A call to arms: Time to get the classical liberal agenda going

What does the stupendous victory of the Narendra Modi-led BJP in the recent elections mean for India’s liberals - the genuine liberals, not the left-of-centre variety?
But first, let’s get definitions out of the way. The word `liberal’ has been appropriated by far too many pretenders and it’s time for the real liberals to reclaim the tag. The genuine liberals are those who believe in the supremacy of the individual, a small but strong state and no overbearing state intervention in the economy. Not for this section a paternalistic state, one that encourages a dependency syndrome in the garb of empowering people. Not for this section any compromise with personal, intellectual, cultural and economic freedoms. And with the rule of law.
This section was starved of a political voice after the Swatantra Party disappeared from the scene in the mid-1970s, though it has been making itself heard, especially after 1991, through other forums. It cheered the initiation of the economic liberalisation process but despaired at the continued overhang of the socialist era, in the form of the paternalistic-cum-nanny state. Contrary to the lampooning of it by the leftist brigade as `neo-liberals’ pushing the agenda of big business, this section has been warning against the economic reforms process being more pro-business than pro-market and pressing for a correction of this skew.
This group (barring a section that is firmly with the Congress) has, undoubtedly, aligned itself with Modi, decisively rejecting the fear-mongering by the leftists and the Congress. His articulation of the minimum-government-maximum-governance idea, spot-on linking of corruption with lack of transparency in governance and promise to address that, disinclination for sop-driven welfare-ism, clear focus on infrastructure and an enabling business environment has resonated with them. Other post-1991 governments had opened up the economy, but no Prime Minister (not even Atal Behari Vajpayee) had articulated a cogent view of the role of the state the way Modi has.
The liberals have quibbles with Modi’s silence on privatisation and his opposition to foreign multi-brand retailers, but see these as minor details that don’t detract from the fact of a directional shift in economic policy and the role of the state.
This, the liberals seemed to have realised, is the closest they could get to the old Swatantra model. For them the decisive mandate that Modi has got is an affirmation of their belief fact that people – even if they don’t understand ideological labels – are instinctively against dole-centric policies (it isn’t as clear as that but let’s leave that for now).
This group will obviously want Modi to deliver on completely dismantling the socialist edifice that had been built up in the pre-1991 era. They know it can’t be done overnight – the stroke-of-pen reforms got over in the early 1990s. It will be a long-drawn out process, with roadblocks aplenty and even some rollbacks. But they will give him time so long as his focus is clear and he reins in the swadeshi economics brigade in the BJP and the sangh parivar which gave the Vajpayee government a hard time. Some leading lights of this group could get closely involved with a Modi government. 
But there are concerns.
One, what if Modi’s promise of a new economic paradigm isn’t what it seems? What if, as Vivek Dehejia asks in this article, `Modi’s instincts are certainly pro-business, but are they pro-free market’? Wouldn’t this run the same risk of encouraging the kind of cronyism that became rampant in the past decade? Two, will he decisively junk the dole-centric welfare model, which the BJP is not entirely averse to (after all it merrily went around supporting the rights-based entitlement legislations)?
Three, and this is a larger concern, what about the role of the RSS in the personal, cultural and intellectual space? The fact that Modi will not allow the RSS to dictate the economic agenda is clear; that he will do so in other areas as well is not. He hasn’t revealed his mind on the issue of non-economic freedoms, the upholding of which is just as important to the liberals as the ensuring of economic freedoms. He has, till now, remained silent on this. There has been no reaction to the Supreme Court order on Section 377. He has also never come out and expressly condemned attacks on intellectual and cultural freedoms as well as provocative statements against Muslims by the rabid right-wingers.
Also, though they don’t buy the mass-murderer imagery that the so-called `secularists’ propagate, they are critical of Modi’s failure to check the 2002 riots. Upholding the rule of law and protecting life and property is an essential part of the classical liberal agenda.
So there is a dilemma.
Should the liberals remain silent on the social issues, and concentrate their energies on getting the economic agenda going, ensuring particularly that this agenda is a pro-market one and not a pro-big business or worse pro-business house one? After all, the entire left-of-centre brigade will be extra-vigilant on the non-economic freedoms, looking for the first chance to trip Modi up. Should the liberals focus on redefining the role of the state in a way that it doesn’t get into the personal and intellectual space and on strengthening institutions so that they can never become compromised regardless of the regime in power? But what if the doomsday predictions of the `secularists’ come true and gangs of sanghis go around attacking minorities,  young couple indulging in PDA and getting books and art shows banned? Should they remain silent spectators because the economic issues are getting addressed?
Would criticising Modi strengthen both the fringe elements in the sangh parivar, who want to push their exclusivist and conservative social agenda, as well as the leftists/Congress supporters, who are just waiting for any opportunity to discredit and pull down India’s first avowedly right-of-centre government?
These are questions the liberals have to wrestle with in the coming days.
The problem they will face is that if they criticise the government, they will be at the receiving end of the ire of the online and offline Modi fanatics as well as the we-told-you-so jeers of leftists and Congress supporters. If they remain silent, the latter will label them fascist sympathisers waiting for suitable rewards. 
But is this twin attack new to them? Haven’t the liberals always been criticised and labelled by extremists on both sides, as well as Congress sympathisers masquerading as neutral intellectuals? Should the fear of such name-calling come in the way of making the most of the first opportunity they have got to expand the genuinely liberal space in India?
Certainly not.
The Swatantra had limited success because the intellectual climate in the sixties and seventies was overwhelmingly leftist. That is no longer the case.
So why can’t the liberals work with the Modi government, flooding it with new ideas and creating an environment for greater receptivity to economic reforms, something that has been sorely missing till now? At the same time, any attempts to subvert institutions, impose an artificial intellectual consensus or a conservative social agenda and snuff out dissenting voices (including left-of-centre voices) should also be opposed. The two approaches need not be contradictory.
History will not forgive India’s real liberals if they pass up this opportunity.

