Commentary/Dilip Thakore

Insulate the economy from petty politics

The Indian economy has had yet another narrow escape. The relatively smooth exit of mannina maga prime minister Deve Gowda and the induction into centre-stage position in New Delhi of the more tactful, urbane and sophisticated Inder Kumar Gujral bodes well for the nation's faltering economic liberalisation and deregulation initiative. Even if it means the end of the special Bangalore-Delhi relationship of the past 10 months.

This is because with his scholarly background the new prime minister is likely to have a better understanding of the importance of the economic reforms programme. Though the relatively rough-hewn Deve Gowda surprised the nation with his commitment to economic liberalisation, his patent bias towards the agriculture sector and subsidies for it created infrastructure development imbalances which could have torpedoed the economic reforms programme. Reassuringly Gujral has promised continuity of the economic liberalisation and deregulation drive while "broadening and deepening" the reforms programme and introducing "transparency" into the central government's decision-making processes.

But as any seasoned monitor of post-independence Indian politics and economics will vouch, there is usually a long shadow between politicians' declarations of intent and actual performance at ground level.

Smooth as the transfer of power proved to be at the end of three weeks of intense speculation and parleying within the constituents of the 13 disparate political parties which constitute the United Front government in New Delhi, there's already a shadow over the Gujral administration. The Tamil Maanila Party which had contributed the services of former Union finance minister P Chidambaram who presented the Deve Gowda government's path-breaking "dream budget" for fiscal 1997-98 two months ago, has opted out of the Gujral government promising (like the Congress) "outside support." And though the new prime minister has resolved to pilot the Chidambaram budget in tacta through Parliament, the economic reforms programme is likely to suffer without Chidambaram presiding over the finance ministry.

Be that as it may, the dawn of the era of coalition governments in New Delhi and the astonishingly personality-driven (rather than policy) petty politicking it has engendered, has created a national groundswell in favour of insulating the economic development process from the influences and machinations of the new genre of self-centred and economics-illiterate politicians who dominate the political process.

The pundits who monitor the national economic scene are fairly evenly divided between those who believe that such insulation of the economy from political turbulence is possible and those who believe it isn't. The latter somewhat more dominant school believes that the Indian state has so comprehensively scaled the "commanding heights of the economy" by promoting thousands of central and state government owned enterprises and by establishing a comprehensive "licence-permit-quota raj" which refuses to release the economy from its politico-bureaucratic coils, that insulating the economy from political interference is impossible. Therefore argues this dominant school, a cleansing and restructuring of the political system is a prerequisite of meaningful economic reform.

However the growing power of the media and the judiciary -- institutions dominated by this nation's influential educated middle class -- offer some hope of insulating the economic development process from India's new genre of declasse politicians even within the current political dispensation. The growth and development of these two institutions which have withstood the levelling-down efforts of the increasingly down-market political class, offer some hope of Italian-style insulation of the economic growth process from political turbulence. Despite having suffered over 50 governments in Rome since 1945, the Italian economy has experienced sustained growth and the nation is among the top 10 economies of the world measured in terms of gross domestic product.

Nevertheless it needs to be borne in mind that India's media and the judiciary are institutions under siege. Politicians still control Doordarshan, the government-owned television channel which through its monopoly terrestrial broadcasting network reaches an estimated 80 million households. And the Indian judicial system is grossly under-staffed and abysmally managed. Against the international norm of one judge per 30,000 people the ratio in contemporary India is 1:600,000! Little wonder the law's delay has become legendary.

Yet even against the backdrop of the petty, unprincipled manoeuvring which characterises the Delhi durbar it is possible to begin the process of insulating the economy from political upheavals. But initiating and sustaining this process requires constant pressure from the educated middle class to strengthen and autonomise institutions such as the media, the judiciary, the bureaucracy and the police. Contrary to Marxist propaganda the bourgeoisie has a constructive -- and vital -- role to play in the national development process.

Dilip Thakore is the founder-editor of Business India and Business World and former editor of Debonair.

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