To begin with….
I will begin this with a short personal tale. In the beginning of 1991, when Narsimha Rao government hesitantly pushed it’s liberal economic policies, venerable comrade economist Dr. Ashok Mitra wrote a venomous op-ed in the very popular Bengali paper Ananda Bazar Patrika. After explaining how dangerous direction this country was headed to and how his once-respected colleague (then FM, now PM) could no longer be trusted to take care of poor, Dr. Mitra offered a radical solution to our debt problem. Loosely translated, the solution is this: National debt? The responsibility of the recovery of the debt lies with the lender, not the indebted. This pearl of profound economic wisdom appealed to my teen-age conscience and armed with this single most important advise, I argued with my father that he really did not need to worry about his personal loans. My father, the incorrigible moralist, offered a simple response: this is called Rinam Kritva Ghritam Pibet economics.
The entire Sanskrit proverb is Rinam kritva ghritam pibet, yavan jivet sukham jivet. For readers unfamiliar with the language, it means Live so long you have a life and live with all comforts and luxury (like eating butter) even if you have to take a loan. The quote is attributed to sage Charvaka who was one of the principal proponent of
nastika lokayata (corrected by jayant) philosophy, one of the six Hindu philosophical traditions. Hardly any of the authentic texts from lokayata school survived the tyranny of future barbarians but some scholars argue that Charvaka’s philosophy was unfairly blackened by followers of other traditions. This post is, however, not about Charvaka or his scholarly supporters or detractors. Two days ago, one of the leaders of LokPal “movement” came forward to present the view that economic liberalizations of nineties are the root cause of corruption in India . Coming from a lawyer who is in direct contempt of supreme court of this nation and believes that all the judges must be socialist, the comment is not surprising. In the past two decades there are various lefty winners of Magsaysay/Booker/Nobel (each of the award coming from wealth of rabid capitalists who handsomely profited from blood and sweat of common laborers) who has taken such lines and qualified as economic nut-cases whose views are suitable for the closed world of taxpayer funded university campuses but toxic for the world that takes human endeavor and spirit of entrepreneurship seriously.
The view itself is devoid of any common sense and as can be expected from the lefties, this particular sermon is devoid of any cause-effect explanation. However, two decades have passed and not many in the young generation have seen the desperations of the past generations for a job…any job. We no longer see those wall writings where, in a bid to use desperate youth, political parties used to promise so many “sarkari” jobs if they come to the power. Instead, today they talk about infrastructure and industry. Yet it becomes necessary to take a survey of the corruption less Ram Rajaya allegedly produced by our past flirting with socialism so that we understand the motivation behind a competition driven fairer economic system that rewards individual effort and offer right role to the right talent devoid of any consideration of caste, creed, family-connection or religion.
A big cupboard and too many skeletons
In the 1957, a Calcutta based business man named Haridas Mundhra stood accused of bribing top administrative officials and finance minister TT Krishnamachari to use funds from then-newly formed Life Insurance Corporation. Finance minister eventually resigned after Mundhra’s conviction. If anyone is trying to portray Sri Nehru as a crusader against corruption he/she should know TTK returned to Congress Loksabha few months later and same cabinet post 5 years later. What was more interesting was Mundhra’s allegation that he paid a Congress leader far senior to TTK in party rank. But could we trust an already convicted man? The investigation never started.
From late forties, when elections started big time, Congress leadership clearly understood that to fight election Congress needed big funds. Arguably fund collection is the dirtiest part of any holy democracy. Thus while mass leaders like Nehru or GB Pant used to mesmerize the audience with their pep talk about upcoming wave of global socialism, leaders like Atulya Ghosh or SK Patil were the background manipulators whose fund collection skills were the ultimate enablers of power dream of mass leaders. A thick line of separation was drawn between these two roles and grateful mass leaders responded with well rehearsed silence when it came to questionable source of funds. Therefore business interests and politico-economic compulsions created a scenario that eventually gave rise to what can be described as transparency-deficit (thank you Dr. Singh) in politics and, by extension, in the administration.
