Original 2012-12-27
In September 2012, the Indian government decided to introduce FDI in the retail sector. “The Prime Minister said that without new reform measures, India would go back to the bad situation of 1989. After 20 years of reforms and still going back to 1989, such reforms must not be done right.” Sonnet said, “What is the problem? That is that there are 1.2 billion people in India and economic growth has to be created by those 1.2 billion people together, not by a few.”
Southern Weekend Reporter Qin Xuan Intern Xie Jiaxi
Editor: Shi Zhe intern Liu Yu Lin
In September 2012, thanks to the economic crisis, the architect of India’s reforms, Prime Minister Manmohan Singh, finally had the opportunity to take them a step forward. The government decided to bring in foreign direct investment in the retail sector.
Once again, this policy was blocked by a coalition of the right and the left.On September 22, the opposition held a nationwide protest march. Veteran Communist Party member Sanit Chopra said the march was the biggest since India launched reforms in 1991. The 71-year-old had not been invited to a police station for some years as he was this time.
“The Prime Minister said that without new reform measures, India would go back to the bad situation of 1989. After 20 years of reforms and still going back to 1989, such reforms must not be done right.” Sonnet said, “What is the problem? That is that there are 1.2 billion people in India and economic growth has to be created by those 1.2 billion people together, not by a few.”
Reform is only possible when there’s no money.
Like most reforms in the world, India’s reforms began when the government ran out of money to spend.
In the 1980s, India’s political turmoil and partisanship severely undermined the secular-elite political landscape laid out by the father of the nation, Jawaharlal Nehru. In order to gain votes, the parties bought the hearts and minds of the people with welfare policies that brought the country’s finances to the brink of bankruptcy.
The collapse of the Soviet Union and the Gulf War dealt India a heavy blow. The collapse of the Soviet Union deprived India of large sums of aid, while the Gulf War brought home large numbers of Indians working in the Middle East, who had been the backbone of India’s foreign exchange. Excessive expenditure and tight income, and eventually India was forced to mortgage a large amount of gold to Swiss and British banks, shocking the public. Under the internal and external problems, India has no way out without reform.
For the ruling Congress party, reforms came at a comical time: in 1985, when the Congress was overwhelmingly dominant in Parliament, party president Rajiv Gandhi attempted to introduce a modest New Deal, but the result was a non-starter. And by 1991, the Congress, though still the ruling party, held no more than half the seats in Parliament, and in the cabinet, only Prime Minister Narasimha Rao and Finance Minister Manmohan Singh supported reform. However, the reforms eventually broke down.
Delhi University scholar T. A. Bhagwani, in his book Understanding Reforms, explains that the Congress party and its supporters at that time, while not without opponents of reform, recognized that the instability of the government would do more harm. If they did not reform, they would also lose their positions of power, so they had to look the other way.
Thus, India’s reforms, now 21 years old, have always suffered from inherent shortcomings.
First, most reforms must be “done quietly”. As Manmohan Singh has said on many occasions, the secret of implementing reforms is to do without saying anything, to avoid publicity, and even more so, to avoid going to Parliament to discuss them.
Secondly, there has always been a lack of momentum and weak consensus for reform, and according to Dr. P.D. Kaushik, an Indian economist, the Indian government has no long-term plan for reform. Whichever party comes to power, they are likely to neither push for reforms nor oppose previous reform policies.
Thus, for more than two decades, the pace of reforms in India has always been on and off.
There is no third option.
In June 2012, Indian director Banerjee’s film Shanghai was released. In the movie, the leader of the ruling party puts forward the slogan of building a poor and backward town into a prosperous city like Shanghai, while the opponents accuse the rulers of plundering the land of the locals in the name of reforms, and a political conspiracy unfolds ……
In the minds of many Indians, Shanghai represents the achievement of China’s reforms. Reformists even believe that India, also as a late developer, can follow China’s example and achieve rapid development and prosperity. Shanghai today is the future of Indian cities.
The reformists’ confidence is of course rooted in reform. Before the reform, India is one of the highest tariffs in the world; in India’s past planning system, an Indian factory if the plan allows the production of 100 parts, it wants to produce 50 more, it must apply for a new license. Today, opening up to the outside world and marketization have allowed India to have high growth that has lasted 20 years.
However, as the movie Shanghai shows, the reforms have made some people rich first and made some people lose their survival. Reforms have also created problems of rising inequality in India.
India has one of the world’s largest populations of poor people, still more than 300 million today. for 21 years, India’s economic growth has been led by services and high-tech industries, which do not generate a lot of employment. Official figures show that 70% of Indians live in rural areas. But mechanization and marketization remain far from the countryside. Compared with the pre-reform period, farmers do have access to cell phones and motorcycles, but bankruptcies due to marketization failures have skyrocketed. The rise in farmer suicides after the reforms is also a heavy punch often used by the left to attack the reformists.
According to Dr. Kaushik, the Government of India is somewhat at its wits’ end with regard to agriculture, rural areas. On the one hand no one dares to remove free electricity to the rural areas, which is tantamount to political suicide. On the other hand, it is impossible to marketize agriculture. As a result, the government stimulates reforms on the one hand, while expanding the level of welfare to buy people’s hearts and minds on the other. So much so that the expansion of welfare has become an excuse for the ruling party to introduce reforms, which are needed to better protect the welfare of the poor and to ensure economic growth in order to generate more revenue.
After 21 years of reforms, India seems to be left with a choice between A high growth but a few get rich first and B slow growth while everyone eats out of a big pot, and so far has not been able to find a third option.
The movie “Shanghai” seems like an allegory of reforms in India. This is precisely the most delicate point in time for Prime Minister Manmohan Singh to reform. India’s sports cars are slowing down due to the world financial crisis, and there are fears that India’s growth has peaked and will thus turn downward. But in India, if everyone realizes the crisis, reforms may be easier.
Reforms with little consensus and much disagreement
In the modern world, it may be difficult to find a civilizational ecology as complex and ancient as that of India, with its dozens of official languages, thousands of ethnic groups, and multiple religions.In 1947, the Indian National Congress party, headed by Mahatma Gandhi, Brahman Nehru, and the Dalit Ambedkar, attempted to make a world-class power out of the complex and ancient civilizational ecology of South Asia.
Nehru devised three principles for Indian society: democracy, secularism and centrally planned socialism. India’s elite expected to draw on the strengths of the two camps of the East and the West of his time to come up with an Indian-style third way. Over the next three decades, India’s development was slow, with annual GDP growth of 3% diluted by a burgeoning population. The “Indian speed” and “Indian poverty” have been repeatedly cited as counterfactuals in studies of the modernization of late-developing countries.
After his death, the Nehruvian consensus dissolved. The Indian elite tried various ways to escape the nightmare of poverty, but it was not until the early 1990s that India took off with reforms. Even then, India’s perceptions of reform were diverse, with little consensus and much disagreement.
In Delhi, Southern Weekend reporters called on key players in both the pro- and critical reform camps in India. One is Shankar Acharya, the former chief think-tank of the reformists, who was among those who stayed up late working with Manmohan Singh in 1991. The other was Congress bigwig Mani Shankar Aiyar, a close associate of Rajiv Gandhi and an invited adviser to the Central Working Committee, the core body of the Congress party. The biggest thing the two men agree on is that they both wear the same Nehruvian Indian formal dress and have the same Shankar name.
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