Archive for March 13th, 2017

How come not many in business leaders/experts/media see concentration of political power as a threat to Indian economy?

March 13, 2017

Reading business history along with political one is extremely interesting. How the business leaders align their interests with a current political force and then very quickly desert it on seeing another emerging political force is quite something.

Prof Tripathi in his tome Business History of India writes about this.  Indian business (especially the large ones) were mostly comfortable with British era for a long time till things started to change in 1880s following two events. First was in 1882 when all import duties on textile goods were abolished. Though the government reimposed the import duties due to deficit in tax revenues in 1894 itself. However, in order to neutralize its impact on British producers, a countervailing excise duty was imposed on Indian textile products. This became the second event of discontent. This was then followed by Swadesi movement in 1905 with Indian business gradually shifting their stance towards Indian politicians with ease.

Even recently we saw this. Indian corporate houses and stock markets gave a big thumbs-up to the second tenure of UPA-II. The stock markets had to be closed due to an upper circuit. There was huge hype back then that India will see big bang reforms in coming months and so on. The big bang are made to read like markets getting more power and lesser role of government. But in reality it is just the opposite. Big bang reforms basically mean a strong leader giving more market power to existing corporates.  Make no mistake about it.  This is how it has always been.

However, these expectations were not met as the government was more interested in social engineering. A slew of welfare programs followed which irked the industry. They did not see this coming. The leaders quickly started looking for an alternative and found the answer in the then CM of Gujarat. The way most corporates/stock players shifted base from being a Gandhian/Congressi to a BJP one was quite something.

In 2014 elections, leadership changed but their agenda was the same. Reforms and stock markets! More power to the state and in the process to them.

Then the big guys soon realised that their agenda of reforms also involved the State government and there things were not in the hands of the centre. This obstruction had to be removed. Thus started the propoganda that State governments which questioned the Centre was against development and reforms. All political opposition was seen as their own opposition.  No attempts were made to understand the Federal structure of India where there has to be a dialogue between the two agencies. To imagine they being bothered about different social construct of States was just too much to imagine.

Thus, all victories of the current government at State/municipal level are built around the usual “huge reforms are coming” agenda. Once again, we are reading multiple stories of how stock markets will rise seeing this recent State election performance.

How come no one is bothered about this enormous concentration of political power in hands of one party? Haven’t we seen trouble in the past because of this very power? Those who question policies of earlier leaders should realise that their mistakes came as there was no opposition or checking force. We continue to live under those policy errors as several experts keep pointing out.

But aren’t we making the same mistake by not even questioning this growing political power?

All this concentration of political power looks good in the beginning but eventually does more harm. There is the famous saying by Lord Acton: “Power corrupts and absolute power corrupts absolutely”.

This is not criticising the political powers whose job is to become more powerful in politics. But to see various agencies who should be acting as checks for the growing State power in India join hands with the State is alarming. And to do that in the name of liberalism is such a joke.