JOIN USWalk the 'acche din' slogan
From the third century BCE to the present rulers as otherwise different as Buddhist Emperor Ashoka, Mughal Emperor Akbar, Indian Governor General Lord Wellesley, and the first prime minister Jawaharlal Nehru, have all sought to unite the Indian subcontinent under their various regimes. We have no historical evidence to suggest that, as per canons of good governance, they differed with Prime Minister Narendra Modi in seeking to see a united India alongside a prosperous one.
Not all of them could bring prosperity, though. Nehru’s devotion to insular socialist planning had not brought prosperity, and the country’s share of world trade had halved. His government failed to introduce mass education or to enforce land reforms. Prosperity – the hope of ‘acche din’ – being the raging mantra of the new political dispensation under Modi, had also been the spurious stuff of a legion fairy tales, which the cynics and the malcontents would rather take with a pinch of salt.
If rumours are anything to go by, the “Bird of Gold,” the golden Indian economy, is on the rise, and by 2025, according to at least one group of American analysts, India’s new globalised and liberalised economy could produce prosperity for more Indians and create an Indian middle class of more than 593 million (almost twice the size of the American population) eager to consume whatever global markets can provide.
What are the sure-fire prescriptions for prosperity? Last year as BJP's prime ministerial candidate Narendra Modi said India was blessed with three ‘Ds’ –demographic dividend, democracy and demand for goods and services to make the country prosperous over a decade.
A few weeks back, Reserve Bank of India (RBI) Governor Raghuram Rajan said that prosperity could be ushered in by strong governments – with the attendant need to “move in the right direction” – who have expertise, motivation and integrity and can provide the needed public goods. Economic inclusion, Rajan advised, must be a benchmark, which according to him, must mean easing access to quality education, nutrition, healthcare, finance and markets to all citizens for ensuring sustainable growth.
Rajan must be counted as our Paul Volcker – appointed Fed chairman by U.S. President Jimmy Carter in 1979, in the midst of one of America’s darkest inflationary episodes – who, following a “monetarist” formula pioneered by economist Milton Friedman, allowed interest rates to rise dramatically and thereby broke the back of a dangerous stagflationary cycle that had plagued America almost the entire 1970s. Volcker’s love for tough interest rate helped set the stage for a 1980s boom that played a starring role in the revival of an American prosperity that lasted right up to 2000.
As governor of an institution the policies of which account to a great extent for the monetary wellbeing of the nation, Rajan stopped short of elaborating that if prosperity means anything, it must include the “poorest of the poor.” Muhammad Yunus won a Nobel Prize for his creation of a bank that provides very small loans to women who dream of becoming economically self-reliant. His fascinating book says that ultimately it is not charity but simple things we take for granted, like access to finance and ownership of property, that are the bases of wealth and well-being.
Though the health of the paper economy could well be an indicator of the sense of prosperity of the market, economic historians point out that under the banner of mercantilism, countries ranging from England and France to the Netherlands, Prussia, and Spain sought to accumulate as much bullion and trade surpluses as possible by using a combination of tariffs to protect their own markets and subsidies to promote their exports.
Of course, the results of these “beggar thy neighbour” policies more often were war and turmoil rather than economic prosperity. It would be Adam Smith, not Ricardo, who would eventually put the final intellectual dagger through the heart of mercantilism. Smith astutely observed that a nation’s productive capacity – its machinery and labour and not its gold and silver and trade surpluses – was the real source of growth and measure of prosperity.
Biggest failure
How can we achieve the goal of a broadly shared prosperity? For most of the past 75 years, the US economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, it faced a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.
Now, the received knowledge is that the real key to long-term prosperity in America lies first and foremost in restoring business investment and the entrepreneurship and technological innovation that come with it as the primary engine of growth and job creation.
No country on earth is known to have unlimited resources and wealth. It needs meticulous planning, political will, efficient administration and commitment that generally convert a scenario of resource scarcity into prosperity. Shared prosperity for India – with its mesh of extreme wealth and ‘lavish’ poverty, its mix of the educated and the ignorant, its competing ideologies, its lack of uniformity, its kindness and profound cruelty, its complex interactions with religion, its parallel realities and the rapid pace of social change – is a challenge in view of the pull of varying priorities and drag in planning and effective implementation of programmes.
The Indian state's biggest failure has been in building human capabilities. As a result, so many of Indians remain illiterate. We have now realised that primary education and primary health are the two most potent ways to eradicate poverty. The mission of prosperity – like the mission of civilisation – is to further the path of development that began in nature. Visions of a dissipated shining India still looming in the horizon, Modi must work some reality into his dream of ‘acche din’.