Upfront disclaimer: I worked for four years on Atalji's personal staff.
This post salutes former Prime Minister Atal Bihari Vajpayee as one who from being an instinctive socialist took some of the most capitalist decisions of an Indian PM; directly strengthening capitalism in India.
The BJP is a party that proclaimed its disdain for the license raj. However, it is as wedded to socialism and state control as any other party. Its record in opposition, both before 1998 and after 2004 is one of anti-business, anti-consumer, and pro-government directed growth. Vajpayee is the embodiment of this socialist mindset. He believed in Gandhian socialism. Like McCain, he wasn't much interested in economics or in making every Indian rich.
Therefore, expectations by industry (and mine too) were low when a Vajpayee-led government took charge. At best, the BJP would not block the liberalization path that Manmohan Singh had laid out for India and Chidambaram was trying to take the now-forgotten United Front government.
Contrast with today. Four years after Vajpayee left office, most businessmen--cutting across sectors--will tell you that he and his government did possibly more for business and growth than his successors. The Vajpayee government's many capitalism-friendly decisions created new wealth, widespread wealth, and sustained growth. Yes, there were failures too, most notably in agriculture, which is why India Shining failed, but no one can doubt the record of Vajpayee and growth.
Other PMs didn't walk so far down the road to (capitalist) Damascus. Rajiv Gandhi studied in capitalist Britain and worked for a company. For him, it wasn't too difficult to take the few capitalism-promoting steps that he did. VP Singh was a socialist in name, but a late 80s icon of capitalism, who had too short a tenure. Chandra Shekhar had an even shorter tenure to count. Gowda and Gujral didn't do much. Manmohan Singh is a trained economist and capitalist. For him the road to Capitalism heaven wasn't too difficult to talk. But, for Vajpayee it was.
For him to liberalize first IT, then ISPs, then telecom, then get private investment into highways; then cleared electricity reforms; then lower and simplify taxes (continued by Chidambaram); then give more financial powers to states; then strengthened the banking and securities markets (whose benefits we're seeing today); then by lowering tariffs and allowing foreign investment, including the then-contentious issue of insurance; then by actively privatizing government assets (backed by the redoubtable Arun Shourie); then improving relations with America and other capitalist nations; then awarding businessmen Padma Shris and Padma Bhushans (till him, there were very few such winners); then always talk about how the average citizen looked to create wealth for himself and his family--either through business or through a job--he did more than any other.
Vajpayee's record as a capitalist PM was so strong that the opposition Congress routinely denounced him as going too far down the accepted socialist path. But Vajpayee understood how wealth was created--and it wasn't by the state--and in his own way he laid the foundation for a political shift to growth. Today, no PM or more importantly no CM can not talk about attracting private investment, fostering employment, and promoting growth.
Atalji, you've been known as the Bhishma Pitamah of politics. I call you the Bhishma Pitamah of Indian capitalism.
Wednesday, November 26, 2008
Wednesday, November 19, 2008
India's second most capitalist state: West Bengal
Gujarat is India's most capitalist state. Big small businesses, small businesses, global connect, share ownership, government-driven capitalism--under all these heads, Gujarat leads the country.
The next state, in my opinon, is West Bengal. Yes, thirty plus years of Communist rule, ave propelled this state to the second spot in a rough index of capitalism. Incidentally, Punjab would rank third.
How do I make this counter-intuitive argument. Simple: West Bengal has the number of capitalists as a proportion of its population than any other state of the Union--more than Gujarat too. These are not shareholders of listed companies, as are many Gujaratis. Neither are they workers in big businesses. But, they are: farmers!
Yes, thirty years after Operation Barga gave West Bengal the highest rate of land redistribution, it has created two generations of farmers who own their own land--and this is what propels the state firmly into the capitalist side. A communist measure is promoting the most diversified ownership of a factor of production--land, labor (UP), and capital (Gujarat).
(Operation Barga was the name given to the land reforms program of the first communist Government of Bengal, elected in 1977, that took land away (sometimes forcibly) from big landlords and gave it to farmers. This has had the side-benefit of making Bengal's farmers overwhelmingly vote for the Communists, and city dwellers for the Trinamool Congress.)
It may be a small plot, but widespread ownership has encouraged farmers to invest in their land and to make even more productive. Which is why, West Bengal now leads the nation in many agricultural rankings.
According to the 2007-08 Economic Survey, http://indiabudget.nic.in/es2007-08/chapt2008/tab115.pdf, West Bengal is number one in rice with 16 percent of India's production. It's number two in potatoes with 31 percent of output.
In fruits and vegetables, the results have been the most startling. According to the 2008 statistics of the Ministry of Agriculture, http://dacnet.nic.in/eands/At_Glance_2008/hpcrops_new.html, Table 5.7 which gives data for the area under cultivation of fruits and vegetables is revealing. In 1990-91, West Bengal was ranked 2 with 871,000 hectares. Orissa was 1 with 996,000 hectares, and UP was a close 3 with 867,000. In 2005-06, West Bengal had risen to 1,455,000 hectares--a clear number 1, UP was 2 with 986,000, and Orissa had fallen to 3 with 975,000 hectares.