It was in 1944, a group of Indian businessmen got together to produce a document on economic direction an Independent India would take. The document later came to be known as Bombay Plan. It was signed by luminaries such as Sri JRD Tata, Sri GD Birla, Sri A Dalal, Lala Shriram etc. The document recommends government interference in heavy industry and centralized planning – exactly the policies later implemented by our crony-socialist Nehruvian model. Much later a court historian would use this document to tout the support of Nehruvian socialist model. A good question may arise. Why would a group of industrialist endorse such a presumably anti-investment socialist system? Because such system eliminates competition and protect the business status quo. In the era of heavy industries, all the big deals went to big business, small scale business man never got a chance. One can come up with the examples of Dhirubhai Ambani but that outsider was an exception. Even then he had to bribe indiscriminately (“I don’t have any ego; I can shake hands with anybody”) to get his way but, to his credit, he did not have elitist hypocrisy of appearing honest.
It was Milton Friedman who provided this rather insightful comment about Nehruvian administration and it’s presumed “anti-business” crusade:
One gets the impression, depending on whom one talks with, either that the Government runs business, or that two or three large businesses run the government. All that appears publicly indicates that the first is true, but a case can also be made for the latter interpretation.
Friedman was not alone. It was opposition in 1959-60, that severely criticized Nehru’s secretary MO Mathai and alleged nepotism on his part. Mathai eventually resigned. Rafi Ahmed Kidwai, one of Nehru’s blue-eyed boy and Firoz Gandhi’s mentor, took over Tata’s airlines and re-christened it as Indian Airlines. The excuse? Indian Army refused to fly ministers in their own planes. Not only it’s legality was questioned, the way Tata’s opposition was hushed seemed inappropriate to many. When allegation of financial irregularities in a monthly magazine run by Kidwai appeared too obvious to ignore, Nerhu gracefully accepted the collateral damage and sent Kidwai out of government. No investigation was allowed. Transparency? That is obviously an imperialist capitalist conspiracy.
I am well aware of the blasphemy I am about to commit when I do not mention much about VP K Menon, the incompetent stoned hack with a penchant for bumbling and sorry excuse for a minister. But, one can not do justice to Menon without making him the focus of a single blog post.
In 1969, under severe allegation of nepotism, a commission was set-up to investigate. In those innocent days, miracles like report from government commission used to be produced. The report found that a very prominent business house which was known for their close proximity with Shri MK Gandhi got lions of share of the government deals. Obviously, the investments in the form of those large donations to Congress election fund and Gandhi Ashram (to keep the presumed father of nations in his beloved poverty) did return at least a 1000% profit.
The report could not have come at a worse time. Congress was just broken and syndicate controlled fragment of Congress party was out of power. Indira, the most paranoid of our past leaders, felt that the same business house was funding her political rivals so she unleashed CBI on them. It was the beginning years of politicization of government machinery. Her elder son would follow the golden path of his illustrious mother and would unleash CBI on Indian Express which was behaving rather “unethically” under Sri Arun Shourie.
Under Shrimati Gandhi’s regime, the role of mass leader and role of fund collector got merged and a new era of “Ram Rajya” began to take shape. Possibilities were endless. So were myriad method of collecting funds. In 1971, during the Bangladesh war, Nagarwala scandal came to light. During the investigation it turned out that the indicted man accomplished the crime after “mimicking the voice of Mrs. Indira Gandhi”. The enlightened inhabitants of presumed Ram Rajya failed to get a demonstration of such mimicry. “Devi Durga” (according to AB Vajpayee, reader Gopi Maliwal points out that Vajpayee did not call her “Devi Durga”, but only provided a comparison) proceeded to kick out poverty, only it was not clear whose poverty she was seeking to eliminate. Eventually an investigation was set up by Janata Party govt. and it dutifully reached a dead end.
