Impact of Liberalisation on Politics | Social Issue Essay, Article, Paragraph for Class 12, Graduation and Competitive Examination.

Impact of Liberalisation on Politics

Scheme of the essay

Exposition: The avowed aim of liberalisation is to achieve self-reliance,

Rising Action: Nehrurian economic model and its variance developed by Mrs. Indira Gandhi has lost its primacy.

Climax:

(1) The impact of liberalisation on political ideology. (2) Impact of liberalisation on political culture.

(3) The movement from discretionary power to rule based regime has reduced the power of the politician as well as of bureaucrats.

(4) The state’s overriding role in the state in the economy is reduced.

(5) The lesser-than-man status of politician is diminished. Ending: Liberalisation in economy has changed politics and it has potential to change it further.

There is a cliche about Jawaharlal Nehru – the man, it is said, was a dreamer, The cliche actually hides the politician in Nehru. Whether he was a dreamer or not, he could certainly sell dreams very well. In fact, the dream he sold to his countrymen of a resurgent, socialist, modern India, standing firmly on the terra firma of economic self-reliance and, therefore, both confident and forward-looking, has been the staple of Indian politics long after the man is dead and gone. For over forty years, this dream and its variations have defined India’s political behaviour and responses.

Even if the dream has gone sour today and his ‘socialist’ model has been given a quiet burial, the political shibboleth used to justify the state’s each and every decision remains the same. Each measure taken by the government is apparently aimed at strengthening the country’s self-reliance and its Socialistic moorings. Even when the Narasimha Rao government took radical measures to usher in the process of economic liberalisation, the rhetoric remained the same. What’s more, the opposition parties, too, speak in the same language, while criticising or upholding the new economic policies.

Indeed, if one were to go by the political rhetoric, it would seem time has stood still in India. But the reality has been otherwise. In the last five years, the Nehrurian economic model, and its variation developed by his daughter, Indira Gandhi, has not only lost its primacy but has given way to a model of which Nehru would have been deeply suspicious- market economics. This has meant a radically different approach to public sector units, the government’s role in the economy, its outlook on licensing, duties, taxation, monopolies, and foreign investments.

In other words, there is a discrepancy today between political rhetoric and actuality. This is partly due to the looming legacy of Nehru, and partly due to the Indian political class apprehension of the fallout of formally jettisoning an accepted model of governance and growth. To what extent have reforms altered the political culture, notwithstanding the sameness of the political rhetoric?

An obvious impact of liberalisation has been on political ideology. Many have pointed out, and rightly so, how when in power today, every political party whether on the right, left or centre – has adopted the same economic policies. Therefore, leaders belonging to different parties have gone on foreign trips to woo international capital, and while doing so have vied with each other to offer incentives and facilities to foreign investors. Some, like have gone ahead of the Central government and completely privatised state units. So, the rhetoric notwithstanding, every party has adopted the same approach to economics. And to that extent, Liberalisation has acted as a great leveller. This much is quite apparent.

However, the impact of liberalisation on the Indian political culture has been more fundamental than this. A main aspect of the reform process has been the withdrawal of the state from both economic activity as well as day-to-day economic decisions. Although the process of withdrawal is far from complete, sufficient has already been done to alter the nature of the political game. In the main, there has been a dramatic reduction in the politician’s over-riding influence on industrial activity, businesses, jobs and contracts. An illustration or two would help in grasping the point.

For example, before the Nineties, the finance minister himself cleared all capital goods imports worth Rs. 1 crore or more. Consequently, businessmen and corporate leaders had to do their routine pilgrimage to North Block, and pay their respects to N.D. Tiwari or Pranab Mukherji, possibly do favours for them as well in order to get the nod for imports. Today, all this is unnecessary as such imports have been made automatic. And automatically, the minister’s lout, as well as the relevance of influence brokers, have diminished. Similarly, corporates wishing to go public no longer have to please politicians in order to ensure that the joint secretary, who was called the controller of capital issues, cleared their application.

In short, the movement from discretionary powers — known as the licence-quota raj – to a rule-based regime in the few five years has greatly reduced the powers of politicians and bureaucrats. This process has been accentuated by the state’s attitudinal change towards the public sector, a sector which is still the dominant one, although it has fallen from its ‘commanding heights’. Earlier, public sector units were run not on social considerations. This made them economically flabby. On top of that, the units were always vulnerable to political interference. The combination of the two spawned a political culture which was unique to India.

As they had an enormous say in the running of the state units, politicians were able to exploit the units for giving patronage and favours, which ranged from jobs to contracts for the favoured ones. All this was rationalised in the name of the ‘social’ role of state units – that they must provide jobs and do this and that for the sake of the people. Under political pressure, the public sector diversified into manufacturing things like bread, cars, soft drinks, and textiles-items which could happily be left to the private sector. The desire to favour the people is still there, but it can no longer be done by giving public sector jobs, but by bringing in more investments and strengthening the infrastructure which, in turn, can create jobs.

The state’s overriding role in the economy had skewed people’s as well as politician’s attitudes towards matters of economics. To the people, the government seemed an inexhaustible source of funds. That these funds had to be generated through economic activity was difficult to realise. If anything went wrong or was damaged, it did not matter, it was the government’s job to set it right. The worth of goods and services diminished in the people’s eyes. Politicians, too, squandered state resources, often with impunity, for serving their private political goals. The resource crunch, plus the new commercial mantra, is gradually bringing about the realisation that nothing comes for free.

The combination of all this has led to an emaciation of the politician’s larger-than-life stature. While the people’s respect for him had gone down earlier, the politician still inspired awe because of his enormous clout. The reduction in the latter has vitally eroded his status and has given him more ordinary features. For instance, S. P. Hinduja is no longer squeamish about telling people how politicians have hoarded their money in foreign banks. Had his business depended on the minister’s will, he is unlikely to have opened his mouth. The same explains why Ratan Tata had the ‘gumption’ to threaten to shift his automobile project from Maharashtra to Karnataka if the land promised was not allotted to him.

There is an apparent contradiction between the reduction in the politician’s clout and the perception that reforms have not diminished their rent-seeking capabilities. While a reduction in his powers should also reduce his money-making abilities. While a reduction in his powers should also reduce his money. making abilities, the hawala and telecom scams give a contrary impression. But what is apparent may not be the case, at least in toto. As is obvious, the Hawala scandal was a product of the old regime when politicians decided on projects, the telecom scandal erupted precisely because the minister played God and the bidding process was anything but transparent. The latter also shows that the journey to a rule-based regime is not over. Otherwise, the logic of reforms and greater transparency should bring down the scope for graft.