Crony capitalism worst kind of capitalism: Australian Prof

Crony capitalism gives bad name to market-based reforms and all efforts should be made to demonstrate that the government initiatives benefit larger sections of the society, says a Melbourne University Professor.
"It is very important for any government which is pursuing reforms not to be seen favouring a particular interest group. That is the opposite of reforms," Gary Banks, Dean and CEO of the Australia and New Zealand School of Government (ANZSOG) told PTI.
Banks, who has been associated with economic reforms in Australia, said that "crony capitalism is the worst kind of capitalism. Rent seeking is a cancer in the economic system."

Australia, he added, had also faced periods of such capitalism but did manage to emerge from it by ensuring that reforms were not undertaken just to benefit a particular industry or a segment.
Reforms in India are also facing flak from experts for favouring certain industry segments to the detriment of the general public. Such issues have been often raised by various experts and are even pursued legally, as public interest litigations.
Banks said that big part of the reform process unwinds protection, benefits, preferments that government provide to particular sectors.

"The effort should be to move away from highly restricted and protectionist or crony capitalist type of environment to a more liberalised market.

"You can't have an efficient economy, if you have a crony capitalist kind of approach because that would be favouring industry and firms which otherwise wouldn't be prosperous and generate wealth the country needs," he added.
Admitting that there is a lot of confusion with regard to the meaning of reforms, Banks said: "I have a very simple definition of reforms. It is a policy change that make things better for the people. If it benefits only one group, that would be opposite of reforms and would need to be reformed."
Emphasising that political leadership has to play a crucial role in pushing reforms, he said they can't be durable unless there is a broad agreement and participation of the community.

India, too, has not been able to push key reforms in sectors like insurance and banking because of lack of broad-base consensus.
Banks said: "If you get the groundwork right, you can build support even from you political opponent because the broader community would understand that opposition was not well founded.