Identical tenures of the two regimes reflect continuity with change, and yet they differ radically in the political economy each pursued. EPISODE # 109
Last year we had the pleasure of viewing your interview with the FM after her budget presentation. We look forward to your comments after the budget this year.
The topic under discussion was the 10 budgets under UPA from 2004 to 2013 compared to the 10 budgets under NDA from 2014 to 2023. Since Indira Gandhi ji was mentioned, I feel that the outstanding reform during her tenures, was the nationalization of banks. Thereafter the comeback of the Congress in 2004, was largely influenced by the promise of writing off the rural debt and the subsequent budget spending during the 10 year period upto 2014 was handicapped by making provisions for writing off loans. Whereas, the principle difference in the budgets from 2015 onwards have been focused on infrastructure development, Defence equipment purchases and settlement of pending issues like OROP.
Thank you for your thoughts. Indira Gandhi was shrewd to figure the popular pulse and to ride it. At the same time she was pragmatic enough to realise that the socialist ideology was perfect for the air waves in an era where public was very animated--remember the civil uprisings world over in the late 1960s and 1970s. However, it was not good enough to deliver economic goods.
She had some great advisors both in the PMO and academic circles who argued their case for a market-based approach. Unfortunately she was not willing to rock the boat--something that has stayed with the Congress and become a fine art of ensuring status quo.
Looking back with perspective we see a continuous, but slow evolution of policy change. This will endure. Good news is that regimes are getting more confident about policy moonshots. Much needed to deliver the benefits of growth to all Indians,
Hey Anil, Very interesting piece - as usual you connect dots that others often fails to see. Kudos also to you for your superb understanding of the politico-economic history of India.
I think you should explore another tangential angle to this story. We can all agree that, except in totalitarian communist regimes, governments can only set policy framework. It is up to private enterprise to then take those policies and run with them. I wonder if an equally important shift has happened whereby the new Indian entrepreneur is
a) not afraid to say they want to make money &
b) are willing and capable of producing goods & services(maybe services more than goods) that are of good quality and, more often than not, competitive on a global basis).
An efficient private sector, a growth-oriented policy environment and a developing financial eco-system that is willing to provide risk capital are all essential ingredients for faster economic growth.
The equivalent analogy, from your piece, I would use for the private sector is that we are seeing a mix of some of the old business families(often with generational change sparking a new mindset) and many new business leaders.
Any change to the behavior of the private sector- a return to protectionism or monopolistic tendencies is what I would watch out for as red flags. Let creative disruption prevail.
As always great to hear your thoughts and insights. Love your last line: let creative disruption prevail. In short down with status quo. I totally endorse your thought. And thank you for the kind words.
Super suggestion on elaborating the change in the private sector. Will research it. Anecdotally I can say though that this pivot is indeed happening. Business is no longer a dirty word, unless of course you are referring to the old guard who continue to believe that business can only be done the dirty way--like it was under the Licence Raj. This is visible in the way representatives of the Indian government have started turning up at events like Davos.
Further, there is a generation of young entrepreneurs (like Prasanta Sarkar who figured in the StratNews episode on Green Hydrogen) who are willing and confident to take calculated risks to disrupt existing production processes.
Ensuring quality is a work in progress though. To share an example. Asian Paints etc started this business of doing home painting jobs--they would take care of everything, from shifting furniture, after-cleaning etc. This is a big hit with urban India. Soon, you have cheaper options among locals, many of whom learnt the ropes of doing business in this way operating as vendors for Asian Paints. So overnight the business of painting your house has acquired a style that is aligned to our sensitivities.
A sector where we are going to see a phenomenal explosion of activity is FinTech. There is now a convergence between the new players and the existing banking/insurance sector. Efforts like OCEN, Account Aggregator are effecting a pivot to cash flows and thereby enabling servicing cohorts with a thin credit profile--in other words taking on risk that they would never have considered even three years ago.
Effectively lots of transformations happening out there. To quote Naipaul a million mutinies (in disruption) happening out there.
Thanks for this very topical piece, there is a lot to unpack & some of the comments are also very insightful.
I just have a quick point that if the Govt does appoint a management consultant to evaluate the potential of professionally monetise existing infrastructure, the value could be in Billions of rupees.