Then one needs to consider bank nationalization. Off course it was accomplished with the holy intention of saving Indian economic system; in between if there were few folks who got their high value loans waived, it can not be government’s fault, can it be? But what impact did it have on the entrepreneurs, especially the ones in the financial sector? Let us take the case of Sri TA Pai, who was running Syndicate Bank then. So one fine morning, Shri Pai discovered that his profit-making bank was nationalized (presumably for greater good). Shrimati Gandhi managed to put the infuriated man in the cabinet. Poor fellow began to realize the raw deal he got when he had to defend Sanjay Gandhi’s tamasha of tax payer funded indigenous car about which, an opposition member in Loksabha said, “The only part of an Indian car which does not make a noise is the horn.”. Oh, the awesome joys of socialism.
We do not need to discuss emergency here. There are many reasons left feels orgasmic about the emergency and the power they enjoyed then. New evolutions occurred when “Devi Durga” came back in the next election after a Janata government proved that they, after all, share the same DNA with Congress (with few accidental mutations). This time large mega deals were signed and the savior of the poor used to take a cut. It turned out that “Devi Durga”, in this reincarnation, had more than ten hands. Almost all hands were hidden, quiet a few of them were out in the open. Indian Express ran few expose on a man named AR Antulay, then CM of Maharastra. Eventually Antulay was found guilty. Ultimately, Antulay resigned and miraculously escaped prosecution while Shrimati Gandhi cleaned her hands (“I did not know”). Saga came to an end when Arun Shourie was sacked from the editorship of Indian Express. Then there existed Reliance and it’s founder who, as the allegation goes, smuggled in an entire factory part-by-part after bribing some politicians (one of them a prominent senior Cong. politician from an impoverished eastern state
and another senior bureaucrat who would later became PM for a very brief period of time I stand corrected, reader Chandru pointed out that this is not true ) to escape the export restrictions. Bofors is just too well known to waste lines here.
History is the mirror where a society find it’s own projection in future. This long list of scam is the necessary background for the conclusions we are about to draw.
We want more…more….more power
To be fair, the measures taken during economic liberalization were not enough to release Indian economy from the straight-jacket of government control. The ‘economic liberalization’ itself is not a new doctrine Rao government imagined about, it was thrust upon us. It was Morarji Desai who, as a FM and later as PM did away with some inconvenient restrictions from bureaucracy. But he could not go too far. Then it was VP Singh, our most forward thinking finance minister (and our most backward thinking prime minister), who decided to simplify the regulatory system, did away with some export restriction and sought to strengthen tax collection system. Some argued that VP’s unceremonious exit from Rajiv’s government was engineered by a industrialist-bureaucrat nexus displeased with VP’s effort in rocking the boat. But even VP’s initiatives (initially backed by Rajiv) were a direct reaction to the payment crisis that began to emerge slowly as a result of the obsession with ‘rinam kritva ghritam pibet’ economics.
By 1989, the hospitalized Indian economic system needed to be put into ICU and IMF offered a bail-out provided we deposit our national gold to London as a short term measure and accept policies of liberalization as a long-term measure. The nation had to accept this slap because likes of Shri Bhushan and Dr. Mitra would like to eat ‘ghritam’ regardless of the cost to the people. The then-PM Chandrasekhar who agitated against VP Singh’s reform by saying that we were betraying Nehru’s socialist legacy meekly sent the gold and allowed his then-FM Jaswant Sinha to draw the first blue-print of the liberalization.
