In India, the last six months have been traumatic as far as economic performance is concerned. Inflation was the highest and industrial growth lowest for two decades. Tata was driven out of Singur. Now Naresh Goyal has surrendered without a fight. There will be a cry raised soon that liberal reform has failed, and the time has come to go back to the days of Nehruvian Socialism. It should be said that Nehru only nationalised two firms—the Imperial Bank of India, which became the State Bank, and life insurance, to create LIC. The economy grew 45 per cent in 10 years in the fifties. It was his daughter who nationalised the banks and tried to take over trade in foodgrains. As growth collapsed and inflation increased, she nationalised even more until Emergency had to be invoked to protect (Indira) Gandhian Socialism.

Whoever wins the next election will face, and, no doubt, concede the demands for job protection and for large uneconomic subsidies to sustain the protected jobs. For a spoiled middle class which enjoys $50 billion of petrol subsidies, Socialism means even larger subsidies for jobs, to sustain low EMIs and for higher education in elite institutions. As the economy will slow down—thanks to these policies—there will be demands for reservations in the private sector for SC/STs and OBCs (though not Muslims because that will be ‘pandering to minorities’).The private sector, which has thrived in the last 10 years and proved its worth by becoming globally competitive, will be browbeaten into submission.

... contd.