This expansion into cash crops (and fruits and vegetables are cash crops--farmers have to sell it in the markets--they can eat only a small portion of what they grow) is another proof of West Bengal's capitalist outlook. If lots of small farmers have to go to a market to sell their produce--and fruits and vegetables (and potatoes too) don't have state guaranteed minimum prices--then they are all capitalists.
The consequence of all this agriculutural capitalism is clear. Again, according to the 2007-08 Economic Survey, http://indiabudget.nic.in/es2007-08/chapt2008/tab18.pdf, West Bengal's yearly per capita income is Rs. 25,226, close to the national average of Rs. 25,716. This is commendable for a state that was for long seen as a byword of economic stagnation.
Owning your land--a dream for farmers in many other states--has created this new class of capitalist farmers and got West Bengal on the road to growth. China went down the same road--reforming agriculture in the early eighties, before moving onto industry in the nineties.
Indeed, now it's clear to me why there's so much opposition in West Bengal to land acquisition for industrialization. Lots of small farmers own only their land, and they're loath to give it up, because like all good capitalists, they've learnet how to extract the best profits from an asset.
If capitalism is not just alive and kicking, but also scoring in West Bengal (to use an appropriate football analogy for the soccer-mad State), then surely the same capitalism can also turn around the fortunes of other States.
The next state, in my opinon, is West Bengal. Yes, thirty plus years of Communist rule, ave propelled this state to the second spot in a rough index of capitalism. Incidentally, Punjab would rank third.
How do I make this counter-intuitive argument. Simple: West Bengal has the number of capitalists as a proportion of its population than any other state of the Union--more than Gujarat too. These are not shareholders of listed companies, as are many Gujaratis. Neither are they workers in big businesses. But, they are: farmers!
Yes, thirty years after Operation Barga gave West Bengal the highest rate of land redistribution, it has created two generations of farmers who own their own land--and this is what propels the state firmly into the capitalist side. A communist measure is promoting the most diversified ownership of a factor of production--land, labor (UP), and capital (Gujarat).
(Operation Barga was the name given to the land reforms program of the first communist Government of Bengal, elected in 1977, that took land away (sometimes forcibly) from big landlords and gave it to farmers. This has had the side-benefit of making Bengal's farmers overwhelmingly vote for the Communists, and city dwellers for the Trinamool Congress.)
It may be a small plot, but widespread ownership has encouraged farmers to invest in their land and to make even more productive. Which is why, West Bengal now leads the nation in many agricultural rankings.
According to the 2007-08 Economic Survey, http://indiabudget.nic.in/es2007-08/chapt2008/tab115.pdf, West Bengal is number one in rice with 16 percent of India's production. It's number two in potatoes with 31 percent of output.
In fruits and vegetables, the results have been the most startling. According to the 2008 statistics of the Ministry of Agriculture, http://dacnet.nic.in/eands/At_Glance_2008/hpcrops_new.html, Table 5.7 which gives data for the area under cultivation of fruits and vegetables is revealing. In 1990-91, West Bengal was ranked 2 with 871,000 hectares. Orissa was 1 with 996,000 hectares, and UP was a close 3 with 867,000. In 2005-06, West Bengal had risen to 1,455,000 hectares--a clear number 1, UP was 2 with 986,000, and Orissa had fallen to 3 with 975,000 hectares.
This expansion into cash crops (and fruits and vegetables are cash crops--farmers have to sell it in the markets--they can eat only a small portion of what they grow) is another proof of West Bengal's capitalist outlook. If lots of small farmers have to go to a market to sell their produce--and fruits and vegetables (and potatoes too) don't have state guaranteed minimum prices--then they are all capitalists.
The consequence of all this agriculutural capitalism is clear. Again, according to the 2007-08 Economic Survey, http://indiabudget.nic.in/es2007-08/chapt2008/tab18.pdf, West Bengal's yearly per capita income is Rs. 25,226, close to the national average of Rs. 25,716. This is commendable for a state that was for long seen as a byword of economic stagnation.
Owning your land--a dream for farmers in many other states--has created this new class of capitalist farmers and got West Bengal on the road to growth. China went down the same road--reforming agriculture in the early eighties, before moving onto industry in the nineties.
Indeed, now it's clear to me why there's so much opposition in West Bengal to land acquisition for industrialization. Lots of small farmers own only their land, and they're loath to give it up, because like all good capitalists, they've learnet how to extract the best profits from an asset.
If capitalism is not just alive and kicking, but also scoring in West Bengal (to use an appropriate football analogy for the soccer-mad State), then surely the same capitalism can also turn around the fortunes of other States.
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