At the global level, politicians have begun responding to some populist/public concerns. Already, tax havens are being forced to become more transparent. That’s a good thing. A debate on the future regulation of finance has also begun. It need not, of course, shut off finance as we have known it, but it can help make the system a lot more transparent and a lot less prone to opacity, collapse and crisis. This crisis has been in large part caused by the opacity of securitised assets — if perhaps the pricing of these assets was transparent we might have got out of the mess sooner.

But that’s where the adjustment with populism must end. There ought not to be any compromise on free trade or on the free movement of capital across borders once confidence returns. In India, policymakers may feel emboldened to undertake more pro-poor public spending — after all that’s mainstream and hardly populist now. But they should also press ahead with other reforms, like disinvestment which can help finance their spending plans. And let’s not even contemplate raising barriers to foreign trade and foreign capital — anyone who lived through India’s decades of socialism would know the dangers of populism in that form.

dhiraj.nayyar@expressindia.com