[Dec 2007, Volume 4 Quarterly Issue] Pdf File size - The IIPM Think ...

MORE MARKETS, LESS GOVERNMENT
and rights. The fact that the economy
and its growth happens within the framework
of a solemnly constituted nation
bound by constitutional obligations,
could give the poor and disadvantaged
reasons to hope and aspire for an inclusive
growth, something that the Finance
Minister has also recently been referring
to and on more than one occasion. If inclusive
growth is not to become a mantra
but serious policy, then it has important
implications for the future of India as we
know it. The future of India as a nation,
as an idea that has so important a place
in the comity of nations globally, will
critically depend on how economic policy
in our country deals with India’s large
scale mass poverty. That remains and
will remain the Indian economy’s most
central problem; how economic policy
deals with it, will be what makes or breaks
economic growth and political stability;
in the ultimate analysis our ability to
break the poverty trap is what will determine
whether we pull through as a society
or descend gradually into chaos and
anarchy. This reality needs to be stated
upfront before entering into any discussion
about state and markets.
The State And Economists
Faster growth rates in the economy has
led to calls for an entirely market based
economic growth model and to even assume
that, the state is and can no longer
be the primum mobilum of development.
If that is so, then how does one deal with
the question of the state when it comes to
thorny problems such as poverty alleviation,
social exclusion and gross societal
inequalities that are a drag on the overall
development of a nation. Often there is a
scare tactic that is mounted about the
dangers of a dirigistic state and which the
Indian state hardly is, especially after the
reforms of the 1990s and from the VIII
Plan onwards. Once, the distinction between
accepting a role for the state in
development and that of a dirigistic state
is deliberately blurred, it is easier to
equate the two and call all state involvement
as dirigistic and then try to figure
out in the push for market friendly economic
reforms how to reduce the role of
the state. This then becomes a false debate.
More critical than raising false
clashes between state and market in the
new millennium, is whether the state in
developing societies such as India has a
developmental role, if so how does then
one define it and shape it? There is no
point in putting questions arising out of
the 19th century and early 20th century
problems that developed states have gone
through and more so when most states,
including the Indian state in an age of
globalization are bending over backwards
to be market and corporate friendly.
There is nothing in our ‘karma’ that says,
we have to go through the routes other
societies have gone through. Pluralistic
and sensible approaches to economic
policy making and economic reform in
particular requires a profound understanding
that economic policy making
especially in open and still vibrant democracies
as ours, is related to good governance
as a public good and multiplier
of economic efficiency. Good governance
in a society of diverse groups, interests
and pulls and pressures is an art. In a developmental
strategy sense, governance
is central to economic policy. For this the
state has a critical role in the management
of the political economy of the large
economies as ours and with such large
and varied socio-economic problems,
agro-eco systems and federal political
structure. Good governance is an important
and critical public good and for
which the state cannot be seen as an adversary
by the market. Undermining the
state has serious consequences for markets
as well. The State can very well be
undermined from within the State by
market forces. Instead of tired debates
about state versus markets, what we need
is serious debate on better policy and
polity, involving state and markets.
Once, the distinction between accepting a role for the
state in development and that of a dirigistic state is deliberately
blurred, it is easier to equate the two and call all
state involvement as dirigistic
Better policy and polity that works to the
welfare of the nation as a whole than satisfy
the greed of a few be it business
or politicians.
Economics and economic growth is
part of the complexity of social systems
and their inbuilt injustices, contradictions
and handicaps. To think that the
problems of economic growth can be unraveled
without reference to the social
system, would mean that when the social
system starts unraveling itself, it will
sweep in its wake, all traces of economics
development. This is an issue that many
economists have tried to skirt. It may be
fashionable amidst the greed and individualism
in the wake of the benefits
brought to the leisure classes as a result
THE INDIA ECONOMY REVIEW
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