Advancing the collective good, and simultaneously minimising and mitigating the costs borne by some sections

www.economictimes.com Who needs democracy?

8 Nov, 2007 economictimes.indiatimes.com T K Arun

Indian industry needs democracy, and desperately. The Indian economy’s sustained growth today is hostage to incomplete democracy, never mind all that champagne spilled on plush carpets of the rich growing richer while toasting the vaulting Sensex. Today, millions of Indians can only stand and stare as spectators while a tiny minority races, twinkle-toed, towards prosperity. Unless these resentful bystanders are transformed into joyous members of the procession, the music will soon stop and the dancing turn into a stampede of the kind that follows a bomb blast at a public place.

Cassandra-like scaremongering? Many Latin American countries have registered decent growth rates under the iron rule of military dictators. So did Korea till the late nineties. Assorted authoritarian governments have presided over impressive economic performance in much of east and south-east Asia for long periods. Even today, the fastest growing large economy of the world, China, is governed by an authoritarian, rather than a democratic, regime. So why should India alone need democracy for sustained growth?

In fact, it is often argued that India’s democracy is actually a hindrance when it comes to economic growth. After all, democracy does mean slower decisionmaking, if not endless dither, with all its greedy politicians, bungling bureaucrats, miles of red tape, self-seeking unions, environmental fundamentalists, trigger-happy litigants, other assorted, competing stakeholders, all translating into a thousand outstretched palms waiting to be greased. So, from the point of view of economic growth, shouldn’t industry be happy with less, rather than more, democracy? After all, businessmen do have access to bureaucrats and politicians, apart from to resources, to insulate themselves from any excess of authoritarian state power.

We could, if we want to, examine the vast literature examining the relationship between capitalism and democracy, their parallel historical growth, their shared common foundations in the freedom of individuals, institutional rather than arbitrary functioning, etc. Decentralised decision-making, which is at the heart of a vibrant, competitive market economy, cannot really happen in an authoritarian political structure, which would curtail freedoms of choice and action in assorted spheres.

So, authoritarian polities are unlikely to produce sustained efficiency in the economies they govern. China, for instance, curtails consumption to save and invest more than half its output, to produce 10% growth. India, on its part, consumes as much as two-thirds of its output and squeezes out 9% growth from the one-third of its output that it saves and invests. Clearly, India’s bumbling democracy is not all that inefficient when it comes to making effective use of resources!

But the practical point is that it is not possible for India to dispense with democracy, whether to rid the economy of the inconveniences arising from democracy or for any other such noble enterprise. It would make more sense to see how deepening democracy is likely to remove key constraints holding back India’s growth.

Consider some of the constraints.

Inability to obtain land for large projects. Nandigram has become a metaphor for forcible acquisition of agricultural land for industrial development and the violent resistance that follows. In a country where 40% of farmers report themselves as being reluctant tillers of the soil who would happily pursue some other occupation if it were available, the only reason farmers still resist industrial advance is that they see no stake for themselves in that development. Rather, they see themselves being deprived of their basic source of sustenance, with only bleak uncertainty about the future being offered as compensation.

This is failure of democracy. Advancing the collective good, and simultaneously minimising and mitigating the costs borne by some sections while pursuing that common good, are integral to democracy. This does not happen in India. People have no faith it would happen, even if it is promised by politicians and the administration. This reflects absence of real empowerment of the people, which is the cornerstone of democracy.

This failure of democracy gets compounded by the forms of competitive politics characteristic of democracy. It is easy for anyone to finance a local agitation against a new industrial venture. Posco, the Korean steel major that came to India with a $12 billion project, has not been able to get going after years of struggle with the political and administrative establishment. A stone throwing mob, assembled easily enough, is enough to close down organised retail in Uttar Pradesh.

Consider communal and caste violence that simmers under the surface, fanned by cynical politics that feeds, ultimately, on the huge gap between the political and social consciousness of much of India and the norms of liberal democracy enshrined in the Constitution.

Or consider shortage of electricity. The problem here is theft —patronised, ultimately, by politics. If one-third of an industry’s output is stolen with impunity, that industry cannot grow. Patronage of power theft is part of a larger malaise. The entire exchequer is seen by the political class as fair game, the rightful fruit of power. This just would not happen in a system where the people have some real control over the government supposedly working for them.

Or consider the traffic snarls in Bangalore or Mumbai. The state governments’ apathy has its roots in another failure of democracy, the huge disconnect between the prosperity of the cities and life in the countryside, where the voters reside.

And let us not forget the harsh reality that more than one-fourth of India’s 593 districts are now officially classified as Naxalite-affected. Civil strife takes a daily toll in Kashmir, the Northeast and different other parts of the country. Not just the bomb blasts that are large enough to grab wide attention, but also the violence that breaks out sporadically over road accidents or petty theft betray social tensions all stemming from a sad deficit of democracy.

For an environment free of the threat of random violence and crime, crucial for security of life and prosperity, industry needs democracy to grow. There is no alternative.