Political Minutes: Politics of Change in India

The School of International and Public Affairs played host to a well-attended discussion on the ‘Politics of Change in India’ on September 20, 2012 as part of its Program on Indian Economic Policies.  The panel discussion comprised of Arun Jaitley, the leader of the opposition in the Rajya Sabha (the upper house of the Indian Parliament), noted free-trade economist and Columbia professor Jagdish Bhagwati, and opposition Member of Parliament NK Singh. The event was particularly germane and received special attention in lieu of the contentious reform measures announced by the Congress-led government over the past week, including a decision to raise the limit on foreign investment into Indian retail.  The backdrop of faltering economic growth in India and stalled economic reform mandate lent an air of urgency.

Professor Bhagwati, who provided numerous personal accounts of his interactions with leading Indian policymakers after independence. Emphasizing the importance of economic growth as a tool of social upliftment, Professor Bhagwati emphatically declared, “Growth is an instrument, a strategy. It’s not a target [in itself] unless you’re crazy. But there are plenty of crazy people out there.” Bhagwati highlighted the path taken by India’s leaders, branding Prime Minister Nehru’s brand of socialism as moderate and open, whilst obliquely criticizing the subsequent socialist policies adopted by Prime Minister Indira Gandi as harmful.

Bhagwati continued by speaking about current Prime Minister Manmohan Singh, and recalled his long association with him dating back to his days at Oxford University. He expressed absolute faith in him, but lamented that he was unable to pass a necessary reform agenda due to the rival power center of Congress Chairperson Sonia Gandhi. Bhagwati ended his analysis of the current political policy paralysis with a wry comment directed at Jaitley, “that gives your party an opening.”

Jaitely, a prominent voice in India’s largest opposition party, the Bhartiya Janta Party, was next to take the stage, drawing a stark comparison between the pre-reform, socialist India rife with shortages and the India of today with its potential and promise. Jaitley’s comments harked back to an era when families were put on 20-year waiting lists to receive telephones, and Members of Parliament were given coupons to entitle them to otherwise rationed wristwatches.

Singh, another opposition politician from the regional Janta Dal party was the final speaker in the discussion. He  made the point that India’s 1991 reforms were only passed because of an adverse balance of payments crisis and added that “governments must first survive before reforming.” He did say, however, that the current government had taken this maxim to its extreme by forgetting about reform because it was so preoccupied with political fire fighting.

Although the discussion concluded with a strident criticism of the government’s inability to pass a reform agenda, the spotlight was placed firmly on opposition parties when audience members questioned the panelists on why their parties were protesting against the government’s latest efforts to open up retail to foreign direct investment at same time as they were praising economic liberalization as a path towards higher growth.

Jaitely replied that the issue of retail was a complex one that affected fragile groups in Indian society such as farmers and small retailers, and that no decision on the issue should have been taken without a consensus in Indian society.

Singh said that gradualism was important in reforms, and that big retail had dubious credentials in developing countries in any case. In a comment that received much applause, Professor Bhagwati retorted to Singh’s response with, “I think you haven’t taken enough economics classes.”