India aspires to be in the league of developed countries by 2047 and legitimately and deservedly so. Over the last three decades, the country has been on the reform path. Some of the reforms like jettisoning the licensing system, introduction of GST, and deregulation of banking and finance are highly consequential. There have been a series of incremental reforms as well and all these have cumulatively helped the country achieve a GDP of $4 trillion. But it is time for a long-term economic model/development path to take the country to the coveted developed nation status.

Globally two distinct economic models/systems are worth debating. One goes by the name Washington Consensus and the other, Beijing Consensus. The suggestion is not to replicate or copy-paste any one of these models, but to develop a roadmap that is appropriate to our own context and contingencies.

Washington Consensus

This model revolves around 10 policies popularly known as Decalogue. These principles are: fiscal discipline; re-prioritisation of public expenditure towards neglected fields with high economic returns, improving income distribution, and high investment in health and education; provide incentives and broaden tax base; positive real interest rate and market determined interest rates; competitive exchange rate; trade liberalisation and move towards a uniform tariff of around 10 per cent; foreign direct investment — foreign and domestic firms shall be allowed to compete on equal terms; privatisation; deregulation; and property rights.

This consensus was unveiled over two-and-a-half decades ago by British economist John Williamson reflecting the mood of the day in the Western markets. This consensus has the backing of the World Bank and IMF. The basic philosophy revolves around virtual combination of political democracy and free markets. But the assumption is that free markets deliver best economic prospects. It argues that government intervention misallocates resources and even represses creativity and as such disfavours. It is not hard to miss its emphasis on market fundamentalism for best outcomes.

The reforms in many poor and developing countries are inspired by the Washington Consensus with mixed results. There is no shortage of economists who dismiss these principles as an unjust set of neo-liberal policies and argue that economic development is too complex and serious to be left to the markets.

In India, the 1991 reforms and thereafter had some elements of the Washington Consensus.

Beijing Consensus

An alternative model for economic development and political principles goes by the name Beijing Consensus, a term coined by Joshua Cooper Ramo.

It is radically different from the Washington Consensus, not least in ideology. Its design emphasis is on: innovation; experimentation; equality; self-determination; and sustainable development.

As opposed to market fundamentalism in Washington Consensus, state capitalism is central to Beijing Consensus. Markets and competition also had a role. This model has delivered superior and fast economic growth in China and per capita income grew by a massive eight times in two decades. Contrary to popular belief the implementation is marked by great degree of decentralisation. Flexibility and adaptability are the other two important hallmarks and this is better explained by Deng Xiaoping’s Cat Theory — it does not matter whether the cat is black or white as long as it catches mice. It is less ideological and more data driven. It relies more on ground level survey to understand people’s needs rather than theoretical models and thus it is more focussed on improving the quality of life of ordinary citizens.

New Delhi Consensus

India successfully navigated the fallout of the global financial crisis and Covid 19. But it does not have a long-term development path or framework on the lines of the Washington and Beijing Consensuses. There are some elements of these Consensuses in our economic policies. However, over the last three decades, since the 1991 reforms, India has jettisoned its policy of the state controlling the commanding heights of the economy. Though not fully market oriented, markets have carved out a role to play, though a far cry from Washington Consensus standards.

Though several economic reforms have been initiated from time to time, they have been halting. In terms of intention and direction one may discern political bipartisanship, but the pace has been hindered by too many pauses, mostly driven by electoral cycles.

As India embarks on a new journey, it is time we have a broader inclusive economic development path that evolves into a New Delhi Consensus, which can be a model for the Global South like our Public Digital Infrastructure.

Such a Consensus will give a consistent and sustainable long-term direction with flexibility and adaptability. The Modi 3.0 government can probably draw on the experience of renowned, dissimilar economists like C Rangarajan, Arvind Panagariya and Raghuram Rajan to develop the New Delhi Consensus — essentially a political and economic roadmap for India to be a top developed country by 2047.

The Consensus would essentially be a compendium of strategies for mobilisation and allocation of resources and the design of institutions to navigate the same. The new narrative is shared prosperity. The government may constitute a bipartisan New Delhi Consensus Commission. This is not revival of the Planning Commission. State Governments are critical to success and they need to be involved. This must be top on the agenda of the first 100 days of Modi 3.0.

The writers are Mentor and Chairman, respectively, of SYFX Treasury Foundation