Sucheta Dalal :Y2K: A year of contradictions and hope
Sucheta Dalal

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Y2K: A year of contradictions and hope  

December 20, 2000

It is that time of the year when one pauses to take stock. Y2K began with high drama and tension but the apocalypse never happened, planes did not fall out of the sky and even the minor collapses that were predicted did not materialise.

But on the ground, the dear motherland continues to tear away in a myriad contrary directions.

On the one hand there is global recognition for India's growing dominance in the information technology business. Not only did IT stocks top the glamour lists on the bourses, but countries such as the US, Germany, Italy and Australia vied with each other to attract IT professionals. The IT boom has charged up an entire generation of young Indians and allowed them to dream of global success; at the same time the World Wide Web continues to hold out the promise that India actually has a chance to leapfrog 40 years of insularity.

But cut to another scene and the picture is far from rosy. Having failed to build a credible political plank, the Congress Party led by the Italian-born widow of Rajiv Gandhi is trying to re-create Indira Gandhi of the garibi hatao years.

It is not as though the Congress does not recognise that the world has spun far away from the decades of the 1960s and seventies in terms of political ideology, economic doctrine, as well as sheer change cause by advances in communication, technological and genetic research. The Congress's new economic agenda is merely a cynical attempt to cash in on the backwardness and illiteracy nurtured by the very party for nearly five decades since independence.

But the Congress is not alone in attempting to extract political mileage out of India's backwardness. The politics of the ruling party too are also a confused attempt to push information technology and the Ram Mandir with equal vigour, while paying lip service to the pursuit of economic reforms. IT and reforms are not expected to fetch votes; so the vote banks are being built and secured with the superglue of religion.

Fortunately, only the BJP and its backers the RSS and the Vishwa Hindu Parishad can unabashedly pursue religion-based politics - the others are compelled to find more secular platforms.

We now have the spectacle of four ineffectual former Prime Ministers trying hard to cobble together some sort of anti-reform rhetoric to claw their way back to the political center stage. Ironically, every single one of them occupied the powerful Prime Minister's office, not as leaders of strong political parties but as consensus and compromise candidates. Yet, their mantra is very similar to that of Sonia Gandhi's Congress - it is to reverse reforms because they are anti-poor.

The fear is that over time, the Congress and the four PMs between them may slowly end up creating an anti-reform climate in the country, even as the ruling party stays focused on the temple at Ayodhya.

The question is, are reforms and growth anti poor? Clearly not; but the first and biggest beneficiaries of the process - the middle class - is also least likely to explain its benefits to the vast majority which is poor and to whom the benefits will percolate only slowly.

But let us listen to Dr Jagdish Bhagwati, the renowned economist on the subject. Dr Bhagwati who delivered the G L Mehta Centenary Lecture in Bombay last week. He points out that there were hardly any economists of his generation who did not return from the London School of Economics or Cambridge or elsewhere with a clearly left-of-centre leaning but began to re-assess their attitude and thinking in the next couple of decades.

After spending time at an economists' conclave and clearly getting an overdose of the anti-reform rhetoric, Dr Bhagwati is clearly unhappy at the dominant political view today that reforms isolate the poor and that they should be reversed because they are anti-poor. The anti-reform lobby is usually clear that reforms lead to increased poverty, but never a precise recipe for removing poverty by any other method.

Dr Bhagwati was concerned about the anti-reform build-up, because it has also found a powerful echo among the technology empowered protesters and non-government organisations like those gathered at Seattle. Choosing to concentrate on the local version of the anti-globalisation refrain, he says, it has two basic arguments - growth is not meant for the poor and growth actively hurts the poor.

"First, let me say that reforms are always about growth, and though it is not an objective in itself, growth is an instrument for removal of poverty", says Dr Bhagwati. An example, according to him is the fact that after all the initial questioning, there is a decline in poverty numbers, which is now broadly accepted by most economic thinkers.

Dr Bhagwati's point is simple - "For over four decades we have given planning a chance, now give us (reformists) a chance." Voices such as those of Dr Bhagwati do lend powerful support to those who are pushing for reform, but are they adequate to put down the anti-reform forces?

Unlikely. The big news of Year 2000 is that there is a definite slowdown in the reform process. The divestment process had ground to a halt because of vested interests of the neta-babu class; industry associations are running scared because of cheap Chinese imports and demanding protection through tariff barriers; the finance ministry has introduced the Fiscal Responsibility Bill, but chances are that that it will address the ballooning deficit problem with a stiff dose of taxation; on the financial front bad loans continue to grow so also the process of evergreening and bail-outs. Finally, some of the mistakes of the early reform days are becoming glaringly obvious - one example is in the power sector where a bankrupt Maharashtra faces the embarrassment of not being able to pay for Enron's expensive power which it has contracted to buy. All this is always at the cost of the ordinary citizen.

But this too has its contradictory riders. The bankruptcy of state governments is itself an incentive to push ahead with reforms. The trend is most obvious in Congress-ruled states, where, notwithstanding the rhetoric of its 'high-command' the reform process continues to surge.

Karnataka and Madhya Pradesh are well-known examples, but even the newly formed state of Chhattisgarh, which is headed by the Congress-mouthpiece Ajit Jogi is aware that there is no alternative to widespread reforms.

It is these very contradictions which give hope, that despite the ideological bankruptcy on the political front, the country will muddle ahead on the steam of individual aspirations and the little segments of the economy which have gained the freedom to move faster than the others.

-- Sucheta Dalal