Friday, January 8, 2010

Disco Dance Tonight: For Sanyasins Only: No Economists allowed to move their legs!!

Prof. Jagdish Bhagwati writes:

  • ……..Indian policy framework had degenerated into an unproductive, even counterproductive, set of policy choices that had produced the abysmal growth rate of approximately 3.5 per cent per annum over nearly a quarter of a century. The slow growth of the Indian economy had also undermined the assault on poverty that had been our central objective since planning began in 1951. It is only common sense that a stagnant economy cannot pull people out from poverty through job creation, even though a growing economy may still not create enough jobs. So, when we failed to grow, we also failed to make a serious dent on poverty.

On 1991 crisis:

  • ……….the fact that thoughtful Indians had finally understood that we just could not go on the way we had, that change was necessary.

    On The States Failed Policies :
  • But Prime Minister Manmohan Singh told me that an important part had also been played by the diaspora. He told me that, when he was spearheading the reforms as the finance minister, Prime Minister Narasimha Rao had lent his full support largely because many members of his own family, who were abroad, had told him that India’s policies made no sense and that they had diminished our standing in the world. Coming from his own family’s immediate experience abroad, the message carried great salience and cemented the resolve of the prime minister to pull India out of the rut into which it had fallen.
    Indeed, the policy-making elites were finally shocked into the reforms by two factors that acted like a pincer movement against the status quo.
  • First, these elites increasingly experienced, at first hand when they went abroad, the disjunction between their sense of India’s ancient culture and glory and their realisation that our foolish economic policies had led to a situation where few took us seriously. The worst kind of psychological situation is where you have a superiority complex and an inferior status!
  • …….they lived often in countries where our policies would have been laughed out of court. I recall writing an op-ed in the New York Times when Prime Minister Rajiv Gandhi was coming to the United States and I had mentioned how he represented a force for change and how the licensing system had been softened to allow for product diversification. The editor asked me what that meant; and I explained how the Indian licensing system had gone so far as to insist on specifying whether one produced knives or forks! The editor was incredulous: how could anyone think that good planning meant that one could not diversify production without permission? I, a member of the diaspora, did mention this at the time to several friends in the Indian government, to their chagrin. Indeed, over time, the flood of such stories coming from the diaspora helped lay the groundwork for the abolition of the senseless licensing restrictions on capacity creation, product diversification, on import competition, that became part of the liberal reforms.

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