Kautilya: Way to go, India

India Today
September 7, 1998

KAUTILYA
Way to go, India

Economy globalises, polity regionalises, society localises.

Jairam Ramesh

India is going through three fundamental transitions. One, economic liberalisation. Two, political decentralisation. Three, social empowerment.

The movement from an inward-looking, state-controlled, public sector-dominated economy to an outward-looking, market-oriented and private investment-influenced economy constitutes the economic transition. The rise of regional parties and the devolution of power to the people -- from the Centre to the states and from the states to local self-government bodies -- forms the political transition. The empowerment of traditionally disadvantaged and discriminated groups is the social transition.

Each depends on and reinforces the other. Economic reforms have been facilitated by social changes which are also transforming the political landscape. Changes in the polity are creating new pressure points for changes in economic policy. In turn, economic growth is leading new social groups into the mainstream.

Liberalisation was triggered by economic compulsions in 1991. But conviction, not compulsion, has sustained reforms -- albeit sometimes at a homeopathic pace. Where is this conviction coming from? Very simply, pro-change dynamics within society.

A profound demographic shift has taken place. Two of every three Indians are under 40 years. This generation has come of age in the growth era of the '80s and '90s -- at a time when ideology has been at a discount and the pursuit of wealth has lost its guilt edge.

The acceleration of urbanisation is creating new economic opportunities and new mindsets impatient with the status quo.

The spread of agricultural prosperity to new regions and the multiplier effects of farm growth on the rest of the rural and semi-urban economy are creating a whole new class of consumers.

The rapid proliferation of communication technology is changing the face of India.

The growth and influence of the new Indian diaspora is ensuring reforms are on track.

From a situation where the Centre virtually ruled the states, the states are now calling the shots in Delhi. Even the so-called national parties are, in essence, regional powerhouses. One of every two BJP MPs is from Uttar Pradesh or Madhya Pradesh. Maharashtra, Andhra Pradesh and Rajasthan account for 50 per cent of the Congress' MPs. The CPI(M) is really a force only in West Bengal, Kerala and Tripura.

Of course, India has a long way to go before it becomes a China. There, paradoxically, the provinces have far greater financial and administrative powers than Indian states. But gradually states are demanding and wresting autonomy from the Centre. Transfer of all centrally sponsored schemes, the creation of a single divisible pool of taxes and total freedom to attract foreign investment will further enhance the powers of state governments.

The Centre-state issue is just one dimension of decentralisation. Far more significant is the role of local bodies, rural and urban. But our view of these bodies must change. Traditionally, they have been looked upon as the third tier of development. Local institutions, instead, should be viewed as the first tier of democracy.

They must be guaranteed powers to raise resources and spend according to their needs and priorities. The development of a municipal bond market, for example, can transform the finances of urban self-government institutions. Similarly the direct transfer of funds from the Centre to, say, zilla parishads will transform panchayats.

States like Kerala, Tamil Nadu, Karnataka and Maharashtra have already gone through a social revolution. Political power has passed peacefully from narrow upper caste elites to long-oppressed and more populous communities. The process has taken the good part of this century. Social reform movements, the spread of education and enlightened political leadership have all played their part. Now comes the next phase in these states -- transition from a creamy layer of the disadvantaged to the truly disadvantaged.

But it is in the great Hindi heartland -- home to over 200 million of the poorest Indians -- that new battles are being waged and a million mutinies, to use Naipaul's evocative phrase, are taking place. The old social order in the north is dead. New alignments are being forged. Parity, not charity, is the demand of communities that have been kept outside the political and social mainstream for centuries.

This aggressiveness has been fuelled in part by the birth of a new agricultural class following the abolition of zamindari and the spread of new farm technology. But the great paradox in north India is that the markedly higher degree of political consciousness has not resulted in a clamour for better governance.

Globalisation of the economy. Regionalisation of the polity. Localisation of society. These should not be seen as the three horsemen of the Apocalypse. Instead, they should be viewed as the trishul of a new India -- of a civilisation which is entering its sixth millennium with the prospect of faster growth and greater equity. It is something India has not experienced in the five millennia it has existed. It is something to celebrate.

The author is secretary of the AICC's Economic Affairs Department. The views expressed here are his own.

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