Home The Public Affairs Universe

The Public Affairs Universe

America’s triumph in the Cold War meant the vanquishing of socialism by liberal capitalism. Countries that resist the ideology even today are considered failed states or are maligned as rogues.  It is not a coincidence, hence, that India embarked on its present liberal economic trajectory at the same time the erstwhile USSR collapsed. Liberal capitalism has became the order of our age.

PASocialist India

In the bygone era, the means of production were collectively owned. This was through co-operative enterprises and through state ownership. The intention was to produce goods and services to satisfy human needs directly. The belief was that this would enable individuals the leisure to focus on self-discovery.

Private participation in the economy was heavily circumscribed by the government through what is called the license-permit raj. The regime was a complex labyrinth of regulations, licenses and other red-tape. Democratic socialist India also witnessed state socialism when it advocated nationalization as a strategy for implementing socialism. The story of Air India, the iconic aviation company started by J.R.D Tata as Tata Airlines, is a pertinent case study. It was acquired by the government and nationalised.

Popular idealogues of the time crusaded against profiteering by private business. They sought to lay the foundations of what they thought would lead to an equitable society. However, the system soon transformed into an elaborate arrangement between corrupt government officials and greedy businessmen. An easy route to success was by fixing. The successful businessman became the one who built relationships with the government that enabled him to get favourable treatment. The system failed because it led to nepotism at the cost of social and national interest.

Economic Liberalisation

Liberalisation means the gradual substitution of government by private business. India accepted liberalisation because the government did not have the wherewithal to satisfy the growing needs of its citizens. It could no longer insulate its people from material advances in other parts of the world. The process has caused and is continuing to cause profound political and social metamorphosis.

India opted to pursue a trajectory of gradual economic liberalisation. It referred to government’s primary responsibility being to ensure stability in society during the transition. It does this by regulating the relationship between national resources, business and consumers while also at the same time reducing its role in the economy and reversing the process of nationalisation.

A short-cut for companies to find value and become successful  today is to adopt the following two pronged strategy: (i) tacitly support liberal media’s campaign against government (ii) remain friendly with the government to influence liberalization and enjoy its benefits. Private entrepreneurs substitute government by positioning themselves as premium service providers compared to government agencies which provide similar services. The positioning means that government services, which lack fanfare, come to be perceived as down-market. The trend has led to government losing its market-share. Liberal economics proactively encourages this withdrawal of government from the market.

The Indian government does nothing to change the perception that it (the government) is a black-hole of corruption and a poor service provider. As a consequence citizen’s trust on government erodes. The government’s loss becomes the private sector’s gain.

Public sentiments in recent years have challenged several initial assumptions on which India’s economic liberalisation rested. This has lead to a realignment in the role of business and of government. Indeed, the distinction between the two is blurring. Governments are no longer the only ones  in control. Businesses have greater responsibility towards providing stability to society than has been previously thought. The Indian ethos, characterised by its preference for equilibrium over anarchy, is slowly but certainly lending its rich colour to what is generally perceived to be a foreign model. Companies that accept this and act on it are the ones that will be the sovereigns of our age.

You can directly interact with the author on his email: narayananiti@gmail.com or tweet @narayananiti


Please enter your comment!
Please enter your name here