This does not mean privatisation but more private participation in Ports, Railways, India Posts & many more organisations which are either sitting on land or on more developed infrastructure.
Im sure there are exercises done across Ministries/departments but would be interesting to know a consolidated potential revenue figure.
Thank you for your kind words. Good thought. But being government it is being managed by DIPAM or The Department of Investment and Public Asset Management.
They have been given a clear brief to unlock the value of assets.
--Identified non-core assets of CPSEs under strategic disinvestment;
--Immovable Enemy Property under the custody of Custodian of Enemy Property (CEPI), MHA as per sub section 6 of section 8A of the Enemy Property Act, 1968;
--This framework is also available for use to monetize assets of other CPSEs/PSUs/other Government Organizations with the approval of the Competent Authority;
--Sick/Loss making CPSEs under closure normally follow the DPE closure guidelines dated 14.06.2018 in this regard. However, any sick/loss making CPSE can also adopt this framework with the approval of Competent Authority.
So in the process they are sorted. Now for the execution.
I really enjoyed today's piece and more so because it did spring some surprises. First of all, I would never have imagined that there can ever be similarities between the UPA and NDA policies. Now it looks like the latter actually ensured a continuity to the former's policies. It's truly continuity with change. Plus, I was always under the impression that economic reforms were brought about in the times of Narsimha Rao and not by Indira Gandhi way back in the early 80's.
Garibi Hatao is a slogan we have grown up hearing. Maybe because we have been hearing it for years, we have always felt that poverty is an issue which can never be wished away from India. Naturally we have simply blamed the population for it. Thankfully the NDA seems to have finally come up with measures which work to ensure the dropping of poverty levels. I wonder if the lack of scams has also something to do with this remarkable process.
Thank you so much. Glad that I could shine the mirror on an Alt-view of India's recent economic history. I would largely blame the media and some vested interests in interpreting facts in a skewed manner.
I was lucky to have engaged some of these key technocrats during my reporting career--they would share small bits of information from time to time. That is when I started to figure that 1991 was not the starting point of reforms. Actually we had studied the Sixth Plan as part of our masters programme. But back then the rhetoric was like you mentioned about "garibi hatao" and lot of left-wing baiting of the ruling party.
Actually the debate to revisit the policy of socialism dominated the 1970s. It went back and forth. Tragic that all of this is overlooked.
In fact not many know that it was the late Isher Ahluwalia who set the cat among the pigeons by arguing that the licensing raj had hamstrung the Indian economy. Her book published in the 1980s and was panned by all the left wing luminaries dotting the landscape. The cancel culture of today has very old origins.
This is why I keep making the case for national debates. Put the facts out there and let people draw their own conclusions.
Well-chronicled. The continuity in Indian policymaking is real when one gets past the daily noise. The differences between governments through the years that you have summarized reflect, to my way of thinking, where Indian society was at those various historical junctures. Indian polity is very much bottom-up. It is mass-based, grassroots-oriented, with roots in the freedom struggle. Today’s policies are, in my mind, an unavoidable response to the tremendous aspirations of a rapidly awakening, ever more literate and aware society. The bar will only keep being raised for future governments. “What have you got for an encore?” will be the ongoing question that governments will have to respond to, or risk being ousted by the electorate.
Thank you very much for your weekly report. Looking forward to next week.
Thank you for your kind words. Agree with you totally. The aspirations are on fire, especially with traditional glass ceilings like the hegemony of elites, english language etc are busted. Over 1 billion people use UPI and 70% of the transactions are for sums less than Rs200--I just paid my vegetable vendor using his QR code a sum of Rs250.
So for politicians the road ahead will be tougher when it comes to campaigning for votes. No low hanging fruit. Worse they have to be on their toes for all five years they are in power. Alternative is the electorate will vote with their feet. Though caste, religion etc continue to dominate a voter's decision, other issues linked to their aspirations too are rapidly expanding this mix.
