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Countries can be poor for a variety of reasons, such as insufficient natural resources, lack of human and cultural capital, periodic devastating natural disasters, protracted internal strife, routine foreign aggression, etc. None of these need to be “deserved” in any sense; it’s just bad luck. However, that’s not the case for India. India doesn't have to be pathetically poor. India’s poverty is by design.
After examining all the evidence, it is hard to avoid the conclusion that the greatest enemy of the Indian people is the government of India. The government makes sure that Indians remain poor by preventing them from creating wealth. India’s poverty is a consequence of a toxic mixture of the idiocy, greed, and stupidity of its policymakers. Why is this so? I believe the stage was set by the British.
The Anti-Prosperity Machine
The British imposed an extractive and exploitative government on India. They created the original "anti-prosperity machine". That is natural, expected, and entirely reasonable since the British were colonisers. Colonisers don't colonise out of altruism. They do it to exploit and extract – let me repeat that – to exploit and extract. The Indian government is a British creation, designed with the specific purpose of keeping the Indian people under its control.
After the British left, those who took over realised that as the new masters, the system suited them perfectly well. The idea that Indians gained freedom from government oppression in 1947 is not supported by evidence. India did become an independent country, but Indians did not gain those economic and civic freedoms that are necessary for generating wealth and economic prosperity. Indians are still enslaved by a government that differs only superficially from the British raj, not in substance. India is under what can be called British Raj 2.0.
Government Allowing DACOIT-y
China and the US have globe-spanning mega corporations. There’s no reason India can't have them too – except for the fact that the Indian government does what it can to stop the growth of Indian companies. Indians are still not free to create wealth. Raghav Bahl explains how Indian laws hobble Indian digital corporations.
Raghav Bahl writes:
Simply put, America and China enable their iconic founders to raise astronomical amounts of capital – cleverly, and ironically, Chinese companies scoop up landfills of dollars on American stock exchanges to build Chinese assets – even as they are assured of retaining control via specially designed financial instruments, structures, incentives, and rights.Raghav Bahl, Founder, Quintillion Media Pvt Ltd
But Indian Entrepreneurs Are Trussed Up…
Compared to such aggressive institutional backing, Indian entrepreneurs are trussed up in archaic laws.
Not allowed to issue differential voting shares.
Not allowed to issue non-voting stock.
Severely constrained in issuing and pricing cross-border quasi-equity/debt structures, perpetual bonds, warrants, convertibles, puts, calls, tracking stocks or options.
Cannot list on overseas exchanges unless the entity is listed in India (there has, lately, been a marginal, grudging relaxation of this).
Mantra Should Be: Empower And Liberate
Whenever I have tried to explain this critical difference between ownership and control to officials at the Reserve Bank of India, the Securities and Exchange Board of India, NITI Aayog and the Ministry of Finance, I have encountered blank expressions, followed by suspicion and disapproval. They just don’t get it.
What will bring about real and lasting change, a fundamental transformation in India? The periodic change of rulers of this or that political party is not working. What we have to do is change the rules of the game so that they force good economic policies regardless of who is in power.
Economic policies matter immensely. Nobel laureate economist Douglass North wrote, “Economic history is overwhelmingly a story of economies that failed to produce a set of economic rules of the game (with enforcement) that induce sustained economic growth.” India has had the misfortune of having leaders who don't have any clue that good policies matter.
(The author is an economist/author who teaches in the US. This is an opinion piece and the views expressed here are the author’s own. The Quint neither endorses nor is responsible for them. This piece was first published as on deesha.org and has been reproduced with modifications after obtaining permission from the author.)
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