February 15, 2020
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Future Shock?

The post-poll economic scenario remains largely unpredictable

Future Shock?
IS the future of India's historic economic reforms programme as bleak as the chances of a single political party capturing power in the Lok Sabha polls? As a coalition government appears more inevitable by the day, the confusion index keeps rising. And politicians are doing little to allay fears. Read these lips:

"Starting from 1953, when the Jan Sangh was founded, we have reposed our faith in liberalisation," says Atal Behari Vajpayee.

Clear commitment, right? But what about the Swadeshi Jagran Manch and its radical economic agenda, which sees foreign investment even in hi-tech sectors, as unnecessary? "The process of economic reforms is a continuing one; it can never be a stop-and-go situation or a one-time exercise," says External Affairs Minister Pranab Mukherjee.

But then why does the Congress election manifesto not mention the word 'globali-sation' even once?

"We no longer believe that nationalism is a panacea. We are for liberalisation, but our concept is different from that of the Rao-Singh duo," says Janata Dal General Secretary Jaipal Reddy.

Sure, but then why does former West Bengal finance minister—and long shot for Union finance minister if an NF-LF-led coalition comes to power—Ashok Mitra tell Outlook: "Nothing short of a total restructuring of the economic policies pursued since 1991 will be acceptable to the constituents of the National and Left Fronts?" So is the future totally uncertain? Well, there are a few things that can be said with some degree of certainty about the direction that the economic policies the three possible coalitions will follow.

A Congress-led coalition will definitely have parties from the current NF-LF combine in it. Left parties have been raving and ranting against privatisation and the invasion of transnational corporations (TNCs), and hinting that the commanding heights of the economy should be returned to the public sector. How will the Congress and its allies reconcile their differences, if they decide to get together, only to keep the BJP away from the throne? The casualty from such an unhappy coalition will most likely be reforms.

Similarly, if the BJP has to cobble together a coalition with regional parties and splinter groups, in spite of all its promises of accelerating reforms, the party may be left with no option but to dilute liberalisation at the altar of political expediency.

And the scenario becomes really hazy when one considers an NF-LF-led government. While H.D. Deve Gowda, Jyoti Basu and Somnath Chatterjee appear to have no qualms about pursuing foreign investment aggressively, Ram Vilas Paswan, Harkishan Singh Surjeet and Ashok Mitra clearly believe otherwise. And no one really knows what Mulayam Singh Yadav thinks about the economy.

Ironically, apparently the most absurd of combinations being talked about—a Congress faction led by Narasimha Rao and the BJP—may see a safe return to the reforms regime. There seem to be no major differences between the broad goals of Rao's reforms agenda and the BJP's: dismantling the licence-quota-permit raj, freeing businesses and professions of state control, stimulating and sustaining a strong capital market, opening up most sectors to foreign investment, and affecting substantial PSU disinvestment.

With the reforms at a critical mid-way stage, and a host of unresolved issues making Indian business jittery, Outlook presents, in the following pages, a history of our economic future.

Above all, what India needs is transparency in TNC policy. The Rao Administration did not provide this, and is unlikely to be provided by the next government, of whatever hue. This implies a host of 'case by case' approvals—a surefire breeding ground for corruption.

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