Nicely argued Anil. I have just two points to add here: (a) The consistency on the policy front despite the divergent political views showcases the obvious fact that it is the bureaucracy that drafts policy at all times. (b) The second is the fact that the same policy is accepted and vouched by politicians across the spectrum is a testament to the PR skills of the bureaucracy - remember the massive number of bureaucrats who sit and draft releases that egregious journalists from our past workplace promote verbatim. Political expediency causes leaders to oppose policies of those in power. Our PM vehemently opposed both Aadhar and GST once-upon-a-time - exactly what the current opposition is doing with policies that they piloted initially. The logic is simple - you need to oppose those in power to get to power! A quick round of Yes Minister and Yes Prime Minister may help justify the point I am trying to make here - which is this: The one who controls the narrative better, wins the day. And there is no way Modi is going to let go of the narrative he's built so magnificently.
Thank you for your thoughts. Agree with you that one common institution regardless of the political hue of various regimes is the bureaucracy. I am not sure if they drive policy change as much as they are a very important bridge that ensures continuity. For instance, can't imagine the bureaucracy (read IAS) backing a revamp of itself or allowing non-IAS cadres being considered or a lateral entry of non-IAS personnel.
The most famous instance of continuity is Amar Nath Varma--who was the top bureaucrat for Rajiv Gandhi, V P Singh and Narasimha Rao regimes. The blueprint for reforms was actually strung together by a set of technocrats (quite a few claim to be the original authors so not naming any) when the Rajiv Gandhi regime was exiting. V P Singh rejected it as he was allergic to anything to do with Gandhi. Varma then took it to Rao, who immediately seized upon the idea and rolled it out.
Most commentators overlook the fact that it was Rao who held charge of the industries portfolio. The delicensing move was his ministry's contribution. But instead of creating a song and dance about it and inviting political criticism Rao's Minister of State quietly tabled it in Parliament on Budget day.
Agree with you that controlling the narrative is key to gaining political leadership. But nothing is permanent in this world. As a journalist I am enjoying the front seat view of this incredible political and social transformation. Grateful and blessed.
Very informative article, Anil!!
Looking forward to reading your detailed analysis and your expert comments on the budget!!
Dear Vandana,
Thank you so much. Hope to match your expectations on the post-budget analysis.
Best
Anil
Last year we had the pleasure of viewing your interview with the FM after her budget presentation. We look forward to your comments after the budget this year.
Thank you Gautam. Was lucky last year to be picked to interview the FM.
Best
Anil
The topic under discussion was the 10 budgets under UPA from 2004 to 2013 compared to the 10 budgets under NDA from 2014 to 2023. Since Indira Gandhi ji was mentioned, I feel that the outstanding reform during her tenures, was the nationalization of banks. Thereafter the comeback of the Congress in 2004, was largely influenced by the promise of writing off the rural debt and the subsequent budget spending during the 10 year period upto 2014 was handicapped by making provisions for writing off loans. Whereas, the principle difference in the budgets from 2015 onwards have been focused on infrastructure development, Defence equipment purchases and settlement of pending issues like OROP.
Dear Gautam,
Thank you for your thoughts. Indira Gandhi was shrewd to figure the popular pulse and to ride it. At the same time she was pragmatic enough to realise that the socialist ideology was perfect for the air waves in an era where public was very animated--remember the civil uprisings world over in the late 1960s and 1970s. However, it was not good enough to deliver economic goods.
She had some great advisors both in the PMO and academic circles who argued their case for a market-based approach. Unfortunately she was not willing to rock the boat--something that has stayed with the Congress and become a fine art of ensuring status quo.
Looking back with perspective we see a continuous, but slow evolution of policy change. This will endure. Good news is that regimes are getting more confident about policy moonshots. Much needed to deliver the benefits of growth to all Indians,
Best
Anil
Hey Anil, Very interesting piece - as usual you connect dots that others often fails to see. Kudos also to you for your superb understanding of the politico-economic history of India.
I think you should explore another tangential angle to this story. We can all agree that, except in totalitarian communist regimes, governments can only set policy framework. It is up to private enterprise to then take those policies and run with them. I wonder if an equally important shift has happened whereby the new Indian entrepreneur is
a) not afraid to say they want to make money &
b) are willing and capable of producing goods & services(maybe services more than goods) that are of good quality and, more often than not, competitive on a global basis).
An efficient private sector, a growth-oriented policy environment and a developing financial eco-system that is willing to provide risk capital are all essential ingredients for faster economic growth.
The equivalent analogy, from your piece, I would use for the private sector is that we are seeing a mix of some of the old business families(often with generational change sparking a new mindset) and many new business leaders.
