Indian democracy is good at providing representation, but not accountability

DEvesh Kapur and Arvind Subramanian’s rule book A 6th of Humanity: main(a) republic of india’s evolution Odyssey on India’s political economy will be released on October 24. Kapur (DK) is currently the Starr Foundation Professor of South Asian Studies at the Johns Hopkins University’s School of Advanced International Studies. Subramanian (AS) is a Senior Fellow at the Peterson Institute for International Economics and India’s former Chief Economic Adviser. Edited excerpts from an interview on the book: This is perhaps the first joint attempt by a political scientist and an economist to write a political economy treatise on India. Both of you have shown a mirror to the peers in your respective disciplines. One of you has written earlier that the top academic journals in the US have effectively created “new facts” and become the gatekeepers of knowledge on India.AS: Thanks for saying that we are holding up a mirror. What Devesh and I wanted to do was to cut across these narrow academic silos. Development is much more than either economics or politics, especially for a country like India. India, when it was created, had to do four transformations simultaneously: building a state, creating a sense of nationhood, changing society and building an economy and markets. And these four transformations were done through universal suffrage-based politics, which is also absolutely almost unique at that state, and in a society that had so many cleavages. This almost necessitates something that’s broader than either just politics or economics.DK: I think one advantage is both of us are older, and we really don’t care about being published in the so-called elite journals anymore. Many of those who work not just on India, but on other developing countries, there is a lot of pressure to go in the topmost journals. Understanding the country is not something they’re interested in. They’re interested in satisfying methodological requirements such as causal inference. We don’t have any pretensions our book is about making such claims. Our thing was we want to understand India, in whichever way we feel it can be better understood.At one point in the book you say, India’s best time is described by Bhagwati plus Sen rather than the Bhagwati versus Sen framework. This goes against the almost entrenched binary in terms of the debate on political economy in India.AS: I think this is something that we feel very strongly that the opposition and dichotomy is completely false. Especially people on the left who kind of look back with some degree of nostalgia about the first 30 years. There is a kind of revisionist view of that period that things were not too bad. But what Devesh and I try and show in this book is that everything changed after 1980 first and then 1990 when growth took off.DK: To add to this, this does not in the least way deny the many foundations that were laid in the first three decades. We really try to bring out that laying the foundations of the democracy, that was all done in the first three decades, and an outstanding legacy. We say at the end, that India was better at nation building in the first half and worse at it in the second. In more recent years, it has probably been better at state building.A large part of the book deals with India’s pre-reform policy choices. Apart from quantifying the economic costs which the book shows they imposed, why do you think the younger generation needs to engage with that period today?DK: If you understand your past better, hopefully, you don’t repeat mistakes. Understanding the past is also important, not just to avoid mistakes, but also learn from the successes. I think we underestimate today how difficult nation building is, and how fragile it is. And if your politics doesn’t understand that, just as your economic policies don’t understand the incredible cost of mishandling state interventions for the rest of economy, then all your aspirations for the future will come to ground.AS: I also want to say the past is never past in India. So, it’s one of those things where the past has a lot of lessons, not just because it’s past, but because it’s in the present as well.One of you served as the top economist in the finance ministry of a government which was supposed to unleash India’s Reagan-Thatcher economic deregulation moment. A passage in the book, shall I say, wickedly, narrates a 2025 policy regime (on fertilisers), as if it were from the 1950s. Is complex or bad policy party-in-power agnostic in India?AS: 100%. Most parties have straddled from, at best, pro-business to completely anti-market and redistribution. Devesh and I say at the end of the book, that one of the defining features, not just of any party, but of Indian society, is what we call the Mai-Bap Sarkar. It is deeply entrenched across parties, across society. The Mai-Bap term actually captures it much better than statism or whatever, because the state is seen as refuge, protector, father, mother, everything, even as it is screwing you, systematically, and not delivering. It is a party agnostic because it reflects society and how can politics not at the end reflect society. Also, not only party agnostic, it’s also agnostic between centre and states.DK: I think between the BJP and others, on a range of policies, there is pretty much convergence, actually, especially on things what that ‘we will not try and reform’. Did any political party try the reform of the police? Does any political party want to give police autonomy? Take the 74th Amendment (on urban local bodies). Has any political party genuinely tried to implement it? Investing in lower courts, district courts, they have no interest because, of course, there’s a complete agreement that strategically, we want to keep law and order weak, that is to be advantage of the political class.Towards the conclusion of the book, you argue that you would rather ask specific and pressing, even if mundane questions, than big ones such as India becoming a developed country or superpower or even prescribe some must-do reforms. You want to explain more?DK: Much of the reforms, they are so well known. There are no original thoughts that we can give. And frankly I find this great power discussion, utterly inane.AS: Firstly, the major reforms that have happened, really serious change, have come after crises. So, it’s almost a bit banal and ahistorical to say we know what we need to do, we haven’t done it. The big ones happen only during crisis. The second thing which I see very everyone will have his own list of what is important. Devesh will say, education, I will say, fiscal policy or growth or whatever. And there’s actually no way of adjudicating whether Devesh is right or I am right. Our approach is not a ‘to do list’, but a Hippocratic Oath of ‘do no harm’ and that is why we were talking earlier about the early achievements and why we should stop undermining them.The book rightly describes India’s democracy as precocious. India seems to be under its second spell of Caesarism today, the first being under Indira Gandhi. The current spell has been accompanied by a rise in support for a “strong leader”. How do you see this trend?DK: On this, India is not an outlier. Worldwide we have seen this even more among younger voters. This shift away from democracy and a yearning for a strong leader is a broad trend. Simply saying how great democracy is and how wonderful it is in principle is not enough. People forget all the dangers of authoritarianism when they have not experienced it for many years. It’s a warning to our leaders. In some ways, most states and not just the centre in India are run in an authoritarian manner. It’s a bit unfortunate, because, we had we had hoped that as the decades go by, democracy actually deepens. But look at the US. It had all this but the US has retreated faster in six months than India has. And I myself have just not been able to grapple what is driving this. One can come up with `democracy has not delivered’, there’s a sense of frustration, anger, expectations not being met etc. Is social media driving some of this? Is technological change driving some of these trends? Probably all of the above, but I don’t want to pretend that I understand it.AS: Firstly, this is global and that’s very important to recognise. And of course, there’s a big debate globally about whether it is the changing fortunes of the middle classes and the working class and whether there’s an economic explanation for this. In India the identity stuff is happening, no question, right? But his is the funny thing -- some people say, look, the difference between Indian authoritarianism and (others) is that it’s happening when growth is still 6%, right? But I think what is distinctive about the last 10 years is that Narendra Modi has provided a social safety net which we call the ‘new welfarism’. It is now the proverbial opiate of the masses.“The Congress, as Mahatma Gandhi acknowledged, was supported by the landed elite, which created a silent debt”, the book says. At another place it draws a distinction between India’s present-day strategy of promoting national champions and South Korean Chaebols, the latter serving national interest more effectively than the former. Do you think this nature of ‘silent debt’ has shifted overtime in India and continues to generate headwinds to national interest?DK: It relates to the point we make on election financing. In the 1950s, the feudals would get the peasantry to come and vote. Now it’s really about the money for the elections. At the MLA level, it might be the sand mining guys, at the state level, it might be the real estate guys, and at the national level, it’s the big industrialist, right? You could make a bargain that you (industry) get all the favours, but I (state) want innovation. But if I am asking for campaign contributions, not innovation, not even exports then…AS: I think what our fiscal state chapter tries to show is that what India’s precocious democracy means is that almost every constituency clamours for, and gets something or the other from the state. So, it is really an equal opportunity claim creator. India’s Tax-GDP ratio is virtually unchanged from 1990 to today. Remember, it is the period of the most rapid growth when you expect taxes to rise. So, the notion that the debt is to particular groups per se, is, I think a kind of a misreading of Indian democracy. Obviously, the amount you get is going to depend upon how powerful you are.DK: Unlike the Chaebols, India’s national champions are in sectors where the linkages with small and medium enterprise are much less, they are also mostly non-tradable and regulatory intensive. There is now strong evidence that the number of sectors in which two largest groups have expanded has hugely grown. That has meant that anyone who wants to be in that sector and grow fears that there’ll either be crushed or forced to sell off. So, your driver of growth, which is always new entrants that then grow rapidly because a few of them are really good, they prefer to relocate out or get into the usual real estate etc. I think