Left, Right and Centre of India’s Economic Policy

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The Lok Sabha elections of 2014, witnessed an event like few others before it. It saw a ruling party's seats brought down by a margin like almost never before while a new leader was elected by the people, as much with the hope to bring in a change in the way the country developed by changing its course, as for any other reasons.

This is thought to be so, as the previous government led by the Congress, suffered from an image of corruption that few others before it ever had. It was surrounded by allegations of scams with top ministers going to jail and cases still pending in court.

But though these allegations were at a level like never seen before, it was not a major surprise, especially since the corruption at all levels of government have been part of the country's history since independence, maybe barring a few initial years.

Why is it so?

Issues related to cutbacks in business deals, contracts given by bending rules, and similar corrupt and illegal actions of those in power, which are usually possible due to the control and influence that government ministers and officials have in such matters, commonly referred to as 'red tape,' have dominated the spotlight in India.

And they exist due to the power and the role that the government enjoys in the working of the country. Corruption, especially by those in power, at the level of the citizen or for big business, comes from its involvement in the process to give permissions.

It is this question of government's role in the economy and the system along with the policy of trade with other countries, that forms the main divide between the Left, Right and Centre of economic policies.

The Right, wants the government to have a minimum role in the running of the country, with a stage eventually reached where the role of maintaining law and order, defence, foreign relations etc., along with a few other exceptions, the only topics on which it would have the mandate to work on. With the economy including foreign trade policy run on the basis of free markets where private business function without any interference from it, Very similar to how the economy of the US functions today.

While the ideology of the Left believes in the government being all powerful and no companies owned by the private sector. Under such an ideology, the government is the sole bearer of power, the sole owner of all resources and is embedded in the functioning of society. The former Soviet Union (USSR) being a prime example of such a state.

And with the world divided at the time of India's Independence, between US and the USSR, India chose to follow the path of the Centre which was quite clearly tilted towards the Left, where though private ownership of companies was not totally shunned, but was clearly discouraged through high taxes, and the policy of the country of isolating itself from others in terms of trade as well as the government playing a major part in every walk of life.

The Right

Narendra Modi while campaigning and after the BJP's victory had repeatedly said that he would deliver a corruption free administration and that he believes in 'minimum government,' referring to the size and role that it should play, a move which if implemented would move India towards the Right of economic policy.

Left, Right and Centre of India’s Economic Policy

It was such a policy that led to the not so secret support from private business owners to his campaign with many business leaders hoping and saying that his victory would bring an end to the old style of working, and would rid the country of government sponsored corruption.

It was the pitch that the prime minister had continuously made giving an example of his role as the chief minister of Gujarat, and the development model that he implemented there, showcasing the ease of doing business in the state with maximum support through minimal interference.

The BJP, which lies on the Right of not only economics but also socio-cultural and political philosophy has tried to move in this direction and certain changes that have been brought in or are being tried to, such as the Goods and Services Tax (GST), push towards labour reforms, incentives provided under 'Make in India' and 'Start-up India' and the push for 'Digital India', can all be possibly seen as attempts of the Right to bring a change to Left's policies.

But many of it critics have pointed to the slow pace of such reforms compared to the zeal with which the party is trying to enforce the policies of the Right in socio-cultural and political issues. They also point to, the government still continuing to run and hold a large stake in many companies even though ambitious plans related of withdrawing from them through the process of disinvestment have been announced.

Now with almost three years of its term passed, what has been or what can be achieved with respect to the initial expectations that the country had is for each individual to judge.

The Left

Though the country began on the path of the Centre, even though it was tilted towards the left, it was in West Bengal and Kerala, two of the major states in the country which saw the implementation of a strict Left ideology in terms of economic policy. In addition, smaller states in the north-east of India such as Tripura have also followed a similar path.

Parties such as the Communist Party of India (CPI), Communist Party of India (Marxist) and lately the All India Trinamool Congress party (TMC) have been the flag bearers of such a stand and continue to be so today.

Left, Right and Centre of India’s Economic Policy

The controversy that took place in Singur, West Bengal, in 2008 related to the setting up of the Tata Nano factory in the state, is a clear case of parties following such an ideology. In this case, even when the government of the communist parties, which ruled the state for more than three decades, tried to move away from its original stand, and towards welcoming private enterprise, by inviting the automobile maker to set up a manufacturing unit for its new car, Nano, in the state, it was the TMC that organised protests against the project.

And these agitations, which alleged government corruption, led to two outcomes. First, the TMC beat the communist parties in the following elections and took over the mantle of the Left when it came to West Bengal. The second, the Tata's abandoned their plans to set up the factory in the state and moved to Gujarat, where prime minister Modi was then still the chief minister. Further enhancing his image of being able to provide a business friendly environment.

Kerala's politics and economics, like Bengal, has been dominated by the leftist ideology, even with the Congress, which is generally considered centrist, choosing a leftist stand when it came to the state.

Though generally proper implementation of the left ideology in the field of socio-cultural subjects like education have seen positive results, when it comes to the economy it has seen absence of big business from the state with neither the policies being supportive of them and also the presence of strong labour unions making it difficult for them to function. And at present, the state is heavily dependent on the remunerations sent to it from those who have left to work outside the country.

The Centre

Though almost all other parties can be put into the category of being in the Centre with a tilt towards the left, it is the Congress which has followed this path most aggressively through its more than five-decade rule at the head of the union government.

It was under the first Prime Minister Jawaharlal Nehru that the party chose to have the government playing a major part in the working of the country. And it was followed on by Congress under the leadership of Indira Gandhi.

Left, Right and Centre of India’s Economic Policy

Though many of its initial steps may be termed crucial for a newly independent country. Other not so necessary steps like taking over airlines run by the Tata's airline into the present day Air India, and major steps like nationalisation of Indian banks i.e. private banks were taken over by the government and made government banks, and taxes for private business owners being made as high as 97 per cent, taken under the party's leadership which made it difficult for businesses to flourish in the country. Leading to an environment where such companies had to go to the government and deal with government officials which again became a major source of corruption.

The ever growing presence of the government in almost all fields including business and also restricted free trade with other countries, which is also a considered a step from the Left playbook, eventually led to the country reaching a point of economic crisis.

This led to the steps of liberalisation, privatisation and globalisation that the country had to take in the year 1991, by a Congress government under Prime Minster PV Narsimha Rao and then Finance Minister Manmohan Singh. And this was the reason for the enthusiasm with which the choice of Manmohan Singh as prime minister in 2004 was greeted by business leaders across the country.

But it was the same administration, which was first supported by one or the other of the communist parties along with a host of other Centre parties, during both its terms that became the face of a corruption-ridden government.

What now?

It was under these conditions that the country voted for a change. But the reality is that while the corruption at the central level seems to have gone down, the presence of the government at different levels still exists and private entities, whether individuals or businesses still have to encounter the government on an almost daily basis.

From a driving license, a birth or death certificate, etc., at the level of the individual, to contracts provided to businesses, permissions to be given in case of opening a business, selling natural resources of the country which the government is the custodian of and finally of being in the business of companies, which either the government owns completely or has a stake in, is a reality in India and if it is to truly change its philosophy of economics, it still has some way to go.

Especially since the different political parties keep shifting between positions which vary from their earlier stated ideologies, on an issue to issue basis.

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