India Hopes for Better Economic Reforms

The people of India have spoken, but not loudly. In the 15th Lok Sabha, the lower house of Parliament, election, which took place in April-May of 2009, no one political party received the absolute majority of seats needed to form a one-party government. All parties are losers, and the Indian National Congress Party is ahead among the losers.

It won less than 38 percent of the total seats, and, yet, the Congress Party has become a lead player in forming a government. Out of 543 members of Lok Sabha, it has 206 MPs of their own party and needs an additional 66 MPs of other parties to form a ruling coalition government.

Like the last time, this will be a center-to-left government and will put the economic reforms on the top of its agenda. The Congress Party's winners and supporters are excited about forming a new government and claim this time they are in a far better position to carry out the economic reforms than ever before in the recent history of India.

May be so, but the humble leader Manmohan Singh has been reforming the economic policies since 1972. First, as Secretary in the Ministry of Finance then as Deputy Chairman of Planning Commission, as Governor of Reserve Bank of India, as Finance Minister, and as 14th Prime Minister of India. And now he is going to be at it again as 15th Prime Minister of India.

But some critics argue he has been rearranging the furniture and his continuation of economic reforms is going keep the nation in a mixed economy format. The rearrangement has been happening for many, many years.

'In every election', said a lady, 'I have voted, but I see no difference.' Millions of Indian would concur with her. The PM and other politicians would tell her that India has made significant economic reforms as well as progress, but growing population is eating it all away. So, you cannot see it.

Unfortunately, it is not the growth in population that is making Indians poor but the sluggish growth in capital formation that is keeping them poor. In order to improve the material conditions, of the lady and others, there is only one way and that is to let the accumulated capital grow faster than the population growth.

Sadly, there aren't many reformists or political parties in India who truly believe in four Cs of economics ' Capital, Capital goods, Capitalists, and Capitalism ' that are good for rapid economic growth. The Capital means money from saving. The Capital goods mean machines and tools. The Capitalists mean the people who build the factories by putting the first and second Cs together. And the Capitalism means an economic system under which free enterprises and private initiatives flourish without government interventions.

The kind of economic reforms India ought to have, for example, is the one that causes the idle and hidden black money (capital) to come out and allow that money to be used in making machines and tools (capital goods) and in letting the entrepreneurs (capitalists) build the factories. The greater the amount of capital invested per citizen, the more and the cheaper and the better products can be manufactured and sold.

In addition to problems in economic reforms ' either going in the wrong direction or at wrong speed ' there is also a problem of instability of government. There are at least sixteen major political parties in India and they are all jockeying for power and lack clear convictions, principles, and knowledge. Furthermore almost all MPs, including the ones who are in trouble with the laws, want to become either a Minister or Prime Minister. It is hard to tell when or which MPs will withdraw from the coalition government and topple it. So, how long any government will last ' or how many reforms will happen ' is anybody's guess.

Let us see what the lady who voted in every election has to say when she goes to vote next time.


More by :  Vasant G. Gandhi

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