Original 2012-12-27
Mani Shankar Aiyar, now a member of Parliament for the Indian National Congress Party, is a representative of the critics of reforms in India. Talking about reforms, he insists that the engine of India should lie in a more efficient public sector, especially at the local level, rather than in the private sector, and he admits that people like him are now a minority in the party.
Southern Weekend Reporter Qin Xuan Intern Xie Jiaxi
Editor: Shi Zhe intern Liu Yu Lin
Indian National Congress Party MP Mani Shankar Aiyar. (Southern Weekend file photo)
Mani Shankar Aiyar, now a member of Parliament for the Indian National Congress Party, is a representative of the critics of reform in India.
In 1999, the eighth year of India’s reforms, the Congress Party set up a Reflection Committee to review the Congress Party’s defeat in three consecutive general elections from 1996-1999. Party president Sonia Gandhi appointed Aiyar as the convenor of the committee. The committee concluded that reforms were the main cause of the Congress party’s losses. In this regard, the committee recommended that the Congress party return to its pro-poor and Nehruvian socialist stance.After the Congress party came back to power in 2004, Aiyar became the Minister of Governance of Panchayat, an autonomous organization of villages in India, and the Minister of Petroleum.
In November 2012, a Southern Weekend reporter met Aiyar in Delhi. Talking about reforms, he insisted that India’s engine should lie in a more efficient public sector, especially the local sector, rather than in the private sector, and he confessed that people like him are now a minority in the party.
India’s problem lies with the grassroots government
Southern Weekend: The introduction of foreign direct investment in the retail sector, a new initiative in India’s reforms, has sparked a huge controversy and put the government in a dilemma – insisting on pushing forward will invite strong discontent from the left, while holding off and abandoning it will disappoint reform supporters. What do you think about this?
Aiyar: The Left is weak in India (the “Left” here seems to refer only to the Communist Party of India). Though their voice is loud and their views are pertinent, their membership is too small. I don’t think they have the ability to woo political power or to form alliances with others. They have missed two good opportunities. One was in 1996, when there would have been an elected communist prime minister, but they passed it up. The other was in 2004, when they had the opportunity to enter government, but they turned it down. They lost opportunities that could have really influenced the direction of India going forward. Sadly. the 2014 elections may be their next opportunity, but it seems they have not made much of an effort.
India’s left tried to emulate China in Bihar, where the Chinese Communist Party is much better, but the Indian left’s way just isn’t smart.
Southern Weekend: How do you evaluate the Indian reforms?
Aiyar: Economic reforms can provide the resources to build a better society where everyone can enjoy the fruits of reform.
In the case of China, higher economic growth has not led to a greater gap between rich and poor, you have one of the largest economies in the world, but also one of the smallest Gini coefficients (sic). China’s grassroots government is so efficient that directives from Beijing can quickly reach the remotest villages, China has done well in education, health, sanitation, housing, drinking water, food, etc. Economic growth has allowed a few to get rich first, and it has also allowed the majority to have an improvement in their lives. gdp growth has pushed up the poverty issue. But India, at least in the last two decades, has had a GDP growth rate of 8% and a poverty alleviation index of only 0.8%. The gap between the rich and the poor is getting wider and wider, which affects India’s democracy and has a negative impact on development.
Unless India can solve the problem, India’s grassroots government can be as efficient as China’s and have the ability to provide the necessities of life for its people. In China, the grassroots government officials are all members of the Communist Party, and the Party and the government are one and the same, and that’s where the efficiency lies. And herein lies the problem for India: how to run a grassroots government and how to deliver public services efficiently. India has a federal system, and many local governments do not have the same decrees as the center. The public sector spends 50 to 75 percent of its money on poverty alleviation, but it is not efficient. How do you ensure that the money is spent on the right things? Only if local governments in India are as efficient as those in China can we reconcile private sector development with social equity.
“Our difficulty is democracy.”
Southern Weekend: The reforms in India were initiated by the Congress Party, and the Congress Party has made changes to that end. Twenty years on, is the Congress party wavering on the reforms?
Aiyar: The Congress party is mostly on the side of reforms. They believe that the measures taken after 1991 have encouraged private sector development, the stock market has been revitalized, export trade has been encouraged …… The result is that our GDP growth, which was below 5 percent in the 1980s, has now doubled. As China’s growth slows down, India is also expected to overtake China. We prefer development to be sustainable. The Congress party supports openness, privatization. But there are still people like me who worry that the gap between the rich and the poor, inequality and other problems will get worse with the reform process.
SC: It has been said that reform seems to be a sensitive topic in India because there are often dissenting voices. So, is there a consensus on reform in India, and if not, what are the biggest obstacles to reaching a consensus?
Aiyar: The biggest obstacle is democracy. But because there is democracy, there is also vitality and prosperity. I think in some ways India is more vibrant than some Western countries. We have so many languages, cultures, religions, hierarchies, that we can’t even arrive at a national interest, a consensual thing. The process of governmental governance in India is a consensus-building process. China is one-party rule, efficient. The difficulties you are experiencing are different from ours.
Our difficulty is democracy. India’s reforms will not be as fast as China’s, but I believe we can harmonize economic growth and social equity very well. India should improve the efficiency of the government at the grassroots level. If we want to maintain sustained and rapid economic growth, we need to be democratic and at the same time show people that everyone has benefited from the reforms. This is not very clear in India right now.
More consideration should be given to the poor
SC: After 21 years of reforms, will Indians benefit generally?
Aiyar: We have not done enough in this regard. I do not believe that everyone benefits and no one suffers much. It’s up to the government to reform, and that’s as important as economic reform.
Southern Weekend: two decades after the reforms, a new middle class has emerged in Bangalore, Mumbai, and New Delhi; they are young, educated, and use Apple phones; do these new middle classes have any influence on Indian politics?
Aiyar: “Middle class” is too big a word. I’d like to use another word – upper class. In the past, upper class meant land-owning aristocrats, now it’s billionaires. But there are still a billion poor people in India, and the gap between the rich and the poor is getting wider and wider. The two should be linked and there should be some consideration for the poor. At least the poor should be ensured to develop as fast as the rich, and the gap should not be allowed to grow wider and wider.
Southern Weekend: How do you see the relationship between corruption and reform?
Aiyar: Corruption all comes from the private sector. If economic growth is dependent on the private sector, there will be more corruption. This is true in China, this is true in Russia, this is true in developed countries. We are going through capitalism and capitalism is bound to have corruption. So the more you depend on the private sector, the more corruption there is. Luckily, we are ready to develop the socialist model again. In India, there are very few people like me who want to go back to socialism.
More energy should be directed to the public sector. In the last two decades, the Government of India has put too little thought into it. Now that the private sector is growing rapidly, grabbing land from the poor, and the government is only thinking about the rich, which is exactly what I fear, we should be thinking more about the poor at the same time. Only then can we do what China has done: tackle poverty while achieving rapid economic growth. We need to advocate government reform, which is the most important thing to do in the 21st century.
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