New Year's Day is a good time to remember Albert Einstein's famous definition of insanity: "doing the same thing over and over again and expecting different results". But no, this is not a reference to the bingeing-and-hangover routine that some may consider mandatory for celebrating the end of a time period defined by a global calendar that has its origins in medieval Europe.
January 1 this year provides a useful opportunity to look back to the future as we head into a general election that many fervently hope will yield a government that will deliver India from its many evils. Any new dispensation's ability to make a big bang difference, however, depends critically on how far it can avoid the patent insanity of doing the same things over and over.
Doubts on this score arise from the Usain Bolt-like speed with which the Aam Aadmi Party (AAP), which positioned itself as a party with a difference, has followed through on its pre-poll promises. The AAP may have couched its campaign appeal in an intelligently "modern" format via social media and used crowdsourcing as a potent differentiator. But its instincts have turned out to be scarcely different from those of traditional Indian politicians, from N T Rama Rao to Akhilesh Yadav. Bar, of course, the fact that the beneficiaries of the AAP's early largesse in Delhi - even if tony NDMC (New Delhi Municipal Council) areas are excluded from the power and water subsidies - are more affluent than recipients of cheap rice or free laptops. What all this means for the state's finances is yet to be clearly explained to the aam aadmi.
The same yardstick applies to the government that takes power at the Centre. It is easy to see what needs to be done to put India on the faster track (and without subverting democracy China-style, for which many businessmen yearn). It's a question of not conforming to the prolonged insanity that has passed for policy since 1991 - that one brief spring of sanity - and in the past 10 years in particular.
A quick read of the 10 "wishful thinking" news reports produced in Business Standard New Year edition* indicates some of the long-standing follies to which politicians cling in the hope that, somehow, someday, India will shed its sub-Saharan levels of poverty and wretchedness.
Consider for a start the "report" that the government would rein in the fiscal deficit at one per cent of gross domestic product (GDP). How would it achieve this in our perfect world? By slashing non-Plan expenditure - subsidies on petroleum products and fertiliser being big-ticket cutbacks.
Logical? Of course! Doable? That depends on whether the political dispensation can immunise itself from special interest lobbies. Consider the decision to raise diesel prices marginally every month and reduce the subsidy burden on a government struggling to bridge the fisc. Mamata Banerjee's tantrum on behalf of the Common Man ended in her Trinamool Party exiting the United Progressive Alliance as a result of it in January. Diesel prices have risen 14 per cent since then with no noticeable protest from anyone.
A similar hissy fit by Ms Banerjee over railway passenger fare increases - that too effected by her own party member - caused a rollback in 2012. In less than a year, however, fares were raised - and raised again in October 2013, as were freight rates.
Of course, there's the issue of cost-push inflation and its burdens on the aam aadmi as a result of higher freight and diesel costs (the Railways, as bulk buyers, is exempted from fuel subsidies). But consider the insanity of expecting the Railways to function safely and efficiently without raising fares for nearly a decade, or for oil marketing companies to sell fuel at unchanged rates even as crude prices soar.
In any case, the biggest component of inflation, food, is a result of supply chain capture by powerful local political interests. These moneyed lobbies make it difficult for reformist-minded chief ministers to do the obvious and scrap their agricultural produce marketing committee Acts or allow competitive retail formats that involve foreign direct investment. And yet, politicians expect inflation to stabilise and small and marginal farmers to prosper with these age-old policy-induced obstacles in place.
The issue of free or subsidised power has been recognised for at least two decades (and the Planning Commission acknowledged long before that), yet successive governments at the Centre and state wait hopefully for foreign investment in power. Fertiliser subsidies have skewed the ecological balance, yet the meek tinkering with "nutrient-based pricing" has kept Indian farms awash with urea-based fertiliser (Rajiv Lall explains it in greater detail in "The politics of unsustainable farming" on the "Issues and Insights" page). A radical disinvestment programme would be great for the exchequer, but the government unloads its stake in homeopathic doses.
This is a minuscule listing of the Einsteinian insanities with which India's policymakers across the political spectrum have persisted. Now, Narendra Modi is being invested with messianic powers of transformation. The question is whether even he - the self-styled "Supreme Doer" - can battle these multiple insanities, which represent many entrenched political interests within his own party and prospective alliance partners.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
