It is a peculiar synchronicity that the 25th anniversary of the 1991 economic reforms that opened India to the world has followed hot on the heels of the British referendum result in favour of exit from the European Union. While the former is rightly celebrated as the pivotal turning point away from socialism and central planning in the history of post-independence India, the latter has aroused anguish from a range of liberal commentators who see Brexit as a decisive challenge to the prevailing liberal international order, nay, to liberalism itself.
What has already encrusted itself into conventional wisdom, a scant week after the vote, is that Brexit represents a repudiation of the putative manifold benefits of globalization and the embrace of a narrower, more constricted, and inward-looking conception of the polity. It is also argued, plausibly, that supporters of Donald Trump, insurgent Republican candidate for the US presidency, harbour a similar world view to the Brexiters.
In perhaps the most perceptive take in the aftermath of the British vote, the leader in the current issue of The Economist sees recent events as an unravelling of the premature declaration of victory for markets, democracy and international cooperation following the collapse of the Berlin Wall and of the system of Soviet communism in 1989 and the years following—a turn celebrated by Francis Fukuyama as the “end of history”. As the magazine writes: “It was liberalism’s greatest triumph, but it also engendered a narrow, technocratic politics obsessed by process.” This is a shrewd observation.
In the quarter century following the apparent triumph of liberal values, a technocratically inclined elite in places such as Britain and the US stopped bothering to make the case from first principles, assuming, as it were, that electoral politics would be a mere sideshow every four or five years. The names of the political masters might change, but they would all be dancing to the same cosmopolitan liberal tune, be reading the same books, and taking advice from the same economists trained at Harvard or Oxford. (If they also attended Andover or Eton, that would be a nice bonus.)
The Brexit vote, and the viability of Trump as a serious presidential contender in the US, has upended these smug certainties. The insouciance of a cosseted elite residing within its echo chamber has been punctured.
What does any of this have to do with India in 1991?
In India, unlike Anglo-America, the embrace of liberal economic ideals, starting in 1991, was a matter of pragmatism and not of ideology. It was driven by a foreign exchange crisis, and our gold being mortgaged, not from a perusal of the collected works of Friedrich von Hayek nor an embrace of Western liberal triumphalism à la Fukuyama. What is more, it built on indigenous policy debates harking back to the 1970s, not on an externally imposed Washington consensus model, as widely and wrongly believed.
Many commentators, including your columnist, have decried the fact that economic reforms in India, originating in 1991, have occurred in an ambiente of crisis and, therefore, have not carried ideological conviction. But the Brexit vote and the political crisis following it should force us to rethink this proposition.
After all, an ideologically grounded programme of economic reforms, driven by a technocratic elite, could very easily face political backlash and reversal—as it did in Russia following the demise of the messy regime of Boris Yeltsin, for instance. An overzealous reliance on ideologically driven economic reformers, followed by an untidy unravelling, played its role in creating a Russia today, under Vladimir Putin, that has reverted atavistically to a dictatorship in all but name.
India, however, never took this ideological road to economic reform, preferring instead a pragmatically driven approach in tune with an indigenous political economy that largely transcends party lines.
It has been widely argued that the economic policies of the current Bharatiya Janata Party (BJP)-led government are more similar than they are different from the Congress-led government which preceded it. The difference lies in the efficacy of their implementation, it is said. This is typically offered by unsympathetic commentators as a criticism of Prime Minister Narendra Modi.
Yet, it is precisely this continuity, driven by pragmatism, not ideological purity, which prevents the sort of sharp reversals and U-turns in policymaking that we have seen not just in emerging economies such as Russia but that are currently on view in Britain and may be on the horizon in the US.
This good sense in policymaking in India manifests itself in an economic reforms trajectory which is incremental and attempts to carry as much of the populace with it as it possibly can. Sometimes, it moves slowly, or appears to grind to a halt, as in the latter days of the previous government and, at other times, it jolts forward, but, for the most part, it moves slowly, and generally in the right direction.
The well publicized critics who have castigated the Modi government for not pursuing a more aggressive and more ideologically pure approach to economic reforms might wish to ponder why the most successful politician in recent Indian history has chosen the slow, steady, pragmatic and non-ideologically driven path.
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