Friday, December 11, 2020

Surely too little, not too much?

Tough reforms are difficult in India because "we are too much of a democracy", Niti Aayog CEO Amitabh Kant seemed to complain. Naturally, his remark was greeted enthusiastically on social media. To stop the controversy this remark generated, Union Minister Ravi Shankar Prasad said, "We are proud of our democracy." "My statement, with relevant portions, is that India is too much of a democracy to mirror a China model," explained Mr Kant.  Argentina, Brazil, South Korea, Singapore and Malaysia all grew fast economically under authoritarian governments, wrote Diva Jain. Robert J Barro showed that "after controlling for other drivers of growth, the overall effect of democracy on growth is weakly negative on average". "In another observation relevant to India's case, he states that the growth-retarding features of a democracy are redistributive schemes and the enhanced voice of special interest groups." India has always had a plethora of social schemes for redistribution to the poor, and this government has been prolific in adding more schemes. Prime Minister Modi announced waiver of bank loans to farmers to win UP assembly election. Last year, he promised Rs 6,000 to all farmers at a cost of over Rs 870 billion and pension scheme for farmers at a cost of Rs 100 billion. Now farmers are protesting at the borders of Delhi, demanding repeal of new farm laws, and the minimum support price (MSP) to be written into law. In fact, they want a "guaranteed remunerative MSP (GRMSP)" to be made mandatory for the private sector with punishment for anyone offering to purchase farm produce at less than that. "Also, many growth drivers in a democracy, such as accountability, rule of law, enforceability of contracts and enriched information environment, do not require drastic legislative action and can be improved through better administration." Indian politicians see accountability and civil servants see information to citizens as loss of power. Every year, at this time Delhi suffers from hazardous levels of pollution. Stubble burning by farmers in surrounding states, encouraged by subsidies, contribute a large chunk to pollution, wrote Seddon and Prof Gulati. When assets of the insolvent non-banking finance company DHFL was put up for sale, US based Oaktree Capital Management looked like a potential winner but the Adani group submitted a bid slightly higher than that of Oaktree after the deadline, leading to suspicions about confidentiality. No one held accountable for cheating. A US firm admitted to paying $1.1 million in bribes to the National Highway Authority of India (NHAI) in 2017. No one punished in India. Right to Information Act (RTI) has been hamstrung by the government by not appointing commissioners so that queries are piling up. "The SC (Supreme Court) simply refuses to hear constitutional challenges to far-reaching State action, sometimes for years," wrote Gautam Bhatia. "Judicial evasion is accompanied by judicial deference." The SC accepts false assurances from the government. Mr Kant must be living on another planet. Democracy is just a word in India. Opium for the people.

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