Any change to the behavior of the private sector- a return to protectionism or monopolistic tendencies is what I would watch out for as red flags. Let creative disruption prevail.
Dear Murali,
As always great to hear your thoughts and insights. Love your last line: let creative disruption prevail. In short down with status quo. I totally endorse your thought. And thank you for the kind words.
Super suggestion on elaborating the change in the private sector. Will research it. Anecdotally I can say though that this pivot is indeed happening. Business is no longer a dirty word, unless of course you are referring to the old guard who continue to believe that business can only be done the dirty way--like it was under the Licence Raj. This is visible in the way representatives of the Indian government have started turning up at events like Davos.
Further, there is a generation of young entrepreneurs (like Prasanta Sarkar who figured in the StratNews episode on Green Hydrogen) who are willing and confident to take calculated risks to disrupt existing production processes.
Ensuring quality is a work in progress though. To share an example. Asian Paints etc started this business of doing home painting jobs--they would take care of everything, from shifting furniture, after-cleaning etc. This is a big hit with urban India. Soon, you have cheaper options among locals, many of whom learnt the ropes of doing business in this way operating as vendors for Asian Paints. So overnight the business of painting your house has acquired a style that is aligned to our sensitivities.
A sector where we are going to see a phenomenal explosion of activity is FinTech. There is now a convergence between the new players and the existing banking/insurance sector. Efforts like OCEN, Account Aggregator are effecting a pivot to cash flows and thereby enabling servicing cohorts with a thin credit profile--in other words taking on risk that they would never have considered even three years ago.
Effectively lots of transformations happening out there. To quote Naipaul a million mutinies (in disruption) happening out there.
Looking forward to your continued participation.
Best
Anil
Dear Anil,
Thanks for this very topical piece, there is a lot to unpack & some of the comments are also very insightful.
I just have a quick point that if the Govt does appoint a management consultant to evaluate the potential of professionally monetise existing infrastructure, the value could be in Billions of rupees.
This does not mean privatisation but more private participation in Ports, Railways, India Posts & many more organisations which are either sitting on land or on more developed infrastructure.
Im sure there are exercises done across Ministries/departments but would be interesting to know a consolidated potential revenue figure.
Look forward to next week.
Dear Saurabh,
Thank you for your kind words. Good thought. But being government it is being managed by DIPAM or The Department of Investment and Public Asset Management.
They have been given a clear brief to unlock the value of assets.
--Identified non-core assets of CPSEs under strategic disinvestment;
--Immovable Enemy Property under the custody of Custodian of Enemy Property (CEPI), MHA as per sub section 6 of section 8A of the Enemy Property Act, 1968;
--This framework is also available for use to monetize assets of other CPSEs/PSUs/other Government Organizations with the approval of the Competent Authority;
--Sick/Loss making CPSEs under closure normally follow the DPE closure guidelines dated 14.06.2018 in this regard. However, any sick/loss making CPSE can also adopt this framework with the approval of Competent Authority.
So in the process they are sorted. Now for the execution.
Best
Anil
Dear Anil
I really enjoyed today's piece and more so because it did spring some surprises. First of all, I would never have imagined that there can ever be similarities between the UPA and NDA policies. Now it looks like the latter actually ensured a continuity to the former's policies. It's truly continuity with change. Plus, I was always under the impression that economic reforms were brought about in the times of Narsimha Rao and not by Indira Gandhi way back in the early 80's.
Garibi Hatao is a slogan we have grown up hearing. Maybe because we have been hearing it for years, we have always felt that poverty is an issue which can never be wished away from India. Naturally we have simply blamed the population for it. Thankfully the NDA seems to have finally come up with measures which work to ensure the dropping of poverty levels. I wonder if the lack of scams has also something to do with this remarkable process.
Dear Ranjini,
Thank you so much. Glad that I could shine the mirror on an Alt-view of India's recent economic history. I would largely blame the media and some vested interests in interpreting facts in a skewed manner.
I was lucky to have engaged some of these key technocrats during my reporting career--they would share small bits of information from time to time. That is when I started to figure that 1991 was not the starting point of reforms. Actually we had studied the Sixth Plan as part of our masters programme. But back then the rhetoric was like you mentioned about "garibi hatao" and lot of left-wing baiting of the ruling party.
