The passage of the Finance Bill has led to optimistic projections by industry of a GDP growth rate matching China's. It is surely a sign of the times that similar exuberance cannot be found for the impact of the dream budget on the country's social indices which by any yardstick, Chinese or sub-Saharan, are shameful. Manmohan Singh had the right idea when he proposed himself for HRD minister next time. That department desperately needs some of the brilliance and energy now concentrated in the economic ministries which have produced such a policy blitz since January.

The social sectors need the same kind of passion for reform, the conceptual underpinning, the advocates and propagandists that market capitalism in India enjoys in excess today. What prevails instead is a sort of passive acceptance of the questionable theory that economic growth by itself will improve living conditions for all the people. But as Amartya Sen and Jean Dreze, among others, argue, governments must do more not less under a market economy to improve living standards and economic opportunities.

Politicians generally have proved incapable of setting the agenda. What is more, with the depths of their greed and self-absorption revealed, they are losing even the authority to intervene. If they did not already know this, they ought to listen to what was said at the annual conference of the Confederation of Indian Industry. On his first day out as India's new Prime Minister, I. K. Gujral was told by the outgoing president of the CII that politics was irrelevant, a mere ``sideshow''; the economy and, by implication, corporate managers, were centrestage. Twisting the knife deeper, others proposed greater statutory powers for civil servants and more public sector accountability to shareholders, less to Parliament, more concern with profits, less with social objectives.

As it happened, it took plain old-fashioned politicians to restore a sense of balance. Gujral was able to puncture the self-importance of captains of industry, Congress and CPI leaders shot down the idea of raising civil servants above their political masters and L. K. Advani said the dismal quality of life of a large proportion of the people of India was unacceptable.

The feelings of CII delegates are not the unique product of that energetic business lobby. Other movers and shakers share them. When Kesri's desperate games threatened to undo Chidambaram's tax-cutting budget, a startlingly radical notion surfaced. Not only should the government get off their backs and the economy be insulated from petty politicking. They think the economy and politics should run on separate tracks. Some politicians (sheepishly?) subscribe to this extreme form of free-market liberalism. The fact that stock markets bore up well and new economic policies continued to flow out of the government during the hiatus between UF coalitions Mark 1 and 2 reinforces the myth of two worlds hermetically sealed from each other. The premise of a consensus on economic development so overwhelming and comprehensive as to admit of no disputes requiring political mediation is convenient but false. Market capitalism is not known to come in one universally popular flavour. And, at this stage, when 350 million Indians have no way of getting much directly out of the market, politicians are needed to provide their passage to the promised land. Politics may appear, on the basis of what often goes on in Delhi and the States, to be no more than a series of gladiatorial contests. But even so narrowly defined, politics is of consequence to the economy. The winners can and do make or mar the economic climate, confidence and policies.

What the claim that the economy is separable from politics proves is not the nature of the consensus on reform but the shift of power from politicians and bureaucrats to business and industry. With only slight exaggeration, the consensus on the budget can be said to be about meeting the demands of business, industry and the middle classes. The clout these sectors exercise is the logical consequence of market reforms and, by and large, is recognised as positive for economic growth. But when that shift of power is accompanied by a feeble Parliament and weak political parties, all the consequences are not healthy. Policy-making lends itself in turn to the economic interests of dominant groups and to political adventurism. And when governments are unable to carry out their social responsibilities, they fail to further economic growth in the truest sense of benefiting all the people.

If Parliament and the political executive are dysfunctional, the radical free-market argument persists, let those who understand good economics make the rules. Good economics here is what is good for chambers of commerce and industry and associations of exporters, for those Chidambaram describes as ``productive sectors''. Where does this leave the unproductive and inarticulate who consume only what they themselves can produce, who are losing their fragile claim on government support because grasping politicians have given welfare a bad name, who find their 15 paise entitlement in every anti-poverty rupee whittled down under the rubric of deficit cutting? For years the victims of distorted socialism, the poor are now becoming the victims of another monolithic idea.

Since governments continue to fail to meet health and education and poverty-net responsibilities, surely it would be good economics, firstly, for the new centres of power in the business world to demand more focussed official intervention in those sectors and, secondly, to assume some social obligations themselves. On the first, the belief seems to be, less government is good for everyone. As for the second, if a recent draft document on corporate governance in India is any guide, the model for corporates is a sort of ``Anglo Saxon'' selfishness. It shows a definite disinclination to recognise any obligation to the community in which corporates are based or any constituency other than shareholders.

An arrangement which allows one half of the country to march ahead but leaves the other immobilised in poverty is clearly unsustainable. One sing of serious trouble has surfaced. The new president of the CII is deeply disturbed about the effect on new investment of what he says is deteriorating law and order throughout the country. He calls for more political will and firm government action on that front.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.