The great churning

Indians are often accused of having no historical sense. Perhaps it is in keeping with that accusation that the current crisis seems to have warped all sense of historical perspective. Next week is the 20th anniversary of a turning point in Indian history: Manmohan Singh's 1991 budget that symbolised a new national regeneration. But there is a bizarre embarrassment about this moment that can only be explained by a strange ideological alchemy gripping India. The Congress party is doggedly determined to undo the major gains of economic reform; its lack of ownership of this occasion symbolises that. Indian intellectual debates have even less integrity than debates amongst politicians. Cues from the top leadership swing intellectual moods, with a scramble to jump on sloganeering bandwagons. Liberalisation was as much about dismantling our psychological inhibitions as it was about economics. But this government has empowered an intellectual climate where all those constricted psychological inhibitions are coming back: a total lack of ambition, a distrust of the people and overweening faith in the state.

There is no doubt that the state has a significant role in creating the conditions where more citizens can participate in the growth created by reform. India needs a properly constructed welfare state. But the UPA completely shifted the emphasis from vibrant job creation and empowerment to welfare, as if success will be measured by the more people we can make dependent. And its design for a welfare state rests on the bizarre assumption that if you create a right and throw money, any problem can be solved. It forgot one cardinal fact: the precondition for sustained welfare is growth. As Adam Smith said, you don't have to like capitalists to acknowledge the proposition that investment is important. It is a severe indictment of this government that on the anniversary of reforms there is more talk of capital flight than growth.

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