Besides the usual discussions on the merits and demerits of the budget proposals, there has been an interesting discussion on the ideological flavour behind the budget. The discussion has arisen, in part, because budget proposals came in the backdrop of an earlier speech by Prime Minister Narendra Modi on ‘subsidies’ to the poor and ‘incentives’ to the rich, and the Economic Survey, which tried to estimate the amount of subsidies that the rich get from the state.
Some are anguished. In response to the charge that the budget had taken a ‘left’ turn, one can identify several measures (without making any claim on it being a complete list) in the budget that are of the ‘right’ variety.
The government has spoken about a calibrated market mechanism for natural gas. It is prepared to undertake strategic sale of its stake in public enterprises. It proposes monetizing state assets. It is prepared to take its stake in IDBI Bank to below 50%. It has delivered what financial markets wanted—lower bond yields and scope for Reserve Bank of India to cut rates. It has offered to pay a part of the mandatory deductions from the wage bill of employers. The extension of presumptive taxation to professionals—that is a game-changer. As Bibek Debroy noted in his blog, this government’s budgets and Economic Surveys are aligned—that is actually about restoring respect and dignity to the office of chief economic adviser and establishing a symbiotic relationship between the two. One should score that for governance. Focusing on the farm sector and that too on irrigation cannot be really called a left turn. In fact, even in the farm sector, creating a national market with a prod to dismantling of the Agricultural Produce Marketing Committees is a right turn.
The Economic Survey reminded us that “persistent, creative and encompassing incrementalism” is the hallmark of this government. It was first mentioned in February 2015 in last year’s Economic Survey. They are sticking to that. So, one cannot blame them for being opaque. That the government is trying to replicate the previous government’s policies while plugging their loopholes and leakages is not a big concern in itself. What is disappointing, however, is that the ‘right’ initiatives are half-hearted and hesitant. It is doubtful if the government’s combination of measures would suffice to haul India out of the economic stagnation it finds itself in. Bold strokes—even if not of the economic variety—may be needed to change the multiple dysfunctional narratives in the country.
In his latest column , T.N. Ninan correctly pointed out that with nearly half the population being poor or marginally better off, the middle class cannot seek an exemption from the withdrawal of subsidies for the better-off. He is right. The fact is that the country still has an uncomfortably and unpardonably large pool of poverty. Cronyism and corruption have been and are still pervasive. That is why ‘left’ thinking is never out of the reckoning in the country. The left may not have succeeded in forming governments lately. But they succeed in many ways. Personally, leftists stay relevant. Their ideologies are incorporated and accommodated by others. History provides further evidence.
In West Bengal, the communists might have been dethroned. But is the Trinamool Congress any less leftist? In any case, where are the so-called ‘right’ parties in India? Even the Swatantra Party only had a brief flirtation with success. Left ideology dominates all parties. The left has always been in the government. There is no need for a left turn. There were only hesitant attempts at right turns. P.V. Narasimha Rao’s so-called reform era lasted two years (1991-93). So did Rajiv Gandhi’s (1985-87) and Atal Bihari Vajpayee’s (2002-04). Had Vajpayee come back, we might have had an interesting battle between the economic right and the left. I remember the 2004 Bharatiya Janata Party election manifesto as being reasonably radically economic right. How long would they have stuck to it would have been an interesting thing to find out. But for now, that shall remain in the realm of speculation.
More often than not, pro-market ends up simply being pro-business and hence is reduced to cronyism. Of course, it is intellectually possible to make the argument that being pro-market and pro-competition is being pro-poor. But to make that argument in popular lingua and with creative art and street plays to convince the larger public is a challenge that has not been accepted. The left is very good at that.
Just as the ‘religious right’ in India has not been able to persuade many that it would lead the battle to end caste discrimination, the ‘economic right’ has not been able to establish its anti-poverty credentials. Only then can its members graduate from writing op-eds to influencing policy sustainably. To start with, they have to remember that economics is an empirical science and one that is based on context. Policies and solutions have to be relevant for the time and the context. Rephrasing its philosophy as one of ‘Heart for ends and head for means’, especially for a country like India is a good way for the ‘Economic Right’ to demonstrate awareness and acceptance of its failure so far.
The ‘right’ and ‘left’ labels box us in and constrain our thinking rather than liberating it. To seek a particular label for oneself and to be proud of it is to become inflexible, irrelevant and useless over time.
(This article appeared more or less in this form in MINT today)