Oldspeak marries newspeak

Routine tokenism and lip-service aside, the BJP in power would be moderate and responsible, as it was at pains to stress in its thirteen days in government. At the time it also seemed that it would be economically liberal and free-market minded in spite of its dubious track record: the slogans of swadeshi and "computer chips, yes, potato chips, no," the crowning glory being its unforgivable conduct in the Enron case.

The BJP could yet prove to be as market friendly in power, but who is to say? A systematic turning of the back on liberalisation is underway, if utterances by party leading lights are any indication. A false divide is created between internal deregulation and external liberalisation just as, in the past, a silly and utterly artificial distinction was made between foreign investment in the consumer and infrastructure sectors. That divide was economically foolish and offensively patronising. Consumer-sector investments constitute a testing of the waters by foreign investors as they involve smaller investments and quicker returns. Unless a general openness is established in this sector, foreign investors are not likely to put their money on far bigger projects with longer-term commitments and late returns. That leaves the argument that India "needs" foreign capital for infrastructure but not for the consumer sector. The BJP might ponder that Indian investors have found the consumer sector a more attractive prospect because of higher returns on account of its having been so well sheltered. Besides, it is ridiculous to offer consumer good phone connections alongside bad cornflakes and washing machines: the two are not comparable, except in the BJP’s mind for their slogan-value.

In any case, how faithful has the BJP been to its alleged love of foreign investors in infrastructure? The single largest foreign investment project at the time was Enron’s. The party’s coalition government in Maharashtra did everything inits power to tamper with it. Its dark suggestions of wrongdoing stuck because there were no proper guidelines for negotiating such projects. But how many projects in India would have to be reviewed if put to the test of suspicion? Worst of all, for its pains, the BJP made not an iota of political capital. It could not scupper the project, a great deal of money was lost and India got a bad name. It could scarcely have chosen a more odd way to get infrastructure investments.

The truth, of course, is that it wanted to shine as the party that bagged the project on India’s terms. Cynicism on foreign investment was perhaps even better exemplified by the Tata-Singapore Airlines joint-venture proposal. Party leaders went about saying that their government would approve the project, but the party would oppose it out of power.

If the party’s economic thinking has long been confused, it is showing no better grasp now. Atal Behari Vajpayee points to the need for lessons from the Asian crisis. Certainly, lessons are needed. The question is: which ones? It would seem that he has concluded that East and South-East Asia are paying for thoughtless, reckless even, opening up of their economies, and that India must desist.

How odd. South Korea, the worst-hit country, was long known not for over-globalising but for clinging to its model of state-sponsored capitalism of a peculiarly nationalist variety. It is easy to disagree with the subsequent IMF prescription. The crisis itself was brought on not by excessive liberalisation but unaccountable banks and reckless companies, the first lending indiscriminately, the second investing unwisely. If Vajpayee’s point is that despite these bad policies Korea would not have got into this crisis but for the no-confidence vote of foreign currency speculators, he is right. But the crisis would have appeared in some other form, at a later time when it would have been even harder to fix.

Opening up makes politicians so afraid because it makes their bad policies transparent and liable to rejection. If that is the freedom the BJP now seeks, there is no reason why it should get it. This is hardly to say that it is not legitimate for a political party to ask questions about reforms. But Vajpayee would be better advised to say he would focus on reforms which worked for the poor, for reform in the farming sector which still accounts for more than a quarter of GDP and employs some two-thirds of the populace, for cushioning the worst-off from the severest effects of reform.

The BJP counts among its supporters a large number of middle-class economic liberals whom its current economic pronouncements would please not at all. Whether anti-reformism would make an offsetting impression among its other supporters is a good question. In all probability, it is not an issue for too many of them. Of course concerns about prices, corruption, jobs are all linked to reform. But the BJP is probably mistaken even tactically to promise to go after liberalisation with a scalpel.

Enron should have marked a defining moment in the BJP’s thinking. Compromise is the essence of politics, but the essence of principled politics also is not to compromise on some core issues. Surely economic well-being is one such.