Myth of the Modi Miracle

The stratospheric legend of Narendra Modi and his promised land of Economic Freedom does not really shine as his propaganda machine and miscellaneous industrialists push it down the nation’s throat. Modi’s Gujarat lags behind and much of the adulation is unwarranted
Mohan Guruswamy Delhi 

The moment of inflection for Narendra Modi’s regime in Gujarat, when it curved away from being viewed negatively after its cold-blooded and bloody conduct during the post-Godhra riots, was when in 2005 the Rajiv Gandhi Foundation, headed by Sonia Gandhi, ranked Gujarat under Modi as the the best in the country for something called “Economic Freedom”. To Modi, this was a match-winning self-goal gifted by a ruling party whose left hand obviously did not know what the right hand was doing. The Gujarat government was quick to take advantage of this deemed accolade from the ‘enemy’ by taking out full pages in the national newspapers, advertising this “honour”.

This was soon followed by Mamata Banerjee’s exertions at Singur, supported by the unlikely triumvirate of Anil Ambani, Amar Singh and Medha Patkar, which drove Ratan Tata and his Nano straight into the arms of  Modi. The legend of Modi and his promised land of Economic Freedom went stratospheric and still shines brightly from up there.

But, what is Economic Freedom?

The notion of Economic Freedom traces its origins to a series of seminars between 1986-94 sponsored by the Fraser Institute of Canada and hosted by Milton and Rose Friedman. Milton Friedman is a Nobel Prize winner in economics and his brand of economics stands at the most rightward fringe of the spectrum. His policy preferences have been criticised by a galaxy of economists, including John Galbraith and Amartya Sen, as insensitive to people and sensitive only to profit. The economics espoused by Friedman found its most sincere adherent in the dictatorial regime of Augusto Pinochet in Chile. Other prominent proponents of Economic Freedom are two of the most conservative US thinktanks: the Heritage Foundation and the Cato Institute.

It is therefore somewhat ironical that the Rajiv Gandhi Institute of Contemporary Studies (RGICS) of the Rajiv Gandhi Foundation got mixed up with something quite as dubious as Economic Freedom. One must wonder what the UPA’s National Advisory Council has to say about Economic Freedom. Or whether they even know about such things?

While Economic Freedom is packaged as a new idea with the Wall Street Journal happily celebrating its umpteenth anniversary, it is mostly a rehash of all that went with the Cold War ideology of free enterprise and free markets. Whatever it is, it is not an economics term that finds recognition in my copy of the MIT Dictionary of Economics. It is actually nothing but a brand of politics promoting an ideological lifestyle favoured by ultra-Rightists.

The Fraser Institute best describes it as follows: “Economic freedom is the extent to which one can pursue economic activity without interference from government. Economic freedom is built upon personal choice, voluntary exchange, the right to keep what you earn, and the security of your property rights.”

Simply stated, this means that good governments are those which let the rich do what they want, take all they want, keep all they want, and the people be damned. In short, the market will take care of everything. This is as dumb an ideology as that where the State is everything and takes care of all, better known as communism.

The annual Economic Freedom of the World Report, published by the Fraser Institute in conjunction with members of the Economic Freedom Network, ranks countries on their level of economic freedom. Incidentally, the RGICS is not a part of this network, which then begs the question as to why it did something so dumb as appearing to endorse the Modi government?

Last year’s rankings had India at 68 along with the Bahamas, Belize, Ghana, Tanzania and Tunisia and way below countries with few real freedoms like UAE (16), Kuwait (18), Oman (18), El Salvador (27), Panama (27) and Jordan (36). Thus, it seems that while Economic Freedom is a composite index of individual liberty, limited government and free markets, the weight accorded to individual freedoms is at best marginal. On a scale of 10, even top-ranking Hong Kong got 8.7, while the US got 8.2. Apparently, the standards demanded by the makers of Economic Freedom are much too high even for these holy centres of capitalism. 

The Heritage Foundation, in conjunction with the Wall Street Journal, seems to have a somewhat different scale but it comes to about the same conclusions. Thus, while their index considers Saudi Arabia to be mostly free, it considers India to be mostly unfree, like China! 

With respect to the composite Human Development Index (HDI), Gujarat’s performance is devastating. The HDI for Gujarat, in 2008, was 0.527, and it ranked 10th among the major states

Let’s get back to the Modi government, which is shouting itself hoarse from the rooftops that it is the best-governed state in India. That’s not even close to the truth because the RGICS study was not evaluating performance.

Economic Freedom is not about good government. It is not even about economic achievements. It is about the least government and looking most business-friendly. It is as if a policeman is to be judged by how crisp and clean his uniform is and not by his professional achievements.

This story is from the print issue of Hardnews: JULY 2012