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Last Updated: Thursday, 20 May, 2004, 13:54 GMT 14:54 UK
India's reforms need changes

By Kaushik Basu
Professor of economics, Cornell University

While I cannot say I am gloating at what lies ahead, I am glad the BJP has been voted out.

On hearing this, people assume that it is the BJP economic policy that I disapprove of.

Indeed, over the last few days much has been written about how, by rejecting the BJP-led government, the Indian electorate has expressed its disapproval of its economic policies.

The ultimate objective of economic policy must be to improve the conditions of the poorest people and this will mean special effort to arrest the increasing inequality of incomes ...

There have been statements in the press of how the vote reveals that the government's privatisation policy has failed or shows the citizenry's disapproval of the emphasis on computer science and information technology or was a referendum against the increasing openness of the Indian economy.

There are few facts to back these claims.

For one, in terms of the actual percentage of votes received, both the Congress and the BJP have lost around 2% compared with 1999 - with the BJP losing 0.19% more than the Congress.

So the average voter has not expressed a large swing away from one to the other.

The election result is a reflection, mainly, of the politics of coalition building - in particular, the art of marshalling more seats from the same number of votes.

Also, the economic policies of the BJP government have not been very different from that of its predecessors.

'India crushingly poor'

From 1991 India has been following the same kinds of policies and these are, in my opinion, broadly the correct policies, with one caveat.

Congress supporters wave in front of a poster of Sonia Gandhi
Congress will need imagination to defeat India's problems

In celebrating the success of the Indian economy in the global domain and the praise it has received in the international media, the government forgot that the mass of India remains crushingly poor and, though these poor people do not write newspaper columns and give TV interviews, they have an opinion and a vote.

The new Congress government should continue with the major policy initiatives in the areas of international trade, foreign investment and even controversial ones, like labour legislation, that the BJP had started.

The only pitfall to avoid is that of treating these as ends in themselves.

The ultimate objective of economic policy must be to improve the conditions of the poorest people and this will mean special effort to arrest the increasing inequality of incomes (absolute poverty has declined over the last decade) - both inter-personal and inter-regional.

This will need a lot imagination, for such a policy will succeed only if it is done while respecting market incentives and continuing to strive for more openness and freer trade.

Pile of problems

With a coalition of so many parties, there will be demand to give away basic goods at a loss (Andhra Pradesh's new leader, Rajasekhar Reddy, has already promised free electricity to rural areas) and to subsidise a variety of services.

The rise of Hindu fanaticism and violence in the name of the religion can damage Hinduism in a way that no foreign rule has been able to do

When these are given to the poor, it looks like a reasonable and generous policy.

What is forgotten is that each such act of giving creates problems in domains that are hidden from our view and which can do irreparable damage to the economy and, ultimately, to the most disadvantaged.

In the travelogue, One River, Wade Davis tells of a signboard he encountered in a train compartment in Colombia that urged "passengers to be civilised enough to throw their garbage out of the windows".

The seemingly generous act of subsidising different sections of the population is a bit like this garbage policy: It looks nice but can cause a pile up of problems elsewhere.

In the case of the economy, this takes the form of a growing budget deficit, which can cause the nation's investment rate to drop and damage long-run growth prospects.

If, despite its reasonable economic policies, the BJP has lost, I think this is related to confusing ends with means, as just discussed, and also because of its complicity in the rise of communalism in the country.

Hindu fanaticism

During my travels in rural India last winter, the majority opinion I encountered was revulsion to the communalism that has been spawned during the BJP rule.

Even in a predominantly Hindu village in remote Gujarat, where the major concern of the people was with water and not politics, barring one individual, everyone (including those who supported the BJP) expressed utter shame about the carnage that had occurred.

If the government had brought some of these criminals to justice there would have been protests by some political groups for sure, but the silent majority would have respected the decision.

Some initial reports suggest that, while the BJP never had much support among India's minorities, this time it lost support among Hindus.

This is not hard to understand. As Karl Marx wrote nearly a century and a half ago, Hinduism is an amazingly resilient religion and, despite repeated foreign invasions, the religion has remained vibrant and thriving.

But there is another way in which a religion can be defeated. This is by changing its character from within.

The rise of Hindu fanaticism and violence in the name of the religion can damage Hinduism in a way that no foreign rule has been able to do. Many a devout Hindu realises this and has registered his protest.

