The writer is a journalist in Delhi whose work has appeared in The Christian Science Monitor and The New York Times. He tweets @DilliDurAst
The intellectual blackmail wasn’t limited to economists and experts. There was even a ‘Libertarian Cartel of Indian Bloggers’ (LCIB) a bunch of grown-up men behaving like school bullies, scouring the internet for anyone questioning corporate malpractice, viciously trolling and abusing into silence anyone who didn’t agree that the state is evil and the ‘free’ market is god. Short of supporting Mukesh Ambani as dejure prime minister, they went to any extent to defend crony capitalism and protect big capital from regulatory oversight. The ‘cartel’ in their name was only half in jest, because it is not as if they ever spoke against cartelisation in the Indian marketplace. The LCIB disappeared like a bheegi billi when the 2008 recession happened. I recalled their evangelism last year when the Competition Commission of India fined 11 cement companies INR6,698 crore for cartelisation. There were no loud cheers from the free-market wallahs about the decision. You’d think they’d be screaming with joy about policies that make a free market fair, make it work for consumers and keep it open for new and small entrants. That is what the antitrust legislation does in the United States.
The current crisis in the Indian economy is blamed on “policy paralysis” — the government is too paralysed to take legislative and executive decisions in the direction of economic reforms for the fear that they will politically backfire.
How and why did the government get policy-paralysed? It was a series of scams that left the government with little credibility. The biggest of these relate to allocation of telecom spectrum and coal mining blocks.
In other words, it was corruption that led to the policy paralysis, which has led to an unforeseen slowing down of growth. The Indian government was throwing away precious public resources to corporates for a pittance. You’d think that free-market wallahs would object, they’d ask for better regulation, and demand a strong and independent anti-corruption ombudsman like many countries have. Instead, what are the free-market wallahs saying? They are targeting welfare schemes. They are saying that Sonia Gandhi’s populism got us here. Hain?
The magical public-private partnership (PPP) is supposed to be the magic wand for ‘nation building’ because public sector companies couldn’t do it. Fine. Let’s see PPP in Delhi. 12,587 crores of public money was spent in letting a private company re-do the Delhi airport. Without even going into the financial scams that are alleged here, let us just see the Delhi airport during monsoon rains. It’s flooded. If a public sector company had built an airport with leaking roofs, the free-market wallahs would be crying hoarse, ‘Privatisation! Privatisation!’ What are they saying now? Nothing. The free-market wallahs’ big rallying cry these days is that the government, short of money, shouldn’t be spending a few thousand crore on a food security law that seeks to end starvation deaths and reduce malnutrition. The free-market wallahs never worried about how much money the government lost in killing the public sector Air India so that private airlines could benefit, or in the huge public debt private companies have run away with, or the money the government could have made by auctioning coal, telecom and other sources rather than throwing them away to favourites. The money being spent on food security, by contrast, is a pittance. The free-market wallahs are opposed to it not because of the finances involved or because its delivery would be inefficient, but because they ideologically think it is not the government’s job to feed the starving.
If the free-market wallahs in India want to be taken seriously, and if they really want meaningful economic growth, they need to stop giving intellectual cover to crony capitalism by resorting to the red herring of ’socialist jholawallahs’.
Published in The Express Tribune, August 30th, 2013.
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COMMENTS (16)
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ETBLOGS1987
@Naveen: You and I both agree that India is poor (though I do not agree that 80% Indians are poor). You and I agree that funds for social develpment are constrained (even if we do not agree on the causes that constrain such funds) . In such a situation does it make sense to spend this money on a food security bill that is directed towards non-poor when pockets of hunger do exist but are not widespread whereas malnutrition is in fact widespread but not addressed through the bill?
It is also unclear when I ever suggested that India should cut down pro poor development expense but grant leeway to the rich? My original post to the author simply contested widespread starvation deaths and the design of this bill. All your rebuttals do not address these two basic points I was making.
@Wsr: Expenditure on Food Security can't be compartmentalised. If you have low income, the first thing you'll cut down is spending on luxury items and not on food particularly when you're being regularly paraded as the most hungry nation on the planet.
I do not feel the necessity to reply to you on the other point as that was not addressed to you.
@Naveen: I did not understand your point about percentage expense on development expenditure. How does it relate to what @gp65 said?. What is being discussed i thought is I whether the food security bill in its current form is a good thing or not .
Also I am quite surprised by your condescending and rude tone 'you better check...'.
@gp65: There's something called density effect- A great many Indians live just above the poverty line. A recent study tried to assess the number of poor using consumption expenditure data by doubling the official poverty line - It arrived at around 80% Indians.
It does not take a genius to see that majority of Indians are poor if we open our eyes to the surrounding.
Money is indeed fungible but my question is why only the schemes meant for poor should be the ones to be axed. Why not cut down on the incentives given to the rich & middle class Indians which are several times more than those to the poor.
ETBLOGS1987
ET mods - pls publish response to someone who has written to me.
