There is a way to turn the Wuhan Coronavirus into an opportunity. The crisis has finally given the Indian state the license to cut through the license quota permit raj that has been India’s greatest bane. And it is thrilling to see Uttar Pradesh Chief Minister Yogi Adityanath rise to the challenge.
Big Bang reform. Just three labor laws remain on the books, dealing with basics such as protection of women and children, rights to timely payment of wages and workers compensation. But beyond that, nothing. Uttar Pradesh is open for business.
Welfare schemes, direct benefit transfers, etc, all have their place in keeping India afloat in crisis times. But those are more like life boats. There will never be an alternative to wealth creation. To get India back on track after the lockdown, the only way is to get business back on its feet.
The big bang labor reforms come just days after Yogi Adityanath announced sweeping changes to laws dealing with agricultural markets.
To understand what is happening, one has to have a working knowledge of the agricultural procurement system in our country. Generally speaking, a farmer must bring their produce to a board known as an Agricultural Produce Market Committee (APMC) in order to be sold. In theory, the purpose of such a board is to protect farmers from “exploitation” by private purchasers. In practice, like every other socialist setup, these boards are hotspots of corruption by local politicians. Not surprising, because they have immense power over the lives of farmers.
The new laws in Uttar Pradesh now exempt 46 agricultural items from these boards. First of all, they allow direct procurement from farmers. Then, they let the private sector to operate mandis of their own. Additionally existing warehouses and cold storages can now operate as market places in themselves. And farmers will no longer be at the mercy of the local APMC, because they have a single license to sell at any marketplace in the state.
In other words, this shakes up the village economy and strikes at the heart of corruption ridden monopolies.
It must be noted that Madhya Pradesh passed a similar law just days ago.
A crisis is also an opportunity to change the world order. At the end of World War 2, the European empires collapsed and a vast swathe of independent nations emerged, from Asia to Africa. Among them, our own. The United States seized the moment and assumed full leadership position in the world. Over the next several decades, the US established itself as the global leader in industry, innovation and culture.
Let’s be real. As the world entered a period of overall peace (however tense), following World War 2, India missed out. We could have used our newfound independence to become like Singapore. But we did not. Not just Singapore: one by one the ‘Asian tiger economies’ left us in the dust. We were too caught up in socialist superstitions to notice.
The boom that China experienced after 1979 could well have happened in India. Sigh.
There are three further observations to make here. First, over the next few days, you will see comrades begin an unprecedented level of chest-beating over these agricultural and labor law reforms. We have to be wary of their propaganda and guard against it. In a democracy, a government may be forced to respond to perception as much as it has to respond to reality. The comrades are very well trained at catching eyeballs with images and videos.
I say ‘trained’ for a reason. Obviously, there are vested interests of foreign governments in holding India back. They have a well paid and well trained shadow army of “activists” operating within India. Which foreign government? Let’s just say a certain country that shares a land border with India.
Second, in order to develop towards a $5 trillion economy, India needs more “industrialized states.” Roughly speaking, India’s post 1991 economic boom has been concentrated in some states in the West and the South. To become a superpower, we are going to need more and bigger engines. And they don’t come any bigger than Uttar Pradesh with its 23 crore population. With a revamped legal framework for labor, land and agriculture, Uttar Pradesh has a huge opportunity to become an engine for wealth creation.
Third, in Uttar Pradesh, we see the clear advantage of having a powerful government with a big mandate. This cushions the government from short sighted political interests. And gives it room to make big decisions, bring about structural change. On the other end, you have the shaky multi-party government in Maharashtra, where the drivers seat is all but empty.
At the moment, nobody seems to like the year 2020. A hundred years from now, people will remember 2020 as the year of the virus. But can we turn it around? The world remembers 1979 as the year China woke up. Can we make 2020 the year that India seized its destiny?