope that ‘Rahul’s Congress’ may be biased toward a more modern and competitive economic architecture (as before, the italics are mine):
On Public Sector: State ownership of businesses in certain critical sectors such as defense production, mass transportation, natural resources and financial services is both needed and justified…
My comment: Instead of the celebratory verbiage usually devoted to a sprawling public sector, there is a rather business-like brevity in this document. The fact that only four sectors have been mentioned could be telling.
One would honestly pray for that to be the case.
On Banking Sector: India’s banking sector is in deep crisis due to the undermining of the institutional integrity of regulatory institutions and failure of regulatory oversight…
My comment: Is the acknowledgement of a deep crisis and failure of regulatory oversight the precursor to a bold blueprint to overhaul the structure and management of public sector banks, even if ownership is a holy cow too difficult to fiddle with in the initial stages? Perhaps an autonomous holding company with direct parliamentary oversight instead of the executive’s administrative control?
On GST: As conceived by the UPA, GST was a ‘Good and Simple Tax’ with one tax rate (not exceeding 18 percent) and exemptions for merit goods… The Indian National Congress stands for a much simpler GST framework with a moderate and reasonable standard rate of tax, abolition of cesses outside the GST structure, a transparent mechanism for revenue sharing with the States, and a robust system of refunds.
My comments: There is a triumphant note here, a twisting of the knife to say “see, we told you so”. There is even a confident appropriation of Prime Minister Modi’s modified acronym – ‘Good and Simple Tax’ – knowing that the joke is perhaps on him in this instance.
There is a clear commitment to set things right, which should be music to the ears of people staggering under the complexity of the current system.
On Aadhaar: The Modi government has distorted the concept and use of Aadhaar; instead of being an instrument of empowerment, it has been turned into an intrusive instrument of control and, in many cases, of exclusion of the very poor.
My comment: Here too, the resolution is perfectly in-sync with the prevailing public and civil society mood.
On Agricultural Tariffs: Wrong tariff policies – for both imports and exports – have made trade in agricultural commodities uncertain and too dependent on the government’s beneficence.
My comment: I love the words in italics!
Should we now expect a deep structural reform of agricultural markets, which are tied up in every manner of regulatory overkill?
In conclusion, I can only reiterate that we are seeing green shoots of promising and potentially bold policy discontinuities in the Congress’s economic resolution. Perhaps they could begin Un-mixing India’s economy, by focusing the might of the state only on five areas: health, education, agriculture, infrastructure, and governance. As I’ve argued here, the rest of the economy can be safely left to the crucifying efficiency of well-regulated competitive markets.
But this economic resolution is currently a collection of words, and words are easy, especially when you are in the opposition. Having said that, all planned change does begin with words that outline a new blueprint. The Congress party could easily have dusted up and trotted out old inanities. The fact that it did not and chose to float some ‘half out of the box’ thoughts, is cause for ‘half optimism’. The other half will happen when Rahul’s Congress begins to ‘act the resolve’!
Raghav Bahl is the co-founder and chairman of Quintillion Media, including BloombergQuint. He is the author of two books, viz ‘Superpower?: The Amazing Race Between China’s Hare and India’s Tortoise’, and ‘Super Economies: America, India, China & The Future Of The World’.