To read Kaushik Basu's future columns, bookmark bbcnews.com/southasia

If you would like to send a comment about this column, please use the form below this selection of readers' views.

I have to agree very much to the fact that BJP has not brought any innovation in economic policies - it was just merely sitting and following divestment without a clear cut vision of uplifting all sections of the society. Further one can clearly see BJP lost in the south big time - what is BJP's understanding of the problems in AP, TN, Kerala or Karnataka besides being mere spectators of what their allies do. BJP has idealists who do not have proper administrative skills. Their vote base is going to erode as long as they only hark about building Ram temple, feeding on upper caste sentiments without concentrating on development.

Yuvvaiva, India (living in US)

Absurdity at its best: Though sitting thousands of miles away, yet how easy, few self proclaimed pundits find it to tell what's the reason for election outcome. My only advice to such people is to come to ground zero, and you will know the real reason.
Sanjeev, India

The focus in the subcontinent is on buzzwords privatisation, IPOs, bull markets, call centres, etc, things that would attract financial manager in the western world. What is often forgotten is that the masses are in the villages, live on agriculture, and care little about broad and short band. A balanced economic policy must strive to improve the 'village economies' and not just the IT world, in these countries. Lets face it, agriculture policy doesn't get the same exciting reception as the new IT policy.
Salman Aslam, UK

Contrary to Mr.Kaushik Basu's opinion, many in India are of the opinion that BJP lost because its hardcore supports didnt come out to vote for it. In the past six years of BJP rule, it has failed to construct a temple at Ayodhya, resettle Kashmiri Pandits in their homes, repel article 370, forgot Uniform Civil Code and has failed to make up for any of its promises it had made to the hindu majority. That is why the hardline Hindus, did not go out to vote. This can be gauged from the fact that average voter turnout this time was lesser than in the last election. In places such as Delhi & Mumbai, it was as low as 25% & 40% , despite electonic voting machines having made the process much easier. In delhi, congress won 6 out of the seven MP seats in the state and five out six seats in Mumbai city. This itself should be a indicator of who stayed at home during the day of voting.
Ajay, India

What's next for India? Good economics and CPI party support will not mix. On top of that Laloo's being Deputy Prime Minister will send wrong signals around the world. In my humble opinion, the end of this new govt has already begun. I think India will have to go to polls sooner than later.
Sanjay Gupta, Uk

I would like to remind Mr. Basu of 2 things that he has missed in his analysis. One is the question of who votes in India. In metropolitan areas, voter turnout among the 25-45 age-group is extremely low, especially among the educated middle class and upper class elites. By any conservative estimate this group is as large as 20-50 million people, perhaps more (depending on what criteria is used). They have been also the main beneficiaries of the BJP-raj. The chief reason they do not vote is not only because of their apathy to corruption in public life but also their perception that they (as a group) cannot swing the outcome of elections. Secondly, I do not agree with the view that a variety of services in rural areas should not be subsidised. Look at the US & Europe. Agriculture and rural development had been subsidised wholesale, albeit, in a different form. Although adopting a simple Robin Hood methodology like giving free electricity or fertilisers will not be enough. More subsidies have to be channelled and in more creative ways, and definitely not for meeting the end of generating political capital. Of course it will create problems elsewhere, but that is in the nature of things. I do not know any country that does not have problems, but why be biased against the rural poor. To cut the chase, problems arise because politicians are neither honest nor capable and courageous to follow principles of good management. Voters who cannot read and write are gullible; they do not have the whole picture and they can be easily persuaded to follow blindly, though less blindly than before. That is certainly an improvement.
Debashis Karmarker, Belgium

Very rightly said. Hinduism is a religion of tolerance, the violent acts of Gujarat and elsewhere in the nation of Gandhiji is truly shameful and the fact that the people in authority responsible for the same had the temerity to contest an election is even more shameful. Being a Hindu and a Brahmin I felt extremely demoralised about the incidents post-Godhra. I truly believe that the BJP lost its mandate more so because of the shame that is "Gujarat" rather than "India's lack of shine".
Rajagopal, India

