Identity Crisis – A liberalized India with close to 10% growth, and still socialist?

Fair warning – this has nothing to do with SAP or Enterprise Software !

I very well remember learning in the civics and political science class in the 80s that the Preamble to Indian constitution reads “WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC” . Little did I know then that the word SOCIALIST was added only in 1976, during the emergency rule under Indira Gandhi. I was taught to believe that it is a good thing that government will watch out actively to make sure there is no discrimination based on social  status, and that government will make sure wealth is redistributed amongst the people so every one is an equal. Although not stated explicitly by my teacher, somehow I also got the impression – along with many other friends of similar age – that capitalism is evil.

Indian economy got liberalized in early 90s when I was in college. We used to have endless debates in college to prove it is a terrible idea. And we were mostly wrong, as I know today – barring a few exceptions.

But why did India have such an affinity towards socialism? and then more narrowly on Marxism? I believe that had to happen due to the country being ruled by the British, and the rulers of the princely states who treated the people as slaves for the most part, and depriving them of social and economic opportunities to advance.  And then there was the brutal caste system – where based on the caste you were born, you were tagged for life to certain social and economic status.

Entire generations grew up with that thirst of equality – with many a leader laying down their life for the cause , and so it is not a surprise that all political parties had to pick up on that line of  ideology to establish themselves.  Some of these parties accuse each other of being right winged. It was only after moving to the US, I started realizing that what is called as right wing is still pretty left leaning according to US politics.

India got its independence in 1947. But 65 years later, we are still a socialist state according to the constitution. The supreme court disallowed a petition recently which requested the word socialist to be stricken from the constitution.  I find that even more interesting . Why would India call itself socialist today, with its liberalized economy and close to 10% growth?  The answer I think has more to do with politics than economics or sociology.

A vast portion of the population in India still live under poverty. But they vote ! And the ruling parties cannot afford to do anything that affects that vote bank. Commitment to the betterment poor is mandatory for any political manifesto.  Not sure how many people know this – but you can’t even register a political party in India, unless it explicitly states its allegiance to being “socialist”.

I actually think that is an excellent thing to do as well – the poor in India needs a way to get out of their misery. However, the implementation of policy is where I am not sure if there is any effectiveness to achieve that goal.

One such idea was the system of reservations based on caste that independent India started to have. The wise men who crafted this put a time boundary on it. Little did they know that it will get extended for ever. I have heard from my grand father, the Late Prof. R Easwara Pillai, about horror stories on how caste system was practiced in India. I think that reservation system was created for a good reason.  It was created at a time where there was serious correlation between caste and economic situation of a person. That is not true in 2012. There are plenty of people who are economically leading a splendid life, but still reaping the benefits of reservation by government due to their caste. They effectively decrease the chances of the reservation system helping the less economically privileged people from their own caste, and other castes.  The erstwhile “upper classes” in general seem to be not doing so well on economic front any more.  It might be poetic justice for what people did or did not do several decades ago – but will it ever bring social equality that it was meant to create?

Good and effective governance cannot happen in India without a clear stance on political ideology. In the pre-90s time, it was the government who decided who got a license to do what business. And the incumbent industry leaders did everything they could to make sure government will not let in a new competitor. It changed for the better after the 90s, and now I am not sure which direction it is headed any more.

A good example is the retroactive tax issue with Vodafone in India. If government and its agencies can act in such an arbitrary  manner, what is the incentive for any company to invest in India? And we have an ex-telecom minister and other officials who went to jail (some out on bail too) accused of massive fraud in allocating spectrum.  I will resist my urge to express my

Where else in the world would a minister in ruling coalition have to be sacked for raising rail fares which have not been raised in a decade? It happened only because of the populist ambitions of the leader of his party.  Railways make a lot of revenue, but not profitability. Trains are allocated solely based on political agenda, and with no respect to the availability of funding or infrastructure. Something has to take a hit – and I am afraid it is maintenance and safety that takes a hit.  But government will not privatize railways or even increase fares meaningfully to compensate for rising infrastructure and maintenance and safety costs.

The pilots of Air India are on strike here – the ones that fly international routes. To begin with, Air India is a loss making airline that is long overdue for restructuring. Every time I get into a flight – and I try every way to avoid it when I can – I keep praying that it lands without any loss of life and limb. I flew them yesterday, and it was horrible. Delayed for an hour, then wrong gates informed to passengers, then boarding without any sequence which further delayed take off, and the most bumpy landing I have had in 2012. I spent some time talking to a few pilots of AI in Bangalore, at a cafeteria in the airport. Their biggest fear seems to competition to their career advancement. They do not want other pilots trained in the new fleet, so that they can protect their jobs. I was polite to them – after all I was getting into an AI flight in few minutes – but left wondering that there is still a section in the world that can get away with that. I don’t have that luxury in my career, and I don’t know any one else who does personally. If I am not at the top of my game – someone else will take my place.

There is a flip side to this story. When my dad did his engineering degree in 60s- there were 3 colleges in the state. Everyone got a job right after school. When I went to my engineering degree in 90s, there were about 10 colleges in the state, but most of us got a job quickly. It was the liberal arts and pure science majors who did not always get a job at my time in school. I was talking to my cousin yesterday, who teaches at an Engineering College. She was lamenting the drop of quality in the students she gets. And the reason for that is that government opened up the higher education arena, and several colleges sprang up without sufficient quality. There is hardly any competition, and vast numbers of students fail to get a degree. Ironically,  only the most passionate students go for liberal arts and pure science degrees now, and consequently they do well in life.  This makes me wonder if opening up “everything” to private sector is all that bright an idea any more.

Another example is the increase in number of high rises that have spring up in my hometown. I grew up in a neighborhood called Belhaven Gardens, near Kaudiar in Trivandrum. It was a nice, quiet place with reasonably sized lots and houses, and every one knew each other. I drove by that house yesterday and could hardly recognize the area – it has so many high rises now in between the old houses, and hardly any privacy. God forbid if one of the high rises catches fire, I could not figure out how a fire engine can even reach it given there is no space left there between the walls and the buildings.  I swear I even saw a high rise that juts into the main road.  It must be an in-between phase between socialism and capitalism that my country is going through.

In short, there is an identity crisis – at least for me, an Indian who lives and works outside India.  Hopefully I will understand the nuances of how India operates more over time. I am fairly certain that I am not the only confused person on this topic, and I am also sure that there are serious flaws in how I view this situation due to my mixed views of spending parts of my life in different countries.