Monday, November 03, 2008

The triumphant smile of the Left over the economic malaise

The Left is waxing eloquent over the current economic problems sweeping all over the globe. The Left parties, represented primarily by the CPM in India, claim credit for opposing FDI in insurance upto 49%, for preventing full capital convertibility, for banking sector reform, and so on. In addition, they claim credit for such social alleviation schemes such as the National Employment Guarantee Program, the farmer loan waiver, prevention of expansion of the SEZ Act, etc. In this, the Congress has also come to the forefront, claiming that it was the slow and measured pace of implementation of reform that led to the country being reasonably insulated from the global mayhem, and by preventing pension fund deposits into the stock market, they prevented loss of money in the pension funds (due to the stock market crash). As further proof of the re-emergence of their way of thinking, they quote the recent interest in Marx and his books.
What a lot of bull. If you compare India with other countries around the globe that were in a similar situation just 20-30 years back, many of them would have suffered much greater economic turmoil than in India, but, and mark this point, even with all this turmoil, these countries have a per capita standard of living which is much better than that afforded to a majority of Indian citizens. For decades after independence, India used a socialist state-controlled approach to growth, and ended up with a small incremental growth level of 2-4 %. Combine this with a population growth of a similar percent, and you end up with a continued high level of grinding poverty.
It is only when the state let go of some of its controls and allowed private enterprise to grow did we start seeing a higher rate of growth and a trickle down effect of the growth starting to reach lower sections of the population (by lower, I mean lower on the economic plane). What India needs is more release of the merits of private enterprise, more openness. What one needs to recognize is that the economic turmoil growing through the US is the result of the regulators failing in their duty, and not the failure of capitalism. Currently, everything seems bleak, and that is because this seems like a terrifying recession. However, every recession comes to an end, and when the next growth phase starts, we will all be enjoying the merits of free enterprise and a faster rate of growth.

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posted by Ashish Agarwal @ 9:43 AM