What UPA-I got right was a renewed focus on redistribution through clever programmes like the NREGA and loan waiver. And it isn’t just the UPA which has reaped the benefit of this changed focus. Even non-Congress, non-UPA state governments which have focused on redistribution (Raman Singh in Chhattisgarh, Naveen Patnaik in Orissa are good examples) have done well electorally.

There is a big catch in this populist spending business — the government needs the money to finance it. The last five years were particularly good for government spending because the economy did so well, thus swelling government coffers. And there is plenty of evidence that growth hit 9 per cent-plus only because of the multiple market-friendly reform efforts of the previous decade. In the absence of high growth, high spending governments will eventually lead us to a fiscal crisis of the 1991 variety, which will once again mean cutting back on all these expenditures — hardly a scenario that deserves a revisit. In the current scenario of low growth, disinvestment is particularly important to raise finances.

In any case, there is no reason to believe that the people of India are instinctively against a greater role for market forces. In fact, the average person in both urban and rural areas will have multiple tales of woe to share on their less than satisfactory interactions with agencies of the state, particularly those which deliver public service. Consider the growing evidence of even poor people sending their children to private schools and their sick to private hospitals in preference to state-run institutions.

... contd.