Independent Indian: Work & Life of Dr Subroto Roy

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Notes on current Indian politics

23 March 2012

Political Science 301/Public Finance-Public Choice 201 Exam Question: Your predecessor government, based on a kind of mild bureaucratic Marxist-Stalinism, has been in power for 34 years. It has systematically ruined educational and cultural institutions. It has utterly bankrupted the state exchequer of the provincial government. [A provincial government cannot print its own money, and can only get taxes from sales and excise etc, besides battling for its share of federally collected direct taxes...everything else is on credit...and you are committed to paying humungous amounts of interest on humungous amounts of public debt...].

By a vast amount of ground-level political work, you manage after many many defeats to win! You remove this utterly corroded destructive regime at the ballot-box.

Then what? Do you examine the accounts intelligently with a fine tooth comb, find the finances to be in disastrous condition, explain that frankly and thoroughly to all the people as being the doings of the previous regime (who have been in power 34 years non-stop), impose discipline on the government machinery, seek to raise the productivity of government expenditure, seek to cut waste/fraud/abuse of public property and resources, and then, when you have the people’s confidence about your good intent and capacity, slowly but firmly raise taxes especially from the wealthy (who were all too often in bed with the so-called communists you displaced), and seek to gain the confidence of old and new creditors with something like Brady Bonds restructuring the old debt with a credible financial plan?

Or do you decide to not do any of the hard financial and managerial work at all, add a few thousand new schemes and projects in response to every favour-seeker’s wish-list, try to sell to people that you are being even more progressive than your predecessor, and then raise taxes on whatever few items you control like cigarettes and country liquor and TV sets?

Mamata Banerjee I never met though Siddhartha Shankar Ray wished us to do so not just in 2009 but back in 1991 when I wrote at his request the Bengal Congress manifesto from beginning to end for that election (which they roundly lost, but their manifesto was remarked upon by their adversary). I am afraid she appears from her Budget to be innocent of all economics and financial management, and so, I am afraid, appears Dr Amit Mitra (he and I did meet once at ICRIER in Delhi back in 1996). I think they have made a catastrophic strategic mistake by not doing the public finance and accounting homework that was needed to explain to all the people precisely what they had inherited in office and what had to be done about it. Now the signal has become confused with the noise and they have let their predecessors off scot-free while promising everything to everyone except the larder is empty.

23 March 2012

Indian Railways own a lot of land and the organised business lobbies are keen to get hold of them on the cheap, as land is now gold and paper money is increasingly worthless in a world of inflationary public finance. I have to wonder if this may have been an influence on recent events.

I advised Rahul Gandhi’s father when I was younger in age than Rahul Gandhi is now. I did so on the basis of my having led the perestroika-for-India project at the Univ of Hawaii since 1986 (and my doctoral work at Cambridge in the decade preceding), all of whose results I gave Rajiv in unpublished form when we met, and which led to the 1991 reform.

    I said a couple of years ago “Later, after his assassination, against which I had warned, the process came to be taken over by the greedy and the mendacious (specifically, organised big business lobbies, big bureaucrats and politicians, Soviet sleeper agents etc). So the truth got lost and has had to be reconstructed slowly.”

    Several friends have advised me to go see Rahul Gandhi. That to me seems inappropriate for obvious reasons. I am on record saying I thought neither Mrs Rajiv Gandhi nor their son seemed to me temperamentally suited to Indian politics — for that matter, nor was Rajiv himself, who was a loving family man and a happy commercial pilot.

    But Rajiv had known his father and his maternal grandfather and had a sense of noblesse oblige acquired from them and his mother too. He was secular, modern-minded, quick to learn, and immensely gracious, at age 46 — to cheerfully learn economics and political philosophy from someone 11 years younger (I was staying with friends at Sujjain Singh Park and remember telling myself when I was getting the Hawaii manuscripts xeroxed at Khan Market before my first meeting at 10 Jan Path that it was likely to be the most important tutorial I had ever given; it was). At our last meeting on March 23 1991, we parted with him saying “Suby, I want us to meet alone, I will arrange a meeting”; it never happened; I did not know Indian politics well enough to do more than mention to V George when I came out “He said he wished to meet me alone”.

    Now his wife and son agreed to enter Indian politics, for reasons of their own, and more importantly, for reasons of their political party, which is so fragile that it may well collapse without them. That explains why the Opposition keeps hammering away at them – the Opposition knows as well as anyone that Sonia and Rahul are the symbols of unity keeping the Congress Party whole.

    I would have much preferred to see them have arranged a fair leadership contest in their party and then withdrawn from active politics to maintain Rajiv’s legacy alive within the Rajiv Gandhi Foundation – to have been an intellectual and moral support for the Congress and other secular, modern-minded political forces in the country but not part of politics itself.

    Instead mother and son got co-opted into the system – in her case, she was given the so-called “National Advisory Council” (something whose origins lay in a conversation I had in Vasant Vihar on 25 or 26 March 1991 with the man who later put it together), in his case he was sent to get the “youth vote”, or do organization-building or win in UP or whatever. Neither may have realized that behind the scenes this was to allow the same political and economic vested interests to remain more or less as is, to control and fashion to their own liking any change that was to come.

    I would have taken things differently and advised accordingly: what unites everyone’s economic welfare in any country is its currency, and it remains essential to seek to stop India’s currency being debauched, to bring some slight semblance of integrity to it, for the first time ever in Indian history, which in turn would mean bringing comprehension and order to India’s public finances and public decision-making and government accounting and audit. Pari passu, corruption would have been controlled and government productivity raised across the board. All that is hard sober work, requiring a lot of real intellectual and political sweat. Instead the way of greed and self-delusion shown by Big Business, Big Labour, Big Bureaucracy came to be chosen, and the results are there to see.