The Lost Heroes of Economic Freedom

First published in Forbes India: http://forbesindia.com/article/independence-special-2013/the-lost-heroes-of-economic-freedom/35917/1

 

When the history of India is written, no future historian should pity us that in a country where great saints have lived, there was not a single Indian to point out the absurdity of the ‘permit-licence-quota raj’.” So said C Rajagopalachari (Rajaji) when asked why he persisted in criticising Nehru’s economic policies when no one heeded him. G Narayanaswamy, a close associate, recounts this anecdote while penning a piece on him in Profiles in Courage: Dissent on Indian Socialism.
As the debate over two economic models—a welfarist-socialist one and a market-oriented one—gets increasingly cacophonous, it is worthwhile to remember a time when such energetic pow-wows were near-absent. When the predominantly left-of-centre intellectual climate—which dominated every field from academia to films—obscured any contrarian view.
And yet a few voices in that wilderness refused to be stifled, forcefully and cogently arguing for a liberal economic order and warning of the dangers that the Nehruvian model posed not just to the economy but to the polity as well (a prediction that came true in 1975). Today, as the economic punditry space bursts with numerous illustrious advocates for an open economy, there is danger of those older voices being forgotten.
Perhaps the least well known of these (outside the rarefied world of economists, that is) is that of BR Shenoy. Shenoy’s many treatises provided the intellectual underpinning to the battle against development economics and centralised planning.
His solitary dissent note to the memorandum of the panel of economists on the Second Five-Year Plan (of which he was a member) is a must-read critique of deficit financing and the dangers of over-ambitious plans. “Controls and physical allocations are not a necessary adjunct to planning... There are great advantages in allowing freedom to the economy, and to the price system in the use and distribution of the needs of production,” he wrote.
Shenoy stands out because he was from the academic world, which did not put up a strong enough opposition to the Nehruvian socialist world-view. There were right-of-centre economists but few who consistently attacked the economic path that India was taking the way Shenoy did. A later generation of economists—Jagdish Bhagwati and Meghnad Desai, among them—was vocal in its criticism but they were largely based abroad and their influence increased only after India liberalised its economy in 1991.
In the overwhelmingly socialist-inclined political space, it was the founding triumvirate of the Swatantra Party—Rajaji, Minoo Masani and NG Ranga—who ceaselessly championed an alternative economic model. Rajaji, the legend goes, was the one who said the ‘licence-permit-quota raj’ had replaced the British raj. The Jana Sangh (the predecessor of the Bharatiya Janata Party) was also in favour of an open economy but its economic ideology was overshadowed by its cultural conservatism and jingoistic nationalism.
It was Nehru’s increasingly statist policies that brought the three Congressmen together, with the Nagpur session of the Congress in 1959 (advocating joint co-operative farming, considered a euphemism for collectivisation of agriculture) triggering the final break with the party and the launch of the Swatantra Party. For 15 years, it presented a trenchant and principled opposition to government micro-management of the economy, deficit financing and high levels of taxation. An impressive showing in the 1967 elections was followed by crushing defeat in 1971. The party disbanded in 1974, by which time Rajaji had died and Ranga inexplicably rejoined the Congress. It was left to Masani to keep the Swatantra ideology alive till his death in 1998.
And then there was the Forum of Free Enterprise (FFE), set up in 1956, which single-mindedly debunked myths about socialism in the popular mind and countered the anti-private sector calumny of the socialists. The Forum was the brainchild of AD Shroff—one of the authors of the Bombay Plan of 1944 and a non-official delegate to the Bretton Woods conference—who had been opposing Nehru’s socialist views since the mid-1930s. With consumer activist MR Pai heading the secretariat for 20 years, the Forum provided a platform to an array of voices through writings, lectures and essay competitions.
Though better known for his annual analysis of the Union budget, eminent lawyer Nani Palkhivala (who was FFE president for 32 years) needs also to be remembered for his 1965 book, The Highest Taxed Nation, which made the very points that tax reformers of the early 1990s did. In the courts, he not only defended personal freedoms but also economic freedom, challenging bank nationalisation and a newsprint control order in the 1970s.
All these people were reviled by the establishment and subject to slander campaigns, the most common being that they were American agents. The Swatantra Party was labelled a businessman’s party (though the majority of industrialists did not fund it). A central minister told Shroff that Nehru wanted him to disband the FFE. But these voices refused to pipe down.
Were these the only dissenters? Certainly not. There were people like Freddie Mehta, Hannan Ezekiel, DR Pendse and Jay Dubashi (who later became an ideologue for the BJP), to name just a few. But it was natural for them to speak out against socialism since they were associated with private industry. The first three worked for the Tata group and Dubashi was director of the Economic and Scientific Research Foundation under the Federation of Indian Chambers of Commerce and Industry.
Eyebrows will be raised that IG Patel, Manu Shroff and several illustrious economists from the Bombay school do not find a mention here. But not all of them were vociferous or outspoken in the way the others were. Patel and Shroff worked for the government and though they may have slipped in some liberal ideas into economic policy, they were not open dissenters or radical reformers.
That’s why it is necessary to doff our hats to these brave voices which ensured that India will not be pitied in the way Rajaji had worried about.