The twenty-fifth anniversary this year of the launch of India’s economic reforms process has led to a celebration of sorts. Former Union Minister Jairam Ramesh has written an entertaining insider-account of it. Many in the Congress party who wouldn’t want to give P.V. Narasimha Rao credit for engineering the reforms have pushed the date back by a few years before his time as Prime Minister, seeking to ensure that Rajiv Gandhi would get all the applause.
The tectonic shift India’s economy made in the early-1990s is by now well-known. We have indeed come a long way since being forced to pawn family gold — all 67 tonnes of it — when we were scraping the bottom of the barrel with barely enough in the box to pay for even a mere three weeks of imports.
There is a grudging acceptance now that it required Narasimha Rao, a person of exceptional coolness, intelligence and Machiavellian cunning, to extricate India from a crisis that everyone knew was long in coming but did nothing to prevent.
The economic liberalisation even in its hesitant form has lifted millions of Indians out of poverty. Some foreign entities that had despairingly given up on India took a second look and returned; several among them, with strong nerves, stuck it out and continued to invest. Some, like Suzuki the auto manufacturer, and Vodafone, the mobile service provider, found spectacular success.
Over the years India, a late-starter in economic liberalisation, began to tail China in terms of economic growth, accumulated a comfortable, but by no means formidable, forex reserve — which is today well over $300 billion. This country even committed $10 billion to the International Monetary Fund in 2012 to help get the global economy back on its feet.
Many exulted at the country’s newfound status as an economic powerhouse. Coincidentally, an Information Technology (IT) industry that had grown by stealth and survived through cunning took off, conferring on Indians an exaggerated reputation for brilliance. We started to walk the world’s streets and crowd its airports with uncharacteristic boldness and self-confidence, and even earned the grudging respect of the Chinese.
Cities such as Gurgaon started to bloom with the more perspicacious ones investing in their growth. Strangely, few people paused to ask why these new havens lacked the basic elements that ought to go with a big metropolis — functional sewage and garbage disposal systems, guaranteed uninterrupted power, and clean water on tap.
Governments, both State and Central, muddled through it all, with horrific results of the kind that drowned Chennai last year and inundated Gurgaon and flooded Mumbai more recently. Other cities grew untidily too, riding on fatal ‘jugadism’, often leaving people to wade through mountain-loads of filth and cope with diseases that should have been long vanquished, such as plague, dengue and malaria. Successive governments continued to rake in money, only to squander most of it. Meanwhile, infrastructure, mass healthcare and education languished.
Living in denial, we allowed ourselves to gloat over the fact that our economic leap forward since 1991 was achieved despite the constraints imposed by democracy while suggesting that the Chinese miracle was solely the outcome of a strong government and an unquestioning society but little else.
One needs to argue otherwise, and show up the lack of urgency and the short-term approach of our policymakers for what they are worth, best done through guns-versus-butter illustrations. The Chief Economic Adviser, through the Economic Survey 2016, informed us, almost in a whisper, that annually India’s wealthy enjoyed subsidies adding to some one lakh crore rupees. This is the kind of money that would have paid for 20 metro railway systems comparable to the one nearing completion in Kochi, or thousands of cold storages and grain silos that would have significantly reduced the quantum of fruits, vegetables and grain rotting in millions of tones. All this while creating ‘real’ jobs for millions of young people across the country, in ways the National Rural Employment Guarantee Scheme, or MGNREGS, never could or ever will.
What our planners and economists have failed to capture is the sheer magnitude of the squandering of resources over the last couple of decades. Air India, already in debt to the tune of over Rs.50,000 crore, has been a regular recipient of massive bailouts, the latest instalment being Rs.30,000 crore. And we are talking of just one public sector unit. Reports indicate that 29 state-owned banks have written off Rs.1,14,000 crore of bad debts, with more to come.
A back-of-the-envelope calculation — aggregating the innumerable scams, the leakages in the public distribution system, the cost of freebies such as television sets, laptops and mixies as well as the astonishingly large amounts lent to the rich and the influential now going belly-up as non-performing assets (NPAs) — indicates a wasteful splurge of at least Rs.5,00,000 crore over the last decade. That is the kind of money that could have overhauled education and health care in the country, with change to spare for a few more urgently required public projects, Swachh Bharat possibly, without the cess that was imposed?
The big lie to nail is the one that asserts that we lacked the resources required to help the country jumpstart and quickly transit to a middle-income economy. We need to accept that economic reforms did give India the wherewithal to achieve miracles; disappointingly, we failed as a country to even achieve the humdrum and the mundane, nowhere more so than in education which economic liberalisation failed to transform.
By the government’s own admission, millions of children continue to drop out of school far too early in their lives, adding to the millions more who already have done so over the last couple of decades. The clearest evidence of this can be found in successive reports of the Ministry of Human Resource Development (MHRD) that establish that there are far fewer children today in the upper primary than in primary schools, and still fewer in the secondary schools. All this has left us challenged educationally and skill-wise, rendering an important initiative like ‘Make in India’ a diseased crawler.
We probably have another chance — and don’t lack the means for it — to ensure that we do not remain a country of everlasting slums with a proclivity to celebrating rather than eliminating poverty. No Prime Minister has been better-placed than Narendra Modi in recent times to risk a flame-out after a single term, getting the basics right instead of allowing the fringes of his party to trip the still-substantial three years left in office, with cow and country. Perhaps that may even get him a second term in office.
Dr. Uday Balakrishnan is visiting faculty member at the Centre for Contemporary Studies, Indian Institute of Science, Bangalore. E-mail: email@example.com