that silent debt is having, undoubtedly in my mind, a crushing effect on the growth driving small and medium enterprises, especially the most dynamic firms in the leading sectors, because of these apprehensions. And it could be that the apprehensions in some cases are exaggerated, but in the end, why should I take that risk?The book is critical of the left in India, primarily in context of the West Bengal Left Front government and the intellectual influence over early economic policy. However, it does lament lack of things such as land reforms suggesting that it is not averse to redistribution or class struggle in principle. What is a bigger indictment of the left in India: its larger worldview or how it implemented it in praxis?DK: There are two things the left intellectuals fundamentally fail to understand. One is the left more than anyone had the view that the state had a critical role in socio-economic transformation in a deeply unequal and hierarchical society and yet made no efforts to improve the effectiveness of the state itself. If there’s one thing Communist governments are good at all over the world, it is primary education and public health. Look at West Bengal. Now, we can say in Kerala it was true, but in Kerala it was social movements that played a big role, not just the parties, right? The second is the left has never understood entrepreneurship. Look at state owned enterprises. None of our economist intellectuals have even once just a simple cost benefit analysis of the rate of return. We show that report after report, the government of India was way more aware of the state’s weaknesses than the intellectuals were prepared to be.AS: I would say that there’s a broader inability to honestly self-reflect on the failures of the state, and to acknowledge and therefore to remedy. I think it’s almost like it’s like a cognitive psychological failure of the left.Most of India’s policy choices have been elite driven, not responses to bottom-up pressures, the book says. Do you think there is a difference to be drawn here between the Indian and Chinese elite, the two outliers in the chart you have on democracy and economic growth?DK: I think this is the bigger puzzle. In the early decades, one could argue that the choices of heavy industrialisation etc. Were there because the policy making was elite. But that argument is harder and harder to make after the 1970s when you had regional parties, more and more OBC representation in Chief ministers, ministers, MLAs etc. Who had a much more agrarian rural background.What strikes me is that the base of transformation that we see in China, which is improving agricultural yields which is more important for long term prosperity than just increasing subsidised inputs like in India. I looked at when the Yadavs (Lalu Prasad and Mulayam Singh) came to power Bihar and Uttar Pradesh, what did they do for the veterinary sciences? You know, their social base is invested in cattle. The puzzle is that that democracy did increase representation but why did that representation not translate into economic policies that benefitted the larger base.AS: The question is how did they get away with it?DK: I think in the south (India), caste-based parties came after you had strong social movements and, in the north, caste politics came too early before the social movement. We point out in the book that many key public goods are co-produced with society. I can’t do solid waste management if everyone just chucks the garbage in the street. That just can’t be mandated by the state. It needs a deeper social consciousness. And in some ways, the primacy of electoral politics almost made social movements stillborn in the north.Let me end with one major disagreement with the book. “Luckily for India, the international order was broadly stable in the last 75 years, which allowed for a globalization that benefitted those developing countries that took advantage of it”, you say. Cold War, Sino-Soviet rift and the Sino-US détente, not to mention our own wars had a major impact on not just India but the entire geo-economic order. The relative tranquillity since the 1990s now seems to be fading away with Trump doing what he’s doing. The superpower rivalry is now in India’s neighbourhood and “the strategic ally” has demoted India in the pecking order.DK: Maybe there’s a misunderstanding. Even the Cold War, it produced an equilibrium where there was stability. There were no wars between great powers and in that sense. Of course, there were periods of instability like the oil shocks. Now, that doesn’t mean that India didn’t face (problems), in its neighbourhood. But what it faced in the neighbourhood is different from the broad international border. So that you’re absolutely right, and we know that in the 1960s, the wars, that really set back India, over the next decade. So, in some ways, maybe we are misreading each other here.AS: Devesh spoke about the security side of things, but in the economic side…and this is another critique of the left. This whole neoliberal order created opportunities for most developing countries including China and India. When the international left criticises the neoliberal era, because of things such as rise in inequality it is one thing. But when the Indian left rails against hyper-globalisation, I lose it because in terms of poverty reduction, breakdown of social hierarchies etc. It was a good time. So, in that sense we need to be very worried about this international economic order changing now, because, we are not a big internal market and cannot grow on the basis of it.