Monday, 24 January, 2022
HomeOpinionToo little democracy is why India’s reforms and progress are stymied

Too little democracy is why India’s reforms and progress are stymied

Amitabh Kant’s diagnosis is wrong: India doesn’t have too much of a democracy. It has too little of it for economic growth.

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The Economist Intelligence Unit releases an annual index of democracy. India’s rank in this index has slipped from 27 in 2014 to 51 in 2019. There is a stark contrast in how India was doing on various parameters of the Democracy Index in 2008-14, as compared to 2014-19.

You cannot ignore the co-relation between India’s declining economic growth and its ranking in the democracy index.

Chief Executive Officer of Niti Aayog, Amitabh Kant, has said in an interview that “tough reforms are difficult in the Indian context” because “we are too much of a democracy,” adding that the Narendra Modi government had taken a number of tough decisions to reform the economy.

The greatest economic reform India could have undertaken this last decade was to avoid demonetisation. If India was enough of a democracy — not even too much, just about enough — we would have had an independent central bank refusing the government diktat of overnight demonetisation. Sadly, we saw the Reserve Bank of India (RBI) just fold up to let the prime minister announce demonetisation of 86 per cent of the currency in circulation, hurting India’s growth story like nothing else before.

Demonetisation was the opposite of reform. It was ruin. It sucked liquidity out of the system and while it did so, the government forgot to print new notes before it demonetised old ones. It stymied the Indian economy, hurting small businesses that were cash-heavy in their operation. Demonetisation not only failed to destroy black money as promised but helped black money hoarders convert their cash into white, because they found loopholes to deposit the money through other means. That money sloshed around in the stock markets, while hurting economic activity in India’s bazaars and small factories.

If India was enough of a democracy, we would not have been able to push through a complex Goods and Services Tax (GST) system that defeated the purpose of simplification of indirect taxation. We would have had more people asking tough questions about whether we really need this reform. GST is arguably the biggest reform that the government has carried out and it should fascinate students of both politics and economics that the government doesn’t brag much about it. Democracy allowed GST to happen: chief ministers of even opposition states gave in. As it turned out, GST was another blow to small businesses and thus mass employment. It favoured the formal sector since everyone needed invoices for input credit. Those who couldn’t catch up immediately were left behind. GST, like demonetisation, was designed to give a body blow to the informal sector of the Indian economy, which is how our growth has been ruined.


Also read: Modi govt must sweat in Parliament to avoid bleeding on street. Farmers’ protest shows why


The democracy excuse

Amitabh Kant needs to explain how democracy contributed to the failure of Make in India. If Narendra Modi gave up on making land acquisition laws easier soon after winning the first single party-majority in the Lok Sabha in 30 years, it wasn’t because democracy stopped him. Democracy gave him the mandate to bring back economic growth. It was populism. It was the fear of losing votes. All because Modi feared four words uttered by the most ineffective opposition leader in the history of Indian politics.

When Narasimha Rao and Manmohan Singh liberalised the Indian economy in 1991, they were running a minority government and the Bharatiya Janata Party (BJP) was opposing the mother of all reforms. Rao and Singh did not make the democracy excuse, taking a decision that was politically risky because it effectively amounted to taking India from socialism to capitalism. Once again, Manmohan Singh risked his government to pass the India-US civil nuclear deal in 2005.

Democracy isn’t stopping Narendra Modi from carrying out meaningful disinvestment or bank privatisation. Truth is that his heart is not in those reforms. His government has shown no real intention for these reforms because it sees, Indira Gandhi-style, public sector banks and companies giving him leverage for distributing political patronage. That’s not democracy, that’s a betrayal of the mandate Modi got to carry out reforms to bring back the animal spirits of the economy. The democracy excuse is just a way of saying Modi would rather spend his political capital on testing everyone’s citizenship and not letting Jammu and Kashmir have a chief minister.


Also read: ‘The walls are closing in again’ – Why I’m losing hope in India


Economy in decline

If India was enough of a democracy, we wouldn’t have seen our prime minister impose a national lockdown on a diverse country of over 130 crore people. Instead, he would have realised that a diverse country needed diverse approaches. States and districts with different levels of coronavirus spread needed different approaches. He could have let the states decide, minimising the damage to the economy, causing fewer migrant labourers to be stranded on the road.

If we were enough of a democracy, we would not have been trying to clandestinely kill the minimum support price (MSP) mechanism for farmers with ordinances. No matter the assurances now. Democracies deliberate upon such ideas, they take the people along, they sell reforms to the masses, they persuade. They don’t impose, whether it is demonetisation or lockdown or changing how the farm economy works.

As the farmers of Punjab, Haryana and elsewhere lay siege to Delhi, we have to ask if it is democracy that’s hampering progress or lack of it. Amitabh Kant says the government has taken a number of tough decisions. The result of these tough decisions is that India’s growth has been declining quarter after quarter since 2016, giving us India’s first recession in decades.

