Command politics has been dumped and it’s time to dump command economy too.
India, in all its diversity, is too complex to have one size fit its entire top-down planned economy. “State knows best”, “bureaucrats are honest brokers”, “politicians are well meaning” — nobody’s buying that anymore. The last 52 years should be proof enough.
Free markets, on the other hand, are nothing more than an economic democracy. The public, as a consumer, votes with its rupees every time it chooses between the competing products and services in the market place. That puts the consumers in the driver’s seat. Socialism and statism, however, disenfranchises the public and puts bureaucrats and politicians in the driver’s seat, and they lap up every lucrative moment.
Free markets and free enterprise have been proven to be the best way to create wealth in nations. India needs to create wealth as fast as possible, if it is hopes to eliminate the poverty stranglehold that roughly half its population chokes on. The state’s command of the economy — from planning to ownership — has been tried long enough, and has failed outright. That’s no surprise. As Fredrick Hayak quite dramatically stated, socialism is a straight road to serfdom. The massive investments in state-run industry have been funneled into a national dumpster — a waste of national savings. India’s return on public sector investments has averaged about one percent. So, forget about it producing any surplus — it doesn’t even cover the cost of capital. Literally, India would have been better off putting this money in a savings account. At least that’s an interest rate of five percent from the bank!
Germany and Japan hunkered down and put their economies together the old fashioned way. China got down to business and started restoring its economic vigor some 20 years ago. It is time India got its act together. Indians are smart, creative, and specially blessed in this New World of information and intellectual property-based economies. And yet, not too long ago, smart Indians were relegated to doing second rate research and development in the state mandated import substitution regime. What a waste!
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The opinions expressed in this essay are those of the authors. They do not purport to reflect the opinions or views of CCS.