Modi’s right-wing populism

India’s free-market intellectuals are still busy assailing and arraigning the socialist populism of the Congress party during the 10 years it was in power from 2004 to 2014. The National Advisory Council (NAC) headed by Congress president Sonia Gandhi has been roundly castigated for left-wing populism. Of course, the critics could not brazenly attack Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) because it soon became apparent that it increased rural consumption, and became a factor in the economic growth rate in the boom years before 2010. They were keen to make their arguments against the Food Security Act but it was never implemented. 

Meanwhile, the markets began to sink and in the Budget of 2009-10, then finance minister Pranab Mukherjee had to provide the fiscal stimulus, which amounted to Rs 1.86,000 crore (3.5 per cent of the GDP).  The fiscal deficit as a result ballooned from 2.7 per cent in 2007-08 to 6.2 per cent in 2008-09. There was, of course, no criticism of the stimulus package from the free-market economists. They had, however, flayed Mukherjee on the issue of the so-called retrospective taxation measure in the 2012 Budget, which was to affect British telecom major Vodafone. A senior economist in the then Planning Commission did admit that the tax claim against Vodafone was indeed fair and valid but it sent out a negative signal to prospective investors. 

The free marketers continue to cry hoarse about economic reforms even as the world economy continues to be in the doldrums. The Bharatiya Janata Party (BJP) leaders and their free-market cheerleaders have been complaining about legacy issues. What they have in mind is the non-existent socialist populism of the Congress, while the real legacy issue is the fiscal stimulus, which seems to have helped in keeping the Indian economy afloat when there was mayhem in the Western economies. The fiscal consolidation programme begun by P Chidambaram in the 2013 Budget and being continued by Arun Jaitley, is an antidote to the fiscal stimulus rolled out by Mukherjee in the 2008-09 budget. The problem does not have anything to do with the socialist populism of the Congress.

Prime Minister Narendra Modi has unveiled his own kind of economic rhetoric, which is as State-oriented as that of the ‘socialist’ Congress. Instead of keeping the role of the State in matters of economy to the minimum, which is what an ideal free market should be — remember the Thatcher-Reagan era slogan that the State is not in the business of doing business — Modi and his government are playing the role of mentors for entrepreneurs. From Make in India to Digital India to Start Up India, there is an attempt to encourage, create and sustain entrepreneurs and their dynamism.

The desire and intent of the government to stimulate economic growth and prosperity is not the right prescription for a liberalised economy. What is expected of the government is to remove the hurdles. It does not have to be a proactive participant in the economy. But the BJP government, in its nationalist fervour to make India an economic powerhouse, is unable to restrain itself from interfering in the market. So a government that is hyperactive as the one like that of the Modi dispensation is, in fact, indulging in right-wing populism. 

There will be quibblers who would argue that the Jan-Dhan Yojana is populism, but not Make in India, Digital India and Start Up India. But the definition of populism need not be confined to policies and programmes that help only the poor. Measures that are intended to help the well-off and the well-heeled can also be termed populist if the government is lending more than a helping hand. As a matter of fact, the government is doing more than giving a helping hand. It is almost parenting the free market in the country, which is both anomalous and ludicrous. This is similar to those parents who do not allow their children to discover their own genius, but instead push them to breaking point in pursuing goals which are their own and not that of their wards. The BJP and Modi want to achieve the economic superpower status for India, and they want to push the entrepreneurs in the country to achieve that goal. This is anything but a free market.

The Indian private sector will never grow up as long as the government continues to push it and mollycoddle it. It has been given protection by the ‘socialist’ governments of Congress, and it is again been pampered by the BJP government. The Indian private sector displays no resilience in times of distress, and it shows no inventiveness when the going is good. The fact that private investment is waiting in the wings at a time when the Indian domestic market is ready for growth and expansion, is a tell-tale sign of the timidity of Indian entrepreneurs and investors. The restrictive governmental rules need to be whittled down, but it should be left to the private sector as to what it makes of the opportunities that this opens up. The government need not, and should not, be nursing the private sector.

There is a need to change the terms of economic debate in the country. The right-wing economic conservatives, who pretend to be liberals in the same manner as former leftists do, have to abandon the inane denunciations of socialism. Socialism is dead and it makes no sense to beat a dead horse. What needs to be critiqued is the lack of innovative genius in the educated Indian middle class, be they scientists, technologists, managers or business folk. Why is it that the Indian entrepreneur seems to prosper in the United Kingdom, the United States, Australia but not in India? This is the hard question. The easy answer is that it is the Indian government that does not allow the middle class to prosper. But this is not an honest answer. The problem lies with the social ethic in the Indian middle class inside the country. It is not willing to play the game according to rules. Of course, there are some in this class, who want to play it straight and fair. But there are others, and it seems a majority, in this class, who believe in gaining political clout and flexing their economic muscle. 
Crony capitalism is an internal malaise of the Indian middle class. India has to become a developed society in order to become a developed economy. 

The author is a consulting editor with dna