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Kanika Datta: From licence raj to reform raj


Kanika Datta  |  New Delhi 

On the face of it, there seems to be a growing dissonance between the political theatre that is Indian democracy and the concerns of businessmen and industrialists. A closer look, however, suggests that there is actually a growing convergence of interests, though not of the means of realising them.

It is evident in the fact that, after Tuesday's trust vote, businessmen expressed heartfelt relief that the United Progressive Alliance had won the trust vote and jettisoned the Left so that economic reforms would be back on track.

This point is noteworthy. After all, there is nothing about the multi-party UPA (minus the Left) that is notably different from the rainbow National Democratic Alliance that preceded it in terms of commitment to economic reform. So it is clear that businessmen were applauding the promise of a few more months of stability and a nudge for more liberalisation.

This in itself reflects a minuscule but critical change in the broad nature of the political discourse. Bar a shrinking element of the Left (and perhaps Sonia Gandhi), there is an agreement on the benefits of economic liberalisation across the political spectrum.

To be sure, little of this consensus is based on a sophisticated understanding of the economics of globalisation. But the demonstrable impact on Indian prosperity from 17 years of incomplete and halting reforms has fostered a vague understanding that, somehow, industrialisation and investment, whether Indian or foreign, mean more jobs for the boys, more development and, therefore, more votes.

So whether it is BJP chief ministers B C Khanduri in Uttarakhand, P K Dhumal in Himachal Pradesh and Narendra Modi in Gujarat or the Leftist Buddhadeb Bhattacharjee in West Bengal or the mildly Leftist Nitish Kumar of Janata Dal (United) in Bihar, attracting investment has become a competitive priority.

This is also true, businessmen in Uttar Pradesh attest, of Mayawati, who has now emerged as the matriarch of the United National Progressive Alliance, in which Chandrababu Naidu, the original Mr Liberalisation of Andhra Pradesh, is a key member.

The emergence of economic reform as a widespread political agenda and a source of competitive politics is certainly a good thing. The problem is that the broad understanding of the concept has not been accompanied by a deeper insight of how it really works. That is why the old political instincts of rentiering and venality remain strong even as politicians vie for their reform legacies.

So, where yesterday's industrialists lobbied and bribed just to do business and keep competitors at bay, today's businesses are being importuned for the right to an enabling environment in which to grow and create wealth. In short, the licence raj has been replaced by the reform raj.

This is obvious in those industries in which the government still has a say

First Published: Fri, July 25 2008. 00:00 IST