Monday, February 7, 2011

Economically illiterate jholawalas

  • As someone who grew up in that era of central planning, licences and permits, I consider it my duty to describe what a shabby, sad, hopeless place India used to be. The economy grew at barely 3 per cent (a figure derided as the Hindu rate of growth) so most Indians lived in absolute poverty. Millions in our poorer states worked as slaves under the euphemism ‘bonded labour’. There was a miniscule middle class and even the richest Indians lived poorly by the standards of the world. 

  • The only people who had easy access to the shoddy products of our controlled economy were politicians and bureaucrats. From their fine bungalows in Lutyens’ Delhi, they controlled quotas and permits as if all of India was their private estate. The rest of us lived with shortages of everything. Sugar, milk, bread, cooking oil, domestic gas, electricity, water and almost everything else was always in short supply. It is not that Indian entrepreneurs were incapable of producing adequate supplies of these things but that government policies ordained that they dare not without a permit or a license. This was based on the flawed economic principle that government factories would produce everything India needed. These factories were run in sloppy fashion by careless officials so an uncontrolled private sector would have put a quick end to them. This is why the private sector had to be licenced and controlled. So successful were these controls that our biggest businessmen could regularly be seen begging for licenses in the smelly corridors of Delhi’s Bhawans. 

  • The people who should be most worried are the well-meaning but economically illiterate jholawalas who constitute Sonia Gandhi’s National Advisory Council. Under their guidance, she has emerged as the Lady Bountiful of Dr. Manmohan Singh’s government handing out jobs to the rural unemployed, forest land to tribal people and free food if the NAC’s latest scheme goes through. All these freebies have been made possible by the fact that the Indian economy, thanks to the enterprise of its private sector, has been growing at a remarkable pace. If Indian businessmen decide that they would be better off investing in some friendlier country, then we could go rapidly back to the way we used to be. So if anyone needs to heed the Prime Minister’s warning, it is Sonia Gandhi especially since many of the interfering ministers claim to be acting in her name. 

(From Back to the licence raj? by Tavleen Singh)

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