Tuesday, October 18, 2011

The state is back in business due to market woes


Part of this appeared in the DNA edition of October 18, 2011


The ex-lefties-turned-today’s-liberals are busy taking up cudgels against neo-liberals – what does this word mean any way because all that one can make out is that the communists and other bleeding hearts use it as a swear word – like deputy chairman of planning commission Montek Singh Ahluwalia.  He is only too happy to play the villain and to indulge in verbal sword play and stand his ground over the Rs 32-per-person-per-day, which translates into for a family of five to Rs 4840 per month poverty line, which would work out to Rs 58,080 per annum. He thinks it is a sensible figure and argues rather persuasively that poverty line is not meant to be a comfort zone. That did not convince his bleeding heart opponents who see as nothing less than an ogre. Of course, both sides are intent on scoring silly brownie points which offers no comfort to the poor man and woman out there in city, town and village.
In this old-fashioned socialist talk – the poverty line debate goes back to the 1960s and 1970s – most Indians, including the famed intelligentsia, are not willing to take note of what is now reluctantly being recognised as the Great Recession, which is not as bleak as the Great Depression of the 1930s but much worse than all the capitalist crises that hit the developed western markets since the second world war. And how the Great Recession shows vulnerabilities of a market system and how free market speculators and manipulators can wreck economies by impoverishing lives of millions of people.
Ironically, India along with China is celebrating the fact that it is now an economic power of significance with the respectable label of ‘emerging market’ and all the top analysts of the developed world are forced to reckon with how the Indian economy fares while calculating the growth prospects of the world economy. At this very moment of a sense of achievement of what the economic reforms of the last 20 years have achieved – a record that a beleaguered prime minister Manmohan Singh is very proud of and he does not even make any attempt to hide his pride behind any mask of humility – Indians are quite perplexed because economic recession in Europe and north America is bad news for the country which still depends on its dollar earnings to build its foreign exchange pile and feel a sense of economic security. With the prospect of the recession stretching out for the next few years, free market India has reasons to worry rather than be the proverbial ostrich.
It is indeed a bad time to indulge in the rhetoric of economic liberalisation, and mouth free market inanities like “Business is not the business of the state”. The state and central banks in the western world are throwing lifelines to errant governments like that of Greece in Europe and banking biggies in the United States. Suddenly it has dawned on everyone that the only way to save the free market economy is for the state to step in and take charge.
This raised the expectation that India’s economic reformers would hold back on their high falutin market talk on the need for speedier reforms. It seems that the blinkered market ideologues cannot read the signs of the times much like the socialists who used to indulge in foolish ideological talk at the very time socialism began to sink.  Even today, socialist critics suggest going back to the bad old ways instead of finding new solutions.
Socialists are out of sync anyway and there is no need to look to them to offer a meaningful critique of the situation. There is greater danger that free market advocates in the government, in the English language media and in the so-called think-tanks pose. With their imbecile paeans for economic liberalisation, they would be leading the Indian economy up the garden path. The hope lies with the Indian businesses which have the habit of running to the government for help at the least sign of trouble. The politicians and bureaucrats, whatever their venal shortcomings, are willing to intervene to protect and support the Indian private sector through export subsidies and the like. Indirectly, this helps the poor people in a limited way.
One of the key elements that the state is back in business in these troubled times was the cabinet decision last week facilitating the central public sector enterprises to acquire raw material sources abroad. This is an interesting and far cry of the free market zealots who wanted to dismantle the public sector lock, stock and barrel. India it seems is groping its way through its untidy pragmatism of a mixed economy, where the public sector is still at the commanding heights of the economy in the form of public-private-partnerships.

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