How the experts sank the UPA

SHEKHAR SWAMY | Updated on March 12, 2018 Published on June 10, 2014

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A government run by a bevy of economists with no sense of the ground reality made mistakes. Some really big ones

As the new government settles down to tackle the myriad problems confronting it, it’s worth taking a quick glance at the principal reasons for the spectacular unravelling of the UPA-2 government.

A defining characteristic of UPA-2 was that it was led by an economist and supported by prominent economists trained in major Western universities inside and outside the government. They approached the situation in India ‘rationally’, like a technical problem to be solved. They had ‘proven’ methods and techniques which they were convinced would address the people’s issues.

They went about their task with a sense of assuredness, stubbornly ignoring anything contrary to their training. To this group, the tradition and practice of generations prior to them were problems to be discarded; a ‘rational’ approach was the answer.

Rationalism and politics

The perils of such an approach to politics and government have been captured in a brilliant essay titled ‘Rationalism in Politics’ by Michael Oakeshott (first appeared in Cambridge Journal in 1947, later reprinted in a book). In a career spanning from 1929 to 1967, Oakeshott taught history in Cambridge, and was later a professor of political science at the London School of Economics.

The essay highlights the hubris that the technocrat surrounds himself with, approaching political issues as if they were engineering problems. Writing about human knowledge, Oakeshott makes the distinction between technical knowledge and practical knowledge. Technical knowledge is the formulation of a set of rules, a prescription that can be learnt and reapplied. It is what is written in a cookbook.

Practical knowledge is that which exists only in use, and is imparted or acquired over time. It is what makes a cook a master chef: the habits, skills, intuitions and traditions which the chef just knows. It is often the case that technocrats — and economists belong to this class — are so sure of their prefab ideas and prescriptions that they simplify reality and don’t factor in how society works.

Four disastrous decisions

Four actions of UPA-2 stand out as examples of their technocratic bias, with a huge negative impact on the psyche of the people.

Cooking gas at nearly ₹1,000: The economist-technocrat’s view is that subsidies on energy should be removed to control the Government’s finances. This is after all the prescription of the International Monetary Fund and the rating agencies, right? The global oil companies would also like the subsidies to go, since as long as oil and gas prices are regulated they don’t have a play in the country.

Cooking gas is in use in 100 million homes in the country. This is the one thing the lady of the house is totally dependent on. All of a sudden she was told that only six cylinders a year would be available at the price she was used to (later changed to nine and then twelve cylinders). For the rest of her needs she was required to pay a full price of nearly ₹1,000 per cylinder.

By this one step, the women in the country were reminded constantly that the UPA-2 government could not be trusted anymore to look after their basic needs. The backlash was inevitable. The practical issues of everyday life completely rejected the technocrat’s view.

FDI in multi-brand retail: The technocrats were convinced that foreign investment in retail was the only way to improve infrastructure in the country and eliminate waste in the system. This was at one level a spectacular admission of the failure of government to improve infrastructure.

At the more important practical level, the mass of people making a living by participating in the supply chain of the nation were told that their methods were outdated and they would now be required to compete with major multinational retailers.

A possible 100 million plus votes lined up against the UPA-2 on this issue.

Aadhaar and direct cash transfer: Unique identification cards was the magic bullet. With this the Government had the means to undertake direct cash transfer to the needy instead of placing subsidised goods in mass distribution systems with their attendant problems of leakage. People could get cash in their accounts and buy their basic needs at market prices. What could have beeen a more elegant solution?

Lost in transfer

Even assuming that the transfer was well implemented, what the beneficiaries saw was an escalation of prices of essential goods that had until then been kept low. What was the guarantee at the family level that the cash received would be used to purchase essential goods? None. A major effort lost its way in the practical world.

Krishna Godavari basin gas price: Just before the elections, UPA-2 announced a near doubling of the price of gas to be paid to the nation’s largest corporate. The technocrat’s logic was that such pricing was needed to encourage investment in the oil and gas sector.

Maybe, this makes sense. But the people heaved a collective gasp. As far as they were concerned, here was another brazen effort at supporting big business against the common man. A practical turn-off that no amount of reasoning was going to persuade otherwise.

The Prime Minister has promised sab ka vikaas, development for all. While receiving ready-mix solutions offered by technician-economists, the Government should put them through the filter of ground realities. India-specific ground-up solutions are the answer, not the kind of rationalism that undid UPA-2.

The writer is group CEO of RK Swamy Hansa. The views are personal

Published on June 10, 2014
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