As things stand today, both democracy and economic growth are slipping away from India. We are not on our way to become Singapore or China. Almost being overtaken by Bangladesh in per capita GDP, we’re on our way to one of those languishing authoritarian countries where crony capitalism is institutionalised with things like opaque electoral funding for a leader whose non-stop election victories don’t match the country’s economic performance.


Also read: PM Modi’s pitch to global investors — put your money in India’s urbanisation and mobility


Adding the right amount of democracy

Give us our democratic freedoms back and see how growth bounces back. Global investors also care about the freedom of democratic institutions such as the media, judiciary, and the central bank. They want to know if this is a country where promises are kept, where foreign companies like Vodafone are not hounded to benefit local companies.

A democracy by definition is known for its due process. A country where the leader wakes up and suddenly announces drastic new policies through a televised address, is not a country known for due process, certainty of policy and trust in democratic institutions such as parliament and judiciary.

Investors want to know if the country has rule of law, peace and amity because business needs such conditions to thrive. Not many foreign investors will be pleased to see a member of the ruling party threaten to disobey the police in taking on street protesters in the national capital when the President of the United States is visiting.

What’s holding India back is not too much democracy. It is too little democracy. The day when a Hindustan Times doesn’t take down its article just because Amitabh Kant denies having said something actually available on video, we will again be enough of a democracy. That’s when we will see reforms and progress.

The author is a contributing editor. Views are personal.

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17 COMMENTS

  1. When hypocritical lefts don’t find any way out to make fool of the poor working class be it farmers, industrial workers & even small scale businessmen on whose weekly/monthly/annually donations they run their a complete corrupt & flawed indoctrinated ideology of ‘Dictatorship of the Proliteraits’ in a democratic way, they often find several flaws in democracy. Isn’t it pretty obvious? As there is an old saying that ‘A bad workman blames his tools’. Otherwise why would these assholes hijack the farmers protest for demanding of release of Delhi Riots & Shaheen Bagh criminals? Shitheads like Prashant Bhushan, Yogendra Yadav & Kavita Krishnamurty & Medha Padkar entered into the farmers agitation fray for only one purpose to demand for the release of anti-national urban naxals instead actually upholding the cause of the farmers. Because their only outlook is that the farmers don’t get access to the wholesale markets or private companies directly, which will disenable their middlemen to get the cut money from the farmers & as well as the whole sale hoarders. That’s their hypocrisy. As an Ex-student of political science & economics, I’ve always detested their hypocrisy.

  2. Modi has taken a leaf from Indira Gandhi’s book. Just recall how the decision to nationalize 14 banks was taken. The merits or demerits in the decision is not the issue, but the manner in which decision was taken in absolute secrecy is the issue. Besides Mrs. Gandhi only three persons were aware of the decision – P.N.Hansard, principal secretary to the PM, A.Bakshi, a RBI Deputy Governor and DN.Gosh , then just a junior official in the Finance Ministry. I.G.Patel, then Finance Secretary, L.K.Jha, then RBI Governor and even Morarji Desai, then Finance Minister were not in the loop. A few days thereafter Desai was summarily dismissed. Now who is a greater democrat – Modi or Indira Gandhi? Has Congress any room to complain?

  3. People like Amitabh Kant are paid to write what they write. In America also millions of Americans believe Trump beat Biden in recent presidential election! So why are you bothering Amitabh Kant if he believes there is too much democracy in India? Please let him be. 2. Amitabh Kant says there is too much democracy. You say there isn’t enough democracy, whatever that means. Be honest and tell us how many in India like democracy, and how many truly care for it? In America, after four years of Trump, there are media critics who now believe American democracy is “diseased”, and that, had Trump won in the recent election, America would have become an authoritarian state! So how is the health of whatever democracy is there in India? 3. You are concerned about Amitabh Kant’s views on state of democracy in India, but he is only a small fry, saying things to please his masters. What about the views of boss of all bosses, Modi, on democracy, parliament, etc? In the later half of 2012 I had come across a quote in “India Today” which ran thus: “Years ago when Narendra Modi was the spokesman of the Bhartiya Janata Party (no dear trolls, he hasn’t always been the chief minister of Gujarat), he thundered at a co-panelist on a television talk show, “It is the tragedy of Indian democracy that I have to listen to people like you”” Do you think Modi’s views on Indian democracy have changed since then? 4. From what is going on in India, America, and the rest of the world, it seems that THE VERY HUMAN NATURE REJECTS DEMOCRACY! How can it then flourish? Hadn’t Dr. Ambedkar said that in India, democracy was just a sprinkling on the top of the soil, beneath which there was a hierarchical and undemocratic society? WASN’T IT THEN UNDEMOCRATIC TO IMPOSE DEMOCARCY ON AN UNWILLING PEOPLE?