But subsequently one was able to connect the dots and stitched together the alt-view. Recently there has been some scholarly work which shined the light on Narasimha Rao. Sharing one good example: https://www.amazon.in/Half-Lion-Narasimha-Transformed-India/dp/0670088226
Actually the debate to revisit the policy of socialism dominated the 1970s. It went back and forth. Tragic that all of this is overlooked.
In fact not many know that it was the late Isher Ahluwalia who set the cat among the pigeons by arguing that the licensing raj had hamstrung the Indian economy. Her book published in the 1980s and was panned by all the left wing luminaries dotting the landscape. The cancel culture of today has very old origins.
This is why I keep making the case for national debates. Put the facts out there and let people draw their own conclusions.
Looking forward to your continue participation.
Best
Anil
Well-chronicled. The continuity in Indian policymaking is real when one gets past the daily noise. The differences between governments through the years that you have summarized reflect, to my way of thinking, where Indian society was at those various historical junctures. Indian polity is very much bottom-up. It is mass-based, grassroots-oriented, with roots in the freedom struggle. Today’s policies are, in my mind, an unavoidable response to the tremendous aspirations of a rapidly awakening, ever more literate and aware society. The bar will only keep being raised for future governments. “What have you got for an encore?” will be the ongoing question that governments will have to respond to, or risk being ousted by the electorate.
Thank you very much for your weekly report. Looking forward to next week.
Dear Shiv,
Thank you for your kind words. Agree with you totally. The aspirations are on fire, especially with traditional glass ceilings like the hegemony of elites, english language etc are busted. Over 1 billion people use UPI and 70% of the transactions are for sums less than Rs200--I just paid my vegetable vendor using his QR code a sum of Rs250.
So for politicians the road ahead will be tougher when it comes to campaigning for votes. No low hanging fruit. Worse they have to be on their toes for all five years they are in power. Alternative is the electorate will vote with their feet. Though caste, religion etc continue to dominate a voter's decision, other issues linked to their aspirations too are rapidly expanding this mix.
Looking forward to your continued participation.
Best
Anil
Nicely argued Anil. I have just two points to add here: (a) The consistency on the policy front despite the divergent political views showcases the obvious fact that it is the bureaucracy that drafts policy at all times. (b) The second is the fact that the same policy is accepted and vouched by politicians across the spectrum is a testament to the PR skills of the bureaucracy - remember the massive number of bureaucrats who sit and draft releases that egregious journalists from our past workplace promote verbatim. Political expediency causes leaders to oppose policies of those in power. Our PM vehemently opposed both Aadhar and GST once-upon-a-time - exactly what the current opposition is doing with policies that they piloted initially. The logic is simple - you need to oppose those in power to get to power! A quick round of Yes Minister and Yes Prime Minister may help justify the point I am trying to make here - which is this: The one who controls the narrative better, wins the day. And there is no way Modi is going to let go of the narrative he's built so magnificently.
Dear Raj,
Thank you for your thoughts. Agree with you that one common institution regardless of the political hue of various regimes is the bureaucracy. I am not sure if they drive policy change as much as they are a very important bridge that ensures continuity. For instance, can't imagine the bureaucracy (read IAS) backing a revamp of itself or allowing non-IAS cadres being considered or a lateral entry of non-IAS personnel.
The most famous instance of continuity is Amar Nath Varma--who was the top bureaucrat for Rajiv Gandhi, V P Singh and Narasimha Rao regimes. The blueprint for reforms was actually strung together by a set of technocrats (quite a few claim to be the original authors so not naming any) when the Rajiv Gandhi regime was exiting. V P Singh rejected it as he was allergic to anything to do with Gandhi. Varma then took it to Rao, who immediately seized upon the idea and rolled it out.
Most commentators overlook the fact that it was Rao who held charge of the industries portfolio. The delicensing move was his ministry's contribution. But instead of creating a song and dance about it and inviting political criticism Rao's Minister of State quietly tabled it in Parliament on Budget day.
Agree with you that controlling the narrative is key to gaining political leadership. But nothing is permanent in this world. As a journalist I am enjoying the front seat view of this incredible political and social transformation. Grateful and blessed.
Look forward to your continued participation.
Best
Anil