@Naveen: I do not disagree that there is a lot of poverty. If you notice, I have also indicated that there is a lot of malnutrition. It is the DESIGN of this program which does not address legitimate problems I have a problem with. Also t he irresponsibility of making the program applicable to 67% of India's population in. The middle of a fiscal crisis while as per the latest measures poverty is down to 21% is something I question.
Though I dislike UPA, when NREGA came and initially all newspapers opposed it, I said this is necessary to give some support to people who may have none. But when you implement a poorly designed entitlement then the same money cannot be used for addressing very genuine widespread problems that still exist.
Thus I agree with you directionally and disagree on the specifics. Do also read the attachment I had provided in my earlier email.
@RAW is WAR:
Tell me one thing, how is the automobile sales keep growing except the past quarter and foreign auto manufacturers are on the biggest FDI source.
Somethings doesn’t compute in your claims.
Basically it is the World Bank and IMF wallahs whose loyalty lay elsewhere. ManMohan Singh, Kaushik basu, Raghu ram rajan and Montek Singh are the people who killed Indian manufacturing and made Indian economy consumption bound without limit. It suited Crony capitalists from India and west who colloborated in the loot of Indian foreign exchange.
@ Author
after the congress government came to power, they implemented
NREGA scheme which itself is a scam to pay poor after robbing working class. In this scheme we are roughly wasting money equal to Pakistan's GDP. Interest rates were raised immediately after congress came to power. So middle class person cannot buy anything. Housing , cars etc. Now congress wants to start food security bill. This will waste money approximately equal to twice of Pakistan's GDP. Also various scam like telecom, coal, C Games etc has depleted the finance required to provide for infrastructure.Agriculture scams by Sharad Pawar has raised prices of food beyond common mans means, in spite of excess food stocks.
kindly do not defend Sonia Gandhi in a Pakistani website. Corporate India is the only hope of the nation. BJP and Mr.Modi is the only answer we have. If we remain blind, we will be dead.
@ Author - This is the first time i've seen an article that i can largely concur. Socialism should be for the poor. Market would like to favor the rich so they can create the growth and alleviate poverty but every now and then govt will need to redistribute so the disadvantaged get a helping hand.
@Author: For one of the few times, I largely agree with you. Food Security Act is a basic necessity in our country. It should be seen as a supplement to the already existing channels of assisting the poor (such as PDS, NREGA, ICDS etc) . It is not possible to design 100% full proof scheme. People can't be allowed to just die of bad health. The fine tuning of the scheme can proceed as we learn more through field studies of actual implementation- as has been achieved with PDS in states like Chhattisgarh and TN.
Having said that, Ideological opposition of Markets is also not good. In building Physical Infrastructure, innovations and catering to the demands of those who can pay, Markets are the perhaps the most efficient way to go. Transparent and Effective Regulation is the key there. However where there is the case of externalities (such as public health & communicable diseases), asymmetric information between the user & provider, distributional disparities ( when poor need somethings the most, but have no money to pay) or Public goods; Government must take a sure shot lead. However, Accountability and functionality of Public Provisioning is extremely important.
Three reasons:
Crony capitalism (e.g. coal gate and telecom scam). Bad policy (e.g. funding current account deficit with borrowings, while little investment in infrastructure). Populism in place of good policies (e.g. food security bill without re-hauling/modernizing PDS). I am fully for food security across the country, but not the way its being done right now.ETBLOGS1987
ET Mods: These days posts by me get filtered just based on my handle. I am challenging the author using facts and data in a polite rebuttal that meets all your guidelines. Pls. publish.
"The free-market wallahs’ big rallying cry these days is that the government, short of money, shouldn’t be spending a few thousand crore on a food security law that seeks to end starvation deaths and reduce malnutrition"
Please provide verifiable reference that talks about starvation deaths in India in recent times. In fact hunger has dramatically reduced. There is widespread malutrition though. In particular iron and protein deficiency that leads to anemia and stunting. Also poor drinking water and assosiated iarrhoea which does not allow the body to retain the nutrition or absorb it. But this bill will do nothing to correct those deficiencies. By addressing non-exitent problems and failing to address very real problems and imisleading the nation about the true cost of this program and not adequately budeting for it but leaving a fiscal overhang for successors, it is not surprising that the UPA intention is questioned.
http://articles.economictimes.indiatimes.com/2013-08-28/news/415387791food-security-bill-infant-mortality-malnutrition Quoting from this article written By Swaminathan Ankleshawaria Aiyar which I have attached "Arvind Panagariya and Jagdish Bhagwati's book India's Tryst with Destiny reveals that WHO norms for malnutrition, widely cited by other economists like Amartya Sen, are laughably faulty. The last National Family Health Survey showed that, by WHO norms, 15% of even Indian elite children were stunted! Kerala's life expectancy is 74 years and infant mortality is 12 per-thousand births. Senegal, Africa, has life expectancy of 61 years and infant mortality of 51 per-thousand births. Yet, according to WHO norms, 25% of Kerala's children are stunted against only 20% in Senegal. Ridiculous! Indians are just shorter than Africans, not more "stunted"."