  4. Excellent article. Most of the articles by Shivam Vij which I have read do not have a good take on the subject. But this one is spot on! It seems the writer really knew what he was writing about. We need more excellent work from him, not just crying over spilled beans about Hindutva, Ram Mandir, being apologetic towards muslim fundamentalists, ultra leftists without a vision. Keep up the good work and always think logically sir.

  5. Economic liberalization in 1991 was due to bankrupt sate of Indian exchequer. Otherwise, all parties in opposition oppose the very same reforms which they want to carry out while in power. So it is all vote bank politics. If we try to bring any consensus by consultation and debate, no bill will pass in any state and center. Every section of india has its own vested interest and is a important vote bank for political parties. It is same in many other democratic countries too. So new reforms are very tough to introduce without political fall out. In this way, coalition government are better as they are formed by parties of very different ideologies and so they may face less opposition in doing reforms. We want reforms but do not want lose status quo.

  6. Print please hire Sivam Vij full time as he’s one of the best in the business and it’s always a pleasure to hear people having the guts to speak truth to power.

  7. NO

    A BIG NO

    INDIAN GOVERNMENT shouldn’t buy what is not required as INDIA is a poor country and all poor have rights on INDIA’s meagre resources.

    No more blackmailing by left pro china idiots and blood sucking middlemen.

    Real farmers are patriots of highest order and must understand that all INDIANS have right in the country’s resources.

    As far as ” THE STUPIDO ”
    IS concerned his slavery of “THE FAMILY ” who is the representative of ROME is a known fact.

  8. Shivam Vij on one point is actually spot on. It does look as if Modi is not serious enough about economic reforms. He doesn’t stake political capital on it, doesn’t do the hard yards to ensure that the bureaucracy follows up, doesn’t like to persuade people and businesses to go along and does not care for what state govt or non govt allied economic experts think. Heck he isn’t even interested in appointing a competent finance minister. All the so called “reforms” so far have been for political grandstanding and have delivered no benefit at all. A dismal decade in India’s progress – 2010 to 2020.

  9. Dear Shivam.Your article is nothing but another liberal nonsense.Seems u lack ground reality.Modi wasn’t elected if he had not promised big,false claims about black money.V r a poor, illiterate country where people want mandirs and masids, not jobs.Even if any political party promises double digit economic growth, people wud still vote on the basis of religion and caste.Western Brainwashed liberals like u shud observe China and vietnam success stories, and Democracies like Mexico and Indonesia failure stories.Don’t blame everything on political parties .They promise what the ordinary people want.Stop Idealising democracy, its just a stupid, inefficient political systemAs long as indians doesnt wake up from this democractic hysteria, v’ll remain a poor, third world country.

  10. Democracy involves wisdom of many where as autocracy or military rule is wisdom of one. You have to be extremely lucky to have a wise ruler who will take the whole nation to prosperity. Evidence of autocracy doing better is very very thin rather history is abound with examples where autocrats only brought death and destruction to the nations. Singapore is only a city state and China is ruled by a Communist party.

  11. Dear Shivam Vij, in a perfect world where there is zero entrophy, democracy can be what you would like it to be.But in reality democracy kept India poor.While China opened up its economy in 1979, v reformed in 1991, when there was no other option other than opening up our economy.Even if any govt attains double digit economic growth, it has to go to election based on religion & caste.Liberals/Leftists like u who lack ground reality shud look at China and vietnam for the success stories and democracies like Mexico and Indonesia for their failure stories.Stop Sugarcoating democracy and blame political parties for everything.V r a poor, illiterate country which needs jobs and infrastructure, not democracy or mandirs or caste.

  12. Too little democracy.You hit the nail on the head.Mr Kant is after all a govt babu whose job is praise the govt,since he is depending on the Govt for his bread and butter.

    Unfortunately the mainstream media including the HT has to toe the govt line since they depend on the Govt for survival.
    Wish the mainstream media was not so spineless and gutless

  13. It is a myth / fallacy that China has become America’s economic equal because it is not a democracy. Some tough decisions like the one child norm required the authoritarianism of the Chinese state, true. However, the secret to the greatest success story of globalisation is the adoption of market economics, first tentatively in agriculture, then full blooded in manufacturing, infrastructure, exports. See how well it is bouncing back from the pandemic, as we flounder at the bottom of the list of major economies. 2. If dictatorship was the route to economic advancement, the Soviet Union would not have collapsed. Apart from the damage caused by individual leaders in countries like North Korea, Pakistan, Venezuela. A recent column in IE analysed how little Indian per capita income rose during Mrs Gandhi’s two decades in power; if the figures are accurate, it actually declined a little. 3. One year into the pandemic, when the richest countries like France and America have announced free, universal vaccination, we do not know if every Indian citizen will get her jab and whether it will be free. That does not sound like a surfeit of democracy .

  14. Achha likha Shivambhai, bahut achha. Aap ne toh comment post karne ke liye gunjayish hi nahin chhodi. Niti Aayog’s contribution to the transformation of India, economic or otherwise, would fit onto a postage stamp.

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