Always Be Reforming
A thread by Murtaza Syed, a Pakistani economist who temporarily headed the country’s central bank last year, has gone viral on twitter. The thread looked back at Manmohan Singh’s seizing of the moment 30 years ago as India’s Finance Minister to unleash a wave of reforms after the country had been held back for decades by the Licence Raj and the Hindu Rate of Growth:
https://twitter.com/murtazahsyed/status/1672857048986583040?s=20
The whole thread is highly recommended and when you’re done, you can read the famous budget speech delivered by Dr. Singh as well. It’s a remarkable speech especially because the mild mannered Dr. Singh — India’s first Sikh PM — was an unlikely candidate to shake the country out of its stupor (he delivered the speech in July 1991 after being appointed by Prime Minister Rao the month before). He had also been a key player in the very economic model he sought to dismantle. You might say he changed his mind after the facts changed.
As the thread pointed out, his Congress Party lost the next election but at that point the reforms had kicked in to the point they had become difficult to reverse. Voters can be funny like that — they don’t like what you did so they kick you out of office but they keep the thing you did anyway. Dr. Singh would of course return to office and go on to become one of India’s longest ever serving Prime Ministers.
Murtaza Syed naturally looks at Dr. Singh’s reforms wistfully and wishes that Pakistan would one day have its own such moment. I sympathise as someone who has always wished Nigeria might have such a moment, too.
But what about India itself? The evidence suggests that the need for a Dr. Singh never goes away as people settle into habits, many of them harmful.
Here was Raghu Rajan, India’s former Reserve Bank governor earlier this year:
The growth in the third quarter of the previous financial year was 5.2 per cent.
“Of course, the optimists will point to the upward revisions in past GDP numbers, but I am worried about the sequential slowdown. With the private sector unwilling to invest, the RBI still hiking rates, and global growth likely to slow later in the year, I am not sure where we find additional growth momentum,” Rajan said in an email interview to PTI.
On Indian growth in fiscal 2023–24, Rajan said, “I am worried that earlier we would be lucky if we hit 5 per cent growth. The latest October-December Indian GDP numbers (4.4 per cent on year ago and 1 per cent relative to the previous quarter) suggest slowing growth from the heady numbers in the first half of the year.
“My fears were not misplaced. The RBI projects an even lower 4.2 per cent for the last quarter of this fiscal. At this point, the average annual growth of the October-December quarter relative to the similar pre-pandemic quarter 3 years ago is 3.7 per cent.
“This is dangerously close to our old Hindu rate of growth! We must do better.” The government, he said, was doing its bit on infrastructure investment but its manufacturing thrust is yet to pay dividends.
In his Troilus and Cressida play, Shakespeare puts one of my favourite lines of his in the mouth of Cressida — Things won are done, joy’s soul lies in the doing. That is to say, one should as much as possible derive more joy from doing something than from completing it.
No where is this truer than when it comes to economic reforms. Old habits die hard and ‘familiar spirits’ can find a way to come back. As much as Pakistan would like to be like India in this regard, no one needs to be like India more than India itself.
Always be reforming.