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Democracy and economic growth

Democracy and economic growth
Contemporary capitalism in India believes that suspension of democracy makes for faster decision-making which would be what the business community needs to bring prosperity to the country. Everyone seems to admire the Chinese miracle, which has been powered by a double-digit growth rate, year on year. We too, constantly compare ourselves to China, how far ahead they are in infrastructure and all-around development, or how far behind they are in civil liberties and human rights.

The state of our economy today is the cumulative result of the choices we have made over the years. Some of them came about because of our <g data-gr-id="63">world view</g> at a point in time and who can argue with having a plan for the development of the country. It has been branded as a socialist approach to India’s development. But then neither capitalism or socialism can pretend to be an ideology; they are means of dividing income and ownership. It also suited our business community, who with a few well-arranged tweaks of the policy environment at appropriate times made money. Yes, the decision-making was in the hands of a few and the fact that one political party was so overwhelmingly dominant in the affairs of the country helped to speed things for each other. 

However, the comfort level of the policy makers and the beneficiaries sooner than later became a nexus and the country began to suffer the consequences of a controlled policy regime. The controls were carefully manipulated to give benefits to select industry men. Fortunately, though,  the financial liberalisation of 1991 happened and it marked the beginning of the regeneration through an opening of the economy. There were voices of alarm from various Indian private entities and the ‘Bombay club’ even protested loudly that competition would kill the local industry. Some even predicted a new wave of ‘colonisation’ after the arrival of multinationals. The business had gotten used to flourishing in a protected environment and wished to go on in that manner. Well-managed policy architecture is the preferred governance paradigm for the business if they can help it, but there has been life after 1991 and we have not yet been colonised.

The world of business has the benefit of the shareholder as its guiding philosophy and all its ventures and adventures are so organised as to maximize that benefit. There can be no quarrel with this outlook and it is only fair that the one who risks his capital and labour deserves the gains of the two. It is his skill and foresight that seeks to create a market for his goods. A democratic regime does not inhibit the prosperous outcomes of the investor. Sure, regulation is a matter of necessity, if only; to ensure fair play between the different and sometimes conflicting but multiple needs of different economic segments. Yes, a democratic system of government is not meant to delay and <g data-gr-id="64">dilate</g> as a strategy to replace decision-making. Indeed, no government can take refuge in prevarication under the guise of deliberation.

The cries of policy paralysis are surfacing again in present times. In a climate where reform is the new norm, we hear of there being a lot of static but no new chorus emerging from either the legislature or the executive arms of the government. Exhortations from various business leaders to the legislators to get on with law-making has been rebuffed with a ‘mind your own business’ riposte from the political tribe. Some smart minds are beginning to get to work as to governing without the legislature. Well, this has huge and serious implications but every idea must run its course and hopefully this one will have a short run. Implicit in this argument is that it necessarily involves a summary dismissal of all dissent mainly by suppressing the dissenter. 

To argue and believe that China’s rise as an economic power has come through the suppression of dissent is misreading a nation’s strengths. The difference is because of the ability of that country to think on a magnificent scale and translate it into reality by ensuring that the executive arm functions. Our executive arm is broken down completely and irreparably. It cannot translate into reality any policy frame. Hence, the process has been converted into a punishment and therein lies the pain for businessman and the common citizen alike.

The impatience with democratic institutions and platforms by the entrepreneurial community is a bit disconcerting. Indeed, even the citizen is feeling let down by the lack of integrity and honesty in the instruments of delivery who comprise the executive arm which gets equated with delays of democracy. We need to realise that democracy essentially is a consensus building process on issues of contemporary concern. Imposition of solutions, even if these are the best and most needed ones have to be tempered through consensus. This really enhances the credibility of the leadership to lead by consensus. Tempers and <g data-gr-id="77">machos</g> will only spoil the pudding. India Inc. has never played a publicly credible role in adding to the consensus process. Notwithstanding its notable exceptions in creating institutions of learning and health care services, they are not seen as gaining profits through the excellence of their products. This has bred a degree of skepticism among the primary consumers of democracy which is the people. Multinationals and business conglomerates are always suspect and they need to position their corporate social responsibility strategies in an eminently cordial way to engage with the democratic processes.

Every government has to function in the public interest. Any regime, democracy or communist or a military dictatorship does not last if it works for only the interest of the ruler or his friends. There is no deception about public interest. A policy implementation framework has to result in the widest good without exception. Even discretion has to be in the public interest which has to reflect the widest good. The mistake we are making in our inclination for the Chinese way is in relation to our practice of public interest having been flawed and continuing to be perceived as being manipulated to somebody’s and not everybody’s purpose. Then democracy gets a bad name and labeled as anti-progress. We have laws which are not obeyed, we have enforcers of law who make unsustainable exceptions at will and the result is an artificial rule of law.  India’s progress will come through the implementation of laws and never through exceptions to the laws. India Inc. can only flourish then and let us not forget that democracies have given enduring and prosperous economies.

(The views expressed are personal.)
Raj Liberhan

Raj Liberhan

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