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MR GANDHI GETS IT RIGHT

By Sanjay Jha

For avid Congress party supporters , the Talkatora stadium was ablaze with incandescent energy after  Mr Rahul Gandhi, Vice-President of the Congress party concluded his passionate speech on January 17th 2014 , invigorating party workers, somewhat demoralized after a disappointing electoral performance in the just concluded assembly elections. Predictably, political analysts immediately pounced on what they felt was Mr Gandhi’s “ left-ward economic swing” in his speech. They miss the woods for the trees.

Frankly, academic discussions on traditional Left versus Right economic thinking  is become redundant and reflects a monochrome approach ;   the world is looking at a  paradigm-shift post the Lehman brothers meltdown and the consequent Great Recession of 2007-08 that resulted in stifling the artificial upsurge created by a gigantic bubble .  The truth is that there is no such thing as unalloyed capitalism or pure socialism anymore ; as Occupy Wall Street showed , the new world economic order has embraced either hybrid capitalism or diluted socialism; take your pick. Inequality is a global challenge. The fact is that Marxism is dead, and so is Adam Smith’s laissez-faire.   Raghuram Rajan was chastised for his circumspection by pin-striped bulls at the peak of mortgage-securities backed derivatives trading  and Alan Greenspan eulogized for his economic liberalism sans financial regulation. The rest is history.

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Rising income inequalities has literally ended the acrimonious debate ( fought between amongst others by Prof Amartya Sen and Prof Jagdish Bhagwati) on what is the appropriate growth model for India. Free-market fundamentalists such as Prof Arvind Panagriya support the “ increase the pie” theory, which lets government stick to defense expenditure , law and order and maintenance of public assets , essential infrastructure and capital-intensive public utility services out of tax revenues.  But has the “ trickle-down” effect really worked?

Former US President  Lyndon  Johnson , in a far more developed USA had made a clarion call for a “ war on poverty”, a few years before Mrs Indira Gandhi called for   Garibi Hatao in 1971. Truth is that the latter was not just a popular buzzword as is often cynically assumed; note,  four decades later, the Congress party’s essential credo focusing on the under-privileged has not changed. The old catch-phrase “ reforms with a human face” is still germane.

Those who trash subsidies as playing vote-bank politics, miss the point; a rising fiscal deficit only accentuates the problems of the government as it has an inflationary impact and hits the common man the hardest; the political cost is humongous. The UPA’s challenge has been to enhance supply-side contributions as rural and urban prosperity increases on account of the fiscal stimulus given during  the slowdown phase. Sure everyone likes a subsidy; perhaps it needs targeting by income-group classification as misguided sops can actually exacerbate disparities ( why do rich households need even a single subsidized LPG cylinder??).

Truth is that Mr Gandhi called India Inc a crucial stakeholder in the growing India Story at his talk at both CII and FICCI. The Delhi-Mumbai Industrial Corridor, the amended Companies Act, FDI liberalization, capital-market reforms and e-governance are manifestations of the Congress-UPA’s pro-growth proclivity. Paradoxically, it is the BJP which is against FDI in multi-brand retail and even opposed railway passenger fare hikes after 10 years,  an act of irresponsible political opportunism. They were central to the Janata-government of 1977 that drove away Coca Cola and IBM ; it is the retrograde economic chauvinism of RSS ideology; xenophobia.  Mr Gandhi is not trying to be a Robin Hood, robbing Peter to pay Paul. He is just looking at a more equitable society with equal opportunities.

Could things have been better under UPA ?? For sure yes, but despite the predicament posed by a collapsing global financial system, an obstructionist opposition and unreasonable allies, the UPA has nudged ahead . A world economy growing at 4% pa at purchasing power parity terms is a projection of the return of economic growth, and perhaps by 2015-16, greater stability. The real benefits of  UPA’s project clearances, anti-corruption legislation, and Direct Benefits Transfer and Aadhaar  could help in the India Story gathering serious momentum.

In fact, the fundamental factor that Mr Gandhi wishes to correct is the famous “15 paise reaching the common man” for every rupee spent  narrated by his father PM Rajiv Gandhi in his celebrated Bombay address. We need to make subsidies distribution efficient and leakage-free as it could lead to huge resource savings. Aadhaar and DBT are game-changers, in that sense. For instance, India’s demographic dividend is meaningless if the vast young are unskilled, uneducated or unfit, hence we need the Right to Education, Right to Food and National Rural Health Mission. These are not just budgetary expenses but economic investment for future generations.

Mr Gandhi is keen to pass the anti-corruption bills, because he knows corruption is bad for growth.  And he sincerely believes that inclusive growth is India’s default option. By all measures and means, he is right.

( The author is the Spokesperson of the Congress party and Co-Founder, HamaraCongress.com)

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