The Singapore model of government could actually be the closest to what India needs

Jun 13 2013, 14:51   |   By Entrepreneur

By R Jagannathan

The death of Margaret Thatcher in the second week of April gives us an opportunity to acknowledge the intellectual contributions of one of the first exponents of radical right-wing ideas that changed the nature of politico-economic discourse in the western world in general, and the Anglo-Saxon part of it in particular. Before Thatcher, the death of Ronald Reagan in 2004 too gave us a similar opportunity, but it is worth recalling that Thatcher preceded Reagan by a good two years. However, what both leaders had in common was an ability to overturn both traditional conservative politics and challenge Left-wing ideas in the same decade. They also changed citizens' notions of what the state can or should do. Their ideas are of some relevance to India, which is still trying to figure out what the state should promise its citizens, and where it needs to get off their backs.

While Thatcher ruled Britain from 1979 to 1990, Reagan was US President from 1981 to 1989. Together, their ideas ruled the 1980s and changed the course of western history. In a sense, they could also be said to have influenced the rise of Chinese capitalism under Deng Xiaoping in post-Mao China, though Deng attained supreme power as 'paramount leader' even before Thatcher, in 1978, and stayed State mentor to Chinese capitalism till 1992, long after both had left the scene.

Put another way, Thatcher, Reagan and Deng were leaders of roughly the same era and together they shaped the re-emergence of capitalism as the dominant idea in global economics, even though they practiced varied versions of it. Today, there are as many versions of capitalism as there are countries-from the Nordic social-democratic model to the British model to the American model to the Chinese and south-east Asian models, including the Singaporean model created by Lee Kuan Yew.

Crony capitalism
There is, however, no clear Indian version of capitalism or the role of the state in Indian society, for the simple reason that no one has been articulating it with any degree of clarity.

What we have had in India is policy formulation by stealth-where the government, by and large, moves in the direction of lesser controls and more space for the private sector to grow, but without any kind of clear ideology on where to draw the line between state and business, and, more importantly, the state and the citizen.

The result has been a messy compromise with crony capitalism, which leaves behind a plethora of arbitrary controls that work to favor some businesses while deterring others. The various scams we witnessed under UPA-2G, Coalgate, etc.- are testimony to this reality.

Freebies galore
In the last nine years under the UPA, the state has taken on entirely new and onerous roles. It now hopes to directly address the issue of poverty and guarantee the basic needs to citizens driven by a charter of rights-Right to Education, Right to Work, Right to Food, Right to Healthcare, and now, even Right to Homesteads. The UPA's unstated ideology is thus to make the state omnipresent in people's lives as the ultimate guarantor of basic necessities. The regional parties have added ludicrous layers to this mai-baap culture by promising people freebies such as TV sets, laptops and even mangalsutras.

No clarity
In recent weeks, Narendra Modi, the BJP's likely prime ministerial nominee in 2014, has been talking of "less government, more governance"-but he has not expanded on this theme beyond generalities.

In fact, at a recent Network18 event in Delhi, where Modi was invited to expand on his theme (which we discussed in the last issue), the Gujarat Chief Minister did not offer Thatcher-like clarity or Reagan-like simplicity on shrinking the size of government, closing down loss-making public sector units or making labor laws easier. So while he would like to say that government has no business to be in business and cut red tape, one cannot expect a Modi-or any political party in India-to take on the unions like Thatcher (coal miners) or Reagan (air traffic controllers) did during their terms. Both rolled back the contours of the state by deregulation and privatisation.

Vote bank politics
Modi himself talked about 'rightsizing' government rather than downsizing it. In fact, India's biggest act of reducing the role of government happened in 1991 under Narasimha Rao and Manmohan Singh. After that, we have seen only minor acts of chipping away at the primacy of government; on the contrary, during the UPA regime, we have found government's role growing out of proportion to the economy's ability to support it.

If anything, the Congress party has shifted the country further leftwards, and no political party is willing to ideologically question it-except feebly. Almost no party opposes the Land Acquisition Bill or the Food Security Bill or any such dangerously expensive ideas for fear of losing votes.

What is now crystal clear is that India will never really produce a Thatcher or a Reagan, but there are good reasons for it. Only societies that have achieved a certain minimum level of wealth can produce a Thatcher or Reagan.

In India, the Left-Right political scale is relative and not absolute. Meaning, we can have parties that are Left or Right of one another, but not ideologically Right or Left in ways that compare with what a Thatcher or Reagan may have achieved.  Modi, for example, would not want to sack any government employee even if he serves no purpose. He would prefer to redeploy him elsewhere. He would not want loss-making public sector companies, but he talks more of 'professionalizing' them than privatization.

Politically, of course, this makes sense, for India is both under-governed and over-governed. The government is in places it should not be (running airlines and telephone companies), but it is not present in adequate force where it should be (law enforcement, regulation, etc).

If the purpose of government is to govern, clearly government has to grow its staffing numbers in areas like policing, the judiciary, and regulators. But it needs to get out of commercial involvements in Air India, railways, etc.

In the area of poverty alleviation, government has to be an enabler, and not too much of a direct intervener. It has to work on policies that create jobs and incomes, and protect the value of citizens' money by tackling inflation. It can help the ultra poor by short-term doles or unemployment allowance, but it should not create permanent dependence on the state.

Singapore model of government
Perhaps, the model closer to India's needs is neither Thatcher or Reagan, but Lee Kuan Yew of Singapore, who has created both a market-friendly state and one that tries to ensure minimum standards of living by investing state surpluses in public goods such as affordable housing, provision of public transport, effective policing and judicial services.

Singapore achieved high rates of growth and near first-world incomes not by asking the state to roll back, but by allowing it to grow where it needed to and encouraging the private sector where it could deliver better results. Lee could do this by running an authoritarian regime for several decades; the challenge for India's government is to adopt this model within a democratic construct.

Whether it is a Modi, a Nitish Kumar, a P Chidambaram or someone else in 2014, Thatcher and Reagan are really figures to draw inspiration from, not role models. India probably needs to look more closely at the Singapore model minus the authoritarian trappings for the right balance between state, business, society and citizen.

> Entrepreneur India May 2013
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