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India since independence has gone through several economic transformations; from a moderate socialist state in the early 1950’s to a more aggressive socialist system during Indira Gandhi’s tenure and a more liberalized economy after 1991. However, the politics has always been centered around three key aspects: caste, religion, nationalism all leading to Populism as an ultimate goal. All the political parties in some way or other comes under this definition.
Nehru hailed socialism as the ideal system for India but empirical data shows that socialism as a political economy has failed to make a mark around the globe and failed eventually. People in our country has a wrong belief that providing subsidies, freebies, and pensions as socialist measures. In fact capitalist countries are better in meeting the objectives of inclusive social growth than the so called communist/socialist countries. Socialism in India is never going to work due to one critical aspect; “The Size of Population”, the promoters of socialism always failed to understand the size of the population they are addressing. A society of this size and diversity cannot proposer in a socialist system especially under limited resources available.
Till now all political parties in someway or other embrace populist political ideology. It may be caste, religion or (pseudo)secular-based ideologies but ultimately everything leads to the same objective which is to get vote consolidation largely based on false promises. No party has ever had a courage to say that they are willing to follow a “Market oriented” capitalist ideology. The result of such politics is evident from the several divisions created in the society as a result of this: Rich vs Poor, Lower caste- Upper caste, Majority vs Minority religion etc.,
At this point it is critical to answer an important question. What is the basic nature of humans? A blunt and frank answer could be its “Greed and Fear”, “seeking freedom and safety”. Through the prism of evolutionary biology, it is always every man for itself and then families and societies developed over time the priorities extended outwards, but the core idea of humans remained in the sole aim of “His/Her survival”. To survive he needs to be selfish and resources available to him were amassed and utilized. Societies and groups evolved over the evolutional cycle, but the core nature of “Human Construct” remained the same.
How do we embrace this basic human nature and still develop a successful economic philosophy? The only answer to this is “Capitalism” which will offer freedom, fair chance to everybody and provides an ideal platform for innovation. It may be argued that “Pareto Principle” which is by far a tool used successfully to measure socio economic outcomes is very much relevant to define a capitalist system. In the same way Socialist and Communist ideologies failure can also be explained by their inability to understand and embrace the aspects of “Pareto Principle” in socio economic contexts. Socialism and communism always talk about a million flowers blooming at the same time at the same rate but has never been the case historically. It can also be argued that the failure to create sustainable socialist and communist states can be explained if we look through this lens.
India needs its private sector to grow. MSMEs are key to this growth prospect. Per fourth MSME census the GDP contribution is almost 8% of the total generating 45% of the total industrial production. Of the 36.17 million strong MSME sector, the registered MSME segment comprises of 1.54 million units, barely 4.3%. Because almost 96% of the MSMEs were found to be unregistered, the sector is largely attributed the epithet of informal sector. Out of the 5% of registered firm less than 1% of MSMEs are companies, 95% are run by proprietorship and partnerships which makes them vulnerable to changes in macro-economic scenarios. The important issue at this juncture is the improvement in numbers for more firms to become professionally managed business organizations. A thriving economy based on “Free Market” principles will become a growth engine for the future economy.
But the BIG QUESTION is which political party is promoting it, the simple answer is no one. For India to become a 5 trillion or 10 trillion economy we need to address the gap in our political thinking based on economic principles.
So, what India needs now…
A bold new political ideology based on “Free Market Capitalist” ideologies. It may not win votes immediately; it may even take its time to get acceptance. But creating such an alternative political ideology which embraces capitalism will ultimately gain attention in the years to come. Before the fifth industrialization takes traction, we need to be on the right path, else the future generation will blame us for not creating the right environment for them to thrive.
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