It was the end of summer of 1997, the East Asian crisis had just begun, and at the World Bank-IMF meetings in Hong Kong I presented a paper entitled “Economic Freedom and Growth Miracles: India is Next”. I then argued that because of ongoing increases in economic freedom, the Indian growth rate should accelerate towards 7.7 percent per annum. “In other words, the uncaged tiger is now prowling a restricted habitat but should soon freely hunt in the whole jungle”.
Openness leads to more efficiency, greater growth, and boredom. Once the Ministry of Finance took the unprecedented step of openly discussing tax reform on the web, via the Kelkar report on taxes, the suspense about the budget has disappeared. But there is still a lot of mess to be cleared up, and it remains to be seen whether the government is genuinely concerned about fairness and growth.
We must reduce the fiscal deficit. In the name of the poor. We must raise taxes. We must not cut expenditure. Round up the usual suspects. But does anybody bother to at least check if the numbers add up, if the logic is sensible, if the reasoning is consistent? No, and why not? The TV glitterati have an easy answer – it is all so complicated really. But we must cut the deficit. Tune in again next year, same time.
Finance Minister Jaswant Singh has scored a century on debut. He should have scored a few more runs to make certain the country wins, but he has done enough to ensure a high probability of success. And as a welcome change, he did not try to be a batsman, pace bowler and googly expert all at the same time. The only reason he got out earlier than he should have, is that he did not go all the way on the recommendations of the Kelkar committee report pertaining to taxation of individuals and corporates. That, presumably, he has left for another innings.
Finance Minister Jaswant Singh’s maiden budget is oriented towards growth. It portrays a vision of India as a will do, can do country, a society ready to assume its historic role in the world economy. Juxtaposed between the fast growing developing country authoritarian model of China, and developed countries feeling the heat from competition down South, there are few counter-weights to the emerging China dominance. Thanks to our misguidedly misguided policies towards labor, small scale industries, food security and other paraphernalia of the left-parivar economics, China has become the leading producer of all the manufacturing goods (besides whiskey) that our erstwhile “in the name of the poor” glitterati consumes. There is little left for other developing countries except to move rapidly up the value chain – that is what Korea is desperately trying to do, and what Jaswant Singh is trying to deliver.
The war in Iraq has changed a lot of equations with the expected effect of confusion in all our minds – including mine. Not predisposed to sitting on the fence, I find myself envious of those in that position. What is going on?
It is more than fashionable, especially among the intellectual left, to hector everyone about the lack of governance in the market place. Arguing against governance is arguing against motherhood, and I, like most people, am not into matricide. Good governance is good, and more is indeed better.
The comparison of India with China is hot - again. First, Prime Minister Vajpayee visited China and every born-again journalist (as well as those born sometime ago) started comparing India with China. The reporting was considerably more favorable to China, with some wizened (but not necessarily wise) experts attributing China’s better economic performance to India having to cope with the “drawbacks” of democracy. Before the dust could settle, the discussion heated up again with the publication of the UN’s flagship report on the state of welfare of the poor, Human Development Report, 2003. This report, done by objective experts, and experts with access to the research of the best and the brightest at not only the UN but also the World Bank, convincingly demonstrated that not only was the average Chinese significantly richer, but so was the average poor Chinese – so much so, that only 16 percent of China’s population was poor, compared to more than double that amount, or 35 percent poor in India.
I have a teen age daughter who just loves everything about the sixties – the clothes, the attitudes, and especially the music. She has some idea also about the excesses of that era, but obviously is too young to know about how the funny bone gets tickled with a little experimentation with an ancient Indian weed. But a headline, front page news item in the Indian Express on Tuesday, Sept. 2, filled this void in her knowledge about that great era. Since no one will believe me, let me quote in some detail: “Warning its cadres of the likelihood of early general elections, the Congress high command has instructed its state units to bring to a halt rail traffic across the country for an hour on September 22.” Why should this be done? Because, the Congress circular states, elections are around the corner and therefore it is necessary “to take all steps and measures to expose the hollow promises of the BJP”. What were these promises? No idea, but likely to be a robust economy, a joyous monsoon, stable prices, bulging foreign exchange reserves, a booming stock market, and Indian industry with a new found spring in its step. What else do politicians promise? Never mind; what “steps” should be taken? Congress workers should picket “Central government offices like railways, post offices, telephone exchanges. If need be, the workers could court arrest. These programmes should not be symbolic”.
The scene – the last page of any Asterix comic. A grand celebratory banquet under the stars, an idyllic scene from a Gaul village. In the corner, gagged, bound and forbidden to sing is Cacofonix the bard, because he sings so out of tune. That’s how I felt this week, (not least because my singing voice makes Cacofonix sound like Lata Mangeshkar).