Sir, I want to make some remarks about your article. Your views regarding the poor is so much coinciding with the reality. Here is lot of development in the transport facilities, and high growth in the IT and BPO sector. But they have benefited only the educated upper middle class families. The villages have roads but not water or employment for the youth. The infrastructure development will provide benefits to all sections of people in the long run. Our policies are mainly concentrating on the development of urban areas (providing water, transport and electricity etc to attract investment). It should be diverted to villages. We have to improve the education level, avoiding school drop outs and at the minimum providing drinking water facilities. That will ensure the development of the whole country, not like the pockets in Punjab, Haryana, Kerala, Maharashtra and Tamil Nadu like that.
Mahendran.R, India

As an Indian in the USA.. the results were a shocker to say the least. Sonia has no clue about the mechanics of running the country. What does her resume have other than the Gandhi ties? I am deeply saddened that, post-Mahatma, we are back in the clutches of a foreign leader. The results would have been slightly different had she given an inkling of what was on her mind prior to elections. It's apalling to say the least, that we are unable to find a leader to run the country.. Shame on you all!!
Bimla Mehta, USA, Indian

I disagree with Kaushik Basu who is misleading international readers about India. I see a communist who hates Hindu culture in his views. He appears to divert readers from a stronger positive aspects of India. The stock markets were bled billions of US$ due to a change in government. I ask 50+ years of Congress rule in India and 10+ years of Communist rule in Bengal hasn't changed "poor" India? Why doesn't this great economist give positive feeds to eradicate the "poverty" in India instead of just being happy with the party change at the centre.
Krishna, India

Very accurate indeed.
Sheetal Banerjee, Uk

I strongly agree with the fact that one of the main reasons why the BJP party has been voted out is because they did next to nothing in relation to the outrageous acts of communal violence committed in the name of religion, especially in places such as Ahmedabad, Gujarat. The BJP had to take the ultimate responsibility for allowing such violence to take place in the first place. It didn't and now its paying the price for the damage it has cost to modern India. Hopefully, the Congress party will bring a greater level of stability to Indian life. Although it will take while to clear up the mess that the BJP have made.
Kurian Abraham, UK

As his name suggests Mr Basu must be from the state of West Bengal where for years it has been ruled by the Communists - no wonder his views are towards the left.
Lakshmi Narayanan, Uk

The writer is correct in pointing out that the ultimate aim of an economic policy should be 'the upliftment of the poor' and 'reducing inequality of incomes'. I wish someone had reminded the NDA of this while they were in power. But as seen they were too busy making money for the government(and possibly their own pockets) rather then utilising it for the poor or towards 'pro-poor' policies in a country where a number of people survive on a morsel of bread and dirty water.
Karuna, India

I liked the analysis of why the BJP lost and particularly their confusing a means with an end - as goals of a thriving economy.
Ajay Malik, Switzerland

I think this article puts the whole process that is taking place in India in some prespective. The reforms though good have not produced any tangible results for the vast majority of Indians. There has also been a backlash against the communal politics of the BJP. This is heartening as it proves that the vast majority of Indians are secular in their outlook and not theocratic. The Congress though should not think that their writ now rules as the vote is more against the communal policies of the BJP and the faliure of economic liberalisation to reach the Indian poor rather than an endorsement of the Congress party. The writing is on the wall. Efforts have to be made to provide for the hard core poor in India while pushing ahead with reforms. Basic issues like education,health, clean water and electricity must be guaranteed. If not this government too will be booted out in 5 years.
Ganesh, Malaysia

Such persons as Mr Basu should be included in the government.
a.rehman sarguroh, India

I did not think I would some day be agreeing with Kaushik Basu, but when it comes to the damage done by Hindu fundamentalism to India's politics, culture and society, I couldn't agree more. It just goes to show that people who dislike religious fundamentalism come from all walks of life. However, I do not think that the BJP's controversial labour reforms will help the poor. In a country with no social security, the only job guarantee was afforded by the legislation which prevented hire and fire policies.
Brijesh Patel, India

I completely agrees with the eminent Prof. Basu's comments on Indian economy and the direction it should take. However, when it comes to Hinduism and identity, I have some reservations. Hindus in India have lesser rights than muslims. Look at the matrimonial laws or even property laws. Even the poorest of Hindus are involved in some kind of family planning where as even middle class muslims have at least 5 kids. What was less than 5% muslim population is now hovering around 20%. In these circumstances, what is wrong with Hindus trying to get an identity and fight for their rights. Is asking for a common civil code a lot? I am not asking anyone to condone violence but to think about basic rights that Hindus deserve in india.
Ganesh Chamarthi, USA

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