December 9, 2006

Dr. Jekyll and Prime Minister Hyde

We will have to devise innovative plans to ensure that minorities, particularly the Muslim minority, are empowered to share equitably the fruits of development. These must have the first claim on resources.

--- Prime Minister Dr. Manmohan Singh addressing at the 52nd meeting of the National Development Council [emphasis mine]

It's an amazing statement from an economist with a doctorate from the Oxford University, and reputed to be the architect of liberalization of the Indian Economy. It's not so amazing, however, from Prime Minister Singh. I have always had a suspicion of Prime Minister Singh's commitment to reforms. It harkens back to his days as the Chief Economic Advisor to Mrs. Gandhi's government during 1972-76. That government was probably the most socialist-minded of all the governments of independent India. Dr. Singh's colleagues and members of Mrs. Gandhi's cabinet included card-carrying members of the Communist Party of India, such as the Steel and Industry Minister Mohan Kumaramangalam.

During Mrs. Gandhi's regime, privy purses were abolished, banks were nationalized, and thousands were forcibly sterilized. The marginal tax rate exceeded 90% on incomes over Rs.100,000. India officially became a Socialist Republic in 1976 with the passage of the 42nd amendment to its Constitution. The draconian regime culminated in the declaration of national emergency in 1975, and fundamental rights were suspended. Dr. Singh was the economic czar of India during this infamous phase of Indian history. I cannot imagine such far reaching changes in policies could have taken place without the tacit approval and cooperation from Dr. Singh.

Thirty years later Prime Minister Singh wants mandated flow of resources to sinkholes designated on the basis of uncorrelated religious asymmetries. How is this planned mis-allocation of resources different from the one on the basis of irrelevant class distinctions in Stalinist Russia? The Prime Minister's Office could have spared us the usual spin that the PM's statements had been quoted out of context by the media. The statement is nothing but a rehash of his cabinet's earlier decision to earmark 15% of funds in various schemes and programs, as part of its 15-point program for the minorities (hm...why is this fixation for the numeral 15? I've got a hunch, but you can easily find the answer in the demographics of India). In the Planning Commission meetings that I've had the privilege to observe, such simple rules of allocation were always preferred. These august bodies of economists turned politicians and politicians turned economists were better equipped to manage fish markets than navigate complicated economic concepts, such as moral hazard, for example.

Perhaps, what Prime Minister Singh really meant to say was that in a secular democracy of the Indian variety, political imperatives, particularly sectarian imperatives, rather than the economic ones, must have the first claim on resources. If so, Dr. Singh could have avoided the platitudes and euphemisms. He could have been forthright with his assessment that the world's fastest growing democracy is so fragile that it is compelled to pay a ransom to a small minority of religious extremists to keep them from blowing it to pieces.

Dr. Jekyll or Prime Minister Hyde, will the real Manmohan Singh please stand up?

  1. One wonders how Manmohan got his PhD in economies on topic like export competitiveness!

    It's more social engineering now (that 15%, and 27% quotas) then controlling the levers of licensing and production of yesteryears economic planning.

    All these guys consider themselves so smart that they can control the results by fine-tuning the inputs - human beings are, after all, puppets to them.

  2. Gopi Maliwal12/14/2006 5:49 PM

    Thank you very much. I have been saying this to all my young friends since 1992 that Manmohan Singh is no "reformer" but a life-long time-server and opportunist who does what he is asked by his masters (or mistreeses). You should also have mentioned that he was RBI Governor when Rajiv loan melas were launched and he said or did nothing to prevent that open loot which laid the foudnation for the subsequent bankruptcy of our PSU banks! He may be financially honest in personal terms (there are lakhs of Indians who are also very honest WITHOUT having a multi-million annual pension) but some of the biggest scams also occured under his watch!
    Goa, Bihar, Jharkhand, etc. under his watch have clearly shown how much political morality or honesty does he have!

  3. I feel a bit afraid in speaking against people like you and Amit Varma who do have lot of more knowledge than me on this subject.
    But the way I see it, is that India is fortunate if it has someone like Dr.Manmohan Singh to lead it who while acclaimed by many as the initiator of the greatest economic experiment called the reform is still a socialist at heart.


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