Nitish visits ruins of socialist shibboleths – Ravi Shanker Kapoor

nitish_kumar_rally--621x414Bihar Chief Minister Nitish Kumar tried to achieve many goals at the recent rally in Delhi, but the portrait of the ambitious leader that emerges is not very flattering. As we shall see, his objectives, statements, and demands lack any novelty; any chief minister of any state could have said similar things 10, 20, or 30 years ago.

It is an open secret that Kumar aspires for the office of Prime Minister, something that is being viewed with expectation by ‘secular’ parties, including the Congress. There were enough hints of Kumar’s ‘secularism’—many Muslim supporters sitting in the front row, an Urdu prayer, a placard thanking the Bihar government for providing land to the Aligarh Muslim University, and so on.

The dominant theme, however, was his reiteration of the demand for the special status for Bihar. Unsurprisingly, histrionics were the hallmark of his address: “We are not begging for special status. It is our right.”

In a bid to elicit support from Chhattisgarh, Goa, Jharkhand, Orissa and Rajasthan—the states which have earlier sought special status—Kumar said, “We are happy that UPA government has agreed in-principle to grant our demand. But now we want it to be implemented soon. Do it now or it will be inevitable after 2014 elections. Only he who holds the hands of backward states will sit in Delhi.”

Kumar’s bombast and symbolism emanate from his dirigiste ideology. The basic premise of this ideology is that only a few divinely ordained Wise Men and Women in New Delhi know what is good for the country and the people. They are in-charge of all the resources; in their wisdom, they distribute or redistribute these resources to states which, in turn, have their own Wise Men and Women. Growth, development, progress—everything is a function of the wisdom of these divinely ordained beings. Problems do arise because of the differences among Wise Men and Women, despite their divinity. But these problems, according to the dirigiste canon, can be resolved by fine-tuning the terms of engagement.

The fundamental flaw of this ideology is that the supposedly Wise Men and Women happen to be politicians, bureaucrats, and hangers-on; and one has to be gullible to expect wisdom from them. Another problem with the premise is that it places little premium on individual endeavor, private enterprise, and economic liberty; the entire emphasis is on vision documents (prepared by Wise Men and Women), regulation, control, and we’ll-tell-you-what-you-should-do policy framework. Government does not focus on its basic duties—that is, law and order, administration, defence, foreign affairs, etc.—and instead dissipates all its energies in managing the economy and telling the productive sections of the populace what they should do. It ceases to be the umpire and becomes a player—eventually, the biggest player in the arena. This results in huge distortions in the economy.

Liberalization was slowly doing away these distortions. This was when Sonia Gandhi, who has been called the “grandmother of socialism,” came to power and revived the ideas, ideals, policies, and dinosaurs of the pre-reforms era. The denouement? Sundry activists, championing a myriad of causes, started influencing policy and sought to stop, if not reverse, the process of liberalization. The circus called the National Advisory Council (NAC) terrorized the reformists in the government. Like a spoilt brat studying in hostel whose communication with his parents revolves around seeking more money on one pretext or the other, the Sonia Gandhi-headed NAC keeps demanding funds for one entitlement scheme after the other. This results in more government spending, higher fiscal deficit, and soaring prices, for more taxpayer money through welfare schemes boosts inflation. And we are not even talking about the concomitant corruption.

What the country needs is a way out of the morass occasioned by the Congress’ political economy. The need of the hour is not a change in the terms of engagement of dirigisme; the need is to go beyond it.

And Kumar is not aiming at that. He is stuck in the phraseology of a bygone era—special category states, more funding for Central schemes, modified norms of such schemes, etc. Of course, the special category status brings more Central funds with much easier conditions; 90 per cent of transfers are in the form of grant and 10 per cent as loans, while for other states the respective ratio is 30 per cent and 70 per cent. The states that have enjoyed the special category status special—in the North-East, Sikkim, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand—are not the most prosperous in the country. On the other hand, there are states which have better indices and where investors flock. What is really needed is good governance and proper policies, and not more top-down resource devolution.

Then there is the issue of other states making similar demands. For instance, Chhattisgarh, Jharkhand, and Orissa are not exactly rich states; besides, they suffer from Maoist violence. If Bihar is made a special category state, more demands would come from these and other states.

By focusing on a frivolous subject, Kumar has ignored the basic problem of the economy. In its recent mid-quarter monetary policy review, the Reserve Bank of India said, “The foremost challenge for returning the economy to a high-growth trajectory is to revive investment. A competitive interest rate is necessary for this, but not sufficient. Sufficiency conditions include bridging the supply constraints, staying the course on fiscal consolidation, both in terms of quantity and quality, and improving governance.”

To be fair to Kumar, he has done a lot to improve governance. The real challenge for Bihar as well as India is the bridging of supply constraints. Addressing this issue would have been a step forward. Unfortunately, he has sought to visit the ruins of socialist shibboleths.

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