Despite globalization, why is India still socialist?
August 31, 2010
India in the 21st century remains a country of stark contrasts and perhaps one of the biggest contrasts is how a country with a thoroughly globalized and thriving IT services and outsourcing industry can still be (officially) socialist. In fact, a recent opinion piece in the Wall Street Journal by Barun S. Mitra is well worth reading as he noted that in India, “we’re all (still) socialists.” His article began by noting that Indian politicians love to talk about “reform” and yet most of them still like to spend more money (Americans and Europeans, does this sound familiar?). Moreover and when it comes to spending US$22 billion in annual food or fertilizer subsidies or the rural employment guarantee scheme (and so on), there is little to no debate – despite the fact that India has a vibrant democracy around 50 political parties at the national level.
Why? Because as Barun pointed out, Indian politicians are all officially socialists. He then noted that during Indira Gandhi’s Emergency Rule in 1976, the 42nd Amendment to the Constitution was passed which added the words “socialist” and “secular” to the preamble. This was followed by a 1989 amendment to the Representation of People Act, which governs elections and political parties, that made it mandatory for all political parties to affirm the general constitution and hence “socialism.” However, dropping the word “socialist” is no easy legal or political matter – even if someone or some group started to clamor for it. And the few attempts to do so via the Supreme Court or the Elections Commission have been met with mixed results or with no results at all.
Nevertheless, India’s economy is still set to enter the 10% annual GDP growth phase, foreign multinationals are investing in the country and the IT services and outsourcing industries (which are largely separate from “socialist” India) continue to both thrive and expand globally. On the other hand, India’s political parties continue to see and reap the political benefits that result from large public-spending and subsidy programs that do not create many real economic opportunities and actually slow economic growth and exacerbate unemployment but also create plenty of opportunities for political patronage and political dependence by particular voting blocks or special interest groups.
Does this sound familiar? In a recent op-ed piece also written for the Wall Street Journal, Daniel Henninger described two visions for America’s future. One vision is that of Europe, which is best by a sovereign debt crisis that’s been building up for 50 years combined with long-term slow or stagnant economic growth while the other vision is that of emerging Asia, where taxes are low and wealth is rising. Henninger’s point is that America needs to decide which vision they want and whether or not they want to spend the next 50 years laboring to produce tax revenue to pay for the pensions of public workers along with other political promises.
Hence and we want to ask our readers, especially those who are Indian or based in India, what your vision is of India’s future: Is it one where socialism continues to hold back much of the country and prevent it from truly globalizing and reaching its full potential? Is socialism also holding back the IT services and outsourcing industries in any way or have the IT services and outsourcing industries somehow found a way to succeed and show what is possible if, and only if, India truly changes? Feel free to post your comments and thoughts below.