Who is reforming no political party is and millions will not be economically empowered as a result

Who is reforming no political party is and millions will not be economically empowered as a result

Congress’s chintan shivir’s push for a policy “reset” after 30 years of liberalisation is part of a worrying trend of political parties refusing to step on the pedal and speed up the next set of urgently needed economic reforms. Every party takes credit for economic growth and resultant job creation and systemic improvements post-1991, a set of changes that have so far pulled millions out of poverty. But initial reforms have lost their impact and India needs greater liberalisation. Instead, political discourse is largely on welfarism, freebies and caste politics in the name of social justice.

Economic inequality is certainly a big problem but a focus only on redistribution will merely subdivide the existing pie. What parties are talking today won’t improve productivity, foster competitive markets or generate new jobs. And these ‘progressive’ policies may even take pernicious turns: Indira Gandhi’s desi-socialistic “Garibi Hatao” slogan facilitated protectionism and rent-seeking, not poverty alleviation. Even BJP, today enjoying the kind of political dominance Congress had three decades ago, is a hesitant reformer. It lost its mojo after Rahul Gandhi’s “suit boot ki sarkar” jibe on key land acquisition amendments. And it lost it again after anti-farm reform protests by a vocal minority of farmers.

The perception that economic reforms are deeply unpopular stems from this fear of vested interests. But as every country has seen, being scared of small, vocal groups means a vast majority is denied better prospects. The current political timidity also extends to whetting voter appetite for bad policies like freebies. And these spends actually hurt citizens when cash-strapped exchequers cut corners in expenditure for schools, hospitals and other public works that improve human capital. Take Rajasthan’s return to defined pension benefit for government employees, setting off copycats in other states. Recall that states overcame the resistance to contributory pensions after defined benefits began proving unviable. No less self-injurious are domicile and caste quotas in the private sector.

The political consensus that allowed GST to come into being is needed again. All-party deliberations to ensure states, in tandem with GoI, pursue reforms in land, labour and agriculture laws are crucial. Without reformed land and labour markets, manufacturing will remain stuck in a few PLI projects. It won’t power a consistent 8% growth, which India needs for about 10 years if it is to come close to the China miracle. It’s doable if the backslide into populism is arrested right now.