The man who was Narsimha Rao’s third choice for a finance minister (and also a protégée of arch-communist PN Haksar) took over this blue-print and ushered the new era of liberalization. To be sure, those policies were no silver bullet. They were just the beginning. Policies that would have strengthened our regulatory agencies to take on the mighty Delhi club class of industrialist-bureaucrat-power broker-mediamen-lobbyist crowd were never implemented. Tax system was never strengthened so those who evaded tax collectors enjoyed protection by extra-constitution authorities and those who paid tax kept fuming while leftists used to enjoy entitlements using their tax money. Government machinery never changed it’s culture of patronization and loot, therefore it did not change it’s ways of sucking up to the big business and harassing small businesses. The era of Vajpayee’s second government was the true battleground of the fight between few who wanted changes and a coalition of vested interests that did not want any change. A coalition of like-minded fellows like Arun Shourie and Jaswant Sinha fought a good fight inside their own party (the BJP plank that was closer to RSS was no different from left in their socialist approach to the economy) and the result was that Sinha was forced out of the cabinet. The replacement, Yashwant Singh,
undid so much of what Sinha accomplished that the era came to be known as rollback era. slowed down the pace of privatizations although provided some much needed reforms.
It is no surprise that such system would inevitably drift towards crony-capitalism. India is far richer than it was in 1960 or 1980s. Today government have so much money that instead of seeking bail-outs from IMF or India club, it talks about contribution to IMF. Apparently, in that new India with that old culture of opaqueness/patronization/graft, any scam would involve more money than ever before. More we allow scams to happen, increasingly bigger scams would happen. We need to strengthen the existing regulatory agencies and ensure more transparency in the government as far as national security would allow.
Now the old coterie of leftists whose policies were primarily responsible for ‘Hindu rate of growth’, want concentration of more power to eliminate the problems resulting from a culture they encouraged in the first place. In a post-economic-disaster world, all other better-performing economies – China in eastern Asia, Poland in east Europe, Germany in west Europe, Brazil in LatAm – know how to keep these self-professed economic experts like mother teresa economists and NGO-leaders at arms length. It is only us who not only listens to them, we placed them in an extra-constitutional body. Who does not want to wield power without any accountability? So today’s NAC comes with out-of-box solutions like one-dish per marriage ceremony; I wonder if they ever tasted chapati without sabji, but I guess chapati-sabji is be a communal dish compared to ghosht biriyani.
Now that they tasted the absolute power for some time, they would like to consolidate that power. The nautanki of Lokpal agitation need to be viewed through that lens. First a collection of popular figures like Baba Ramdev and Anna Hazare was used to bring in popular support and now reviled figures like genocide Suzy came in forefront while popular figures were pushed to the background. Now, as time progresses, the agenda of this group is coming to light. Heck, after all, who does not want world’s biggest middle class taxed to the poverty? If all the rural poor children/urban slum-dwellers/banbasi tribal children get a school to study, takes up private jobs and dreams of an apartment, who would join left’s politics? That is why middle class needs to be bullied every now and then. Because Marxist gods like Mao or Stalin are already discredited, middle class need to be told about demons of free market economy and lest it be mistaken as re-packaging of already discredited economic principles, it must be carefully covered in humanist language and pro-poor tone. One look at MNREGA and one understands how the biggest scam of converting public cash into private funds was carried out using humanist language and pro-poor tone. More power we give to them, more they will take from us. The lust for power using misery of poor is so irresistible, that they would not stop at any level in pursuit of their own happiness.
At one hand they would like millions of poor to live in utmost poverty in the name of preserving their innocent lifestyle (while simultaneously calling themselves as ‘progressives’); on the other hand they will tax middle class to death so that no individual effort or small business succeeds (so strong is the hatred that it reminds of the hatred catholic church had for artisan guilds and groups like freemasons in seventeenth century Europe); if that does not expose the hypocrisy properly, consider this: presumably anti-corporate anti-rich anti-establishment crusaders see no conflict of interest while accepting the largess of government or trusts controlled by rich foreigners. The trusted anti-corporate pro-poor crusaders like Nisha Susan had no problem in promoting Hallmark holidays under the garb of secularism.
An old colleague and one time very close friend from an immigrant Cuban family in USA once provided an excellent insight. “It is impossible to tell the left to go to hell”, he once told me “everywhere they go they create a fresh one”. I can not agree more.
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