View: For the economy to grow, democracy can’t be in recession


There are two recent images of global India. The first is India as the world’s vaccine exporter, sending supplies of Covid vaccines to diverse countries from South America to South Asia. The other is the government’s furious line against pro-farmers-protest tweets of music star Rihanna and climate activist Greta Thunberg, cracking down on those who shared a “toolkit”, jailing Disha Ravi and continuing police deployment at farm protest sites.

The vaccine export drive aims to showcase “atmanirbhar” India as a manufacturing hub and vaccine supplier to the world. Towards this end, PM Modi has announced the focus on ease of doing business and declared that the role of the private sector is vital as wealth creators create jobs. FM Sitharaman has urged industry and private enterprise to show “animal spirits”, British economist John Maynard Keynes’s phrase, describing a human emotion that guides energetic financial behaviour in difficult times.

Freedom is indivisible. Freedom cannot be compartmentalised. The authoritarian economic miracle of China may be a role model for some, but in India, given the dizzying diversities of economic life, the evidence shows that economic growth is best achieved in times of civic and social freedom.

The attempt to spur free private enterprise when a vast state apparatus is severely constricting civil and democratic rights, when sedition charges are being slapped, when those holding any ideology opposed to the governing regime are imprisoned or muzzled, is bound to fail, particularly if fear is the dominant emotion. The first step to unleashing the “animal spirits” is surely to recognise that fear and control over thought and expression, are the biggest deterrent to those spirits.

Who, after all, is the common entrepreneur? He or she – often a young genius behind a startup or a new business – is above all a free thinker who is able to generate a bright new idea that may catch the imagination of people. Entrepreneurship is rooted in the freedom to think, to question prevailing paradigms, entertain inconvenient truths and come up with out-of-the-box ideas. But in a climate of fear, where the freedom to think is severely constricted by the fear of being dubbed “anti-national”, the robust energies of new entrepreneurs are in danger of being snuffed out.

In the past weeks, the internet has been shut down at various protest sites, and there are moves to bring social media platforms Twitter and Facebook under government diktat. The political leadership has decried the stranglehold of IAS babus, yet, in the recent takeover of the Delhi Gymkhana Club, we see ever-expanding government as a government ministry has taken charge of a recreational hub. In a clear attempt at thought policing and constricting academic freedoms, publicly funded universities now need government permission for international online conferences.

In India’s economic growth oriented phases during the tenures of PV Narasimha Rao, AB Vajpayee and Manmohan Singh governments delivered steady growth rates and had a lighter footprint on civic life. Vajpayee and Singh ran coalition governments and may have, on occasion, failed to provide decisive leadership, yet in their time India’s Big State was less intrusive.

Yes, Vajpayee cracked down on and Outlook magazine for exposes on his government and during UPA, Binayak Sen, cartoonist Aseem Trivedi, anti-nuclear protesters in Kudankulam were charged with sedition. But generally there wasn’t the kind of fierce ideological polarisation that today deems any dissent to be “anti-national”. Now, not just state agencies, but even private groups of vigilantes or non-state actors are taking it upon themselves to police weddings, art exhibitions, TV and comedy shows.

If every sector of society is yoked to the state apparatus or is vulnerable to non-state actors who act on behalf of the Big State, then citizens will constantly need political patronage and protection, in return for which they must surrender their freedoms. When the state is stifling freedoms across society, how can the entrepreneur dare to think freely or unleash his or her animal spirits?

In this situation, free-spirited entrepreneurs will flee rather than submit to government diktats. Businessmen will turn into cronies living off political patronage, rather than earn a just profit by satisfying paying customers. The controversy over the manner in which airport tenders were won by a single business house with no prior experience in the area, overruling objections by the Niti Aayog and the finance ministry’s department of economic affairs, is a pointer to an ecosystem that breeds cronyism.

Liberals generally oppose controls and are, for example, in favour of farmers being able to gain access to markets and freedom from burdensome regulations. Yet markets mean voluntary rule-based negotiations, in which two parties strike a deal if convinced it’s a win-win for both. If there’s a fear that the odds are heavily stacked against one side, that one side could suddenly become the target of massive and arbitrary state power, it will be prone to cry off. If internet shutdowns, closing of roads, a command and control mentality and draconian police action become the daily hallmarks of the state’s inclination, there will be a natural trust deficit on promises of “reform”.

If a thought police is attempting to control culture and social life, it’s unreasonable to assume that freedom is possible in economic life. India has been continuously “backsliding” in the Economist Intelligence Unit’s Democracy Index of 167 countries, falling from 27th in 2014 to 53rd position last year. When democracy’s in recession, the economy too can be stalled by the headwinds of state power.

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