When an overweight man undertakes a fitness programme to regain his health and improve quality of life, he suffers many aches and pains and, primarily, loses weight. He does not complain about it because it is part of the process of improvement. Nobody quotes his loss of weight as a negative consequence of his effort.
The same goes for the economy. Reform is a painful process and there is decrease in volume because efficiencies are being introduced. The bad practices that might have increased the weight are painfully eliminated and good ones introduced instead, involving starting from scratch at many places. This is exactly what has been underway in the Indian economy in recent years. Just as one has to drive slow on a potholed road, or one that is undergoing reconstruction, or on a winding mountain track, the economy has also to slow down in certain sectors during a period of transformation.
The problem ever since the years of the bureaucrat run ‘socialist’ model of the past has been large scale corruption and the crony capitalism that emerged out of the nexus between politicians and businessmen that gave rise to a large parasitic class of middlemen. With ill-gotten gains to be hidden away, sectors of the economy where this money could be ‘parked’ got a boost, while those that required higher skills, quality, technology and competition suffered enormously. While, ostensibly, India’s youth was expected to become self-employed, their actual experience was entirely negative if they refused to get on the corruption bandwagon. It is only natural that India’s competitiveness globally was enormously reduced. It is only in the service sector, as well in newly emerging technologies where government had little role to play, that India made some gains.
The task of economic reform even by the business-friendly government of Prime Minister Narendra Modi is proving enormously difficult. While it requires a psychological change among the people to become more responsible and bold, they also need to resist the effort by vested interests to continue the systems of the past. It is no surprise, for instance, to see the family-centric parties almost immediately rejecting change-making infrastructure projects in favour of monetary giveaway schemes. That is what they have thrived on and need to survive. The continuing attacks on ‘capitalists’ by the latest standard bearer of out-of-date economics are an example of this.
Social and economic transformation depends greatly on the political culture. Unless people look beyond immediate self-interest, the parasitic culture becomes even more entrenched and everybody pays the price for it.
