If democracy is best epitomised by freedom of choice, then India never became a democracy economically. While we attained our political freedom when we became a sovereign democratic republic 63 years ago, our democracy as yet remains incomplete. Yes, we gained the right to vote and decide who governs us, we enjoy free speech, the right to work anywhere in India, a free press and the right to express our opinions feely. As a nation, we take our democracy seriously and we are proud of it — in fact, how many times we have heard it said that we are the largest democracy in the world.

But isn’t it strange that when it comes to the economic sphere, we do not have comparable freedom or choice? For example, we have no choice when it comes to train travel — Indian Railways is the only option and it is owned and managed by the Government. We can choose the banks we want to bank with, but 80 per cent of the banking system is owned and managed by the Government. We are forced to buy power from monopolistic distribution companies owned mostly by State governments. Power generation is mostly controlled by government companies. Generating companies in turn have to buy coal from a monopolistic Coal India — a government company. Where’s the freedom of choice for the common man?

Insurance has now been privatised but the Life Insurance Corporation with an 80 per cent market share is a government-owned company. All of us can buy petrol only from government-owned oil refining and marketing companies. The biggest oil exploration company is the government-owned ONGC (Oil and Natural Gas Corporation Ltd). There are steel-producing companies, mining companies, telephone companies, water utilities, equipment makers, an airline, hotels, and many other companies and whole sