Guest guest Posted June 18, 2003 Report Share Posted June 18, 2003 > >June 9, 2003 > >Commentary (Asia)WALL STREET JOURANL > >Asia's Quiet Miracle > >By BRUCE GILLEY > > > >As it nears the end of its fifth year in office as > the head of a coalition > >government, India's Bharatiya Janata Party is > preparing to put its mandate > >on the line in national elections due by October > 2004. Little surprise that > >the party has recently shown signs of backing down > on some planned economic > >reforms in areas like taxation, foreign investment > and privatization. > >Cabinet rifts and a series of antireform strikes > have chastened the > >government against moving too fast at the risk of > considerable political > >loss. > > > >Yet those in the chambers of commerce and business > press engaged in a > >reactive bout of hand-wringing need to check > themselves. Almost unnoticed > >by the outside world, India over the past two > decades has witnessed an > >economic transformation of staggering proportions. > It is a transformation > >that has cut poverty to 20% of the population today > from something like 40% > >a few decades earlier (estimates vary), while > adding nine years to the life > >of the average Indian. Most important, it is a > transformation that has been > >achieved through open processes of reaching a fair > and consensual policy, > >which in the lexicon of the dissatisfied is now > being disparaged as > >"politics." > > > >The democratic nature of India's economic miracle, > as frustrating as it is > >to those who like the stroke-of-a-pen changes of > authoritarian countries > >like China, has ensured that reforms are more just > and therefore more > >enduring. Inequality has remained moderate while > opportunities have > >expanded for all. By bemoaning the incremental > nature of India's economic > >reforms, critics are liable to undermine the very > foundations of the > >country's stirring success. > > > >As the columnist Paranjoy Guha Thakurta wrote in > Business Today magazine in > >late May: "While it may be very fine to wax > eloquent about the need for > >so-called economic reforms, unless a political > consensus can be arrived at, > >all such attempts are bound to falter if not fail." > That would be a tragedy > >indeed. > > > >Of course, the BJP is far from being above > recrimination in its handling of > >recent economic reforms. Its reform of the > power-generation sector and its > >attempts to reduce the dangerously high annual > public-sector deficit (now > >11% of gross domestic product) have been plagued by > ineptness and > >corruption. > > > >But most of the criticism has focused instead on > issues where reform has > >been delayed precisely because the losers are not > reconciled to change. > >Reforms in agricultural support, small-scale > industry restrictions, labor > >laws and privatization have been delayed because of > the interests affected. > > > >India's reforms have moved forward by minimizing > opposition, not bulldozing > >it. That may have meant a pace that many find > frustrating. But the > >important result, notes a recent paper by Harvard's > Center for > >International Development, is that "India's > political system is more than > >ever in consensus about the basic direction of > reforms." > > > >Economic reforms in India began haltingly in the > mid-1980s and then > >accelerated sharply in the early 1990s. Easy > reforms in areas like > >licensing, exchange rates and banking came first. > In the period from 1985 > >to 2001, real per-capita GDP in local currency > terms grew 3.9% a year, four > >times the rate of the previous three decades, > marking an unprecedented gain > >for the average Indian. India's Human Development > Index, as measured by the > >United Nations Development Program, rose by 23% > between 1985 and 2000, the > >same as in much ballyhooed China. > > > >The BJP, true to its nationalist roots, began life > espousing Gandhian > >policies of self-sufficiency and small industry, > known as swadeshi. It > >first won office in 1998 because of growing > disaffection with reforms and > >with elitist secularism. The coalition led by the > BJP represents a poor > >people's movement that threatened reforms. > > > >Yet when it came into office, the BJP sensibly > embraced reforms as the best > >hope for the poor. It was, and is, the only party > with the legitimacy to > >push the reforms forward, since it has a foot in > both the elite and > >populist segments of India's fractured society. The > fact that it is > >criticized not only by right-wing ideologues in > India, but also by > >influential left-wing intellectuals and unionists > for selling out to > >"liberalism," shows just how successfully it has > walked the middle way in > >its efforts to move forward through consensus. > > > >Low inflation, strong foreign-exchange reserves and > healthy agriculture and > >services sectors underlie the changes. The > information technology sector > >continues to boom despite the global IT bust, now > accounting for 3% of GDP > >and 15% of exports. There is no vast underclass of > disaffected farmers and > >workers threatening to overturn the reforms, or > even the political system, > >as there is in China. Indeed, the BJP-led coalition > includes many of the > >parties that represent those groups. > > > >If India's voluntary and female-empowering > population-control policies > >continue to surprise with their success, per-capita > GDP gains could > >outstrip those of the first decade and a half of > reforms. As University of > >Michigan scholar Ashutosh Varshney told a > conference in the U.S. in April: > >"Progress has been, and will remain, gradual and > steady." > > > >For those inclined to discount the gains under the > BJP because of the > >communal violence that has erupted on its watch, a > little perspective is > >key. The rise of the BJP was supported by India's > poor, who could be > >organized using the symbolism of Hindu revivalism. > It was a response to the > >failures of the elitist Congress Party to address > the country's > >developmental problems in more than four decades of > rule. Communalism was > >already on the rise when the Congress began reforms > in the mid-1980s > >(highlighted by the 2,700 killed in anti-Sikh riots > in 1984). Yet the > >economic reforms that the BJP continues to push > forward may be the best > >solvent for these passions. Moreover, on their own, > the reforms have life > >and death implications in a country like India. > Infant mortality began to > >fall in the late 1970s as a result of the country's > agricultural boom, but > >the decline accelerated once economic reforms > began. Taken on its own, the > >fall in infant mortality between 1985 and 2001 > saves about 800,000 lives a > >year today. If the decline continues as targeted by > the state through 2007, > >another 600,000 children a year will be saved. > > > >The BJP has emerged as India's strongest party > (along with its allies, it > >won 40% of the popular vote in the 1999 elections) > precisely because it > >more closely reflects Indian society than any other > party. It is more > >national, and cuts across the various > identity-based (region, caste, > >religion, ethnic group, etc) parties. And it is > more nativist and populist > >than the highbrow Congress. Much of the > "instability" of post-1998 Indian > >politics is because of the growing inclusion of > more people in democracy, a > >natural result of a process that leads to a more > healthy polity. Five years > >out, India is still in this initial process of > democratic deepening. > > > >Post-1947 India has been a whipping boy for > impatient reformers of all > >colors, from the left and right. In his 1966 book, > "Social Origins of > >Dictatorship and Democracy," the Harvard scholar > Barrington Moore, Jr. > >berated India's "peaceful change" and called for > "coercion on a massive > >scale" to solve the country's development > challenges. Fortunately, the > >post-1985 economic reformers ignored such advice > and stuck to the country's > >great democratic tradition. This is not just for > idealistic reasons. The > >country's more enlightened industrialists are also > quick to point out that > >they prefer reforms that will not face another poor > people's movement. As > >Narayanan Vaghul, former chairman of the Industrial > Credit and Investment > >Corporation of India told a conference in New York > in 1999, just after the > >BJP announced its bold economic reform plans, > "Unless the common man in the > >street is able to identify himself with the reform > process, we will find > >that the reform is going to be very difficult." > > > >India's reforms are not just an economic issue. The > country is forging a > >proudly democratic model of economic reforms. It is > the kind of model that > >many developing countries, despairing that they do > not have the > >dictatorship of China to force through difficult > reforms, can hope to > >emulate. > > > >The BJP government should be kept honest and chided > when it falls down. But > >the politics that it plays are mostly the politics > of balancing interests > >and views that, if not addressed, might threaten > the entire movement. Those > >who criticize the consensual nature of India's > economic reforms risk > >undermining Asia's quiet miracle. > > > >Mr. Gilley is a doctoral student in politics at > Princeton University and > >the author with Andrew J. Nathan of "China's New > Rulers: The Secret Files > >(New York Review of Books, 2002). > > > > > >-\ - > >URL for this Article: > >http://interactive.wsj.com/archive/retrieve.cgi?id=SB105510492687064200.djm > > > >-\ - > > > > > > 2003 Dow Jones & Company, Inc. All > Rights Reserved. > >Printing, distribution, and use of this material is > governed by your > >Subscription Agreement and copyright laws. > > > >For information about subscribing, go to > http://wsj.com > > > > > > _______________ > Gift yourself a holiday. Treat your family like > royalty. > http://www.flexihols.com/2003/index.php > SBC DSL - Now only $29.95 per month! http://sbc. Quote Link to comment Share on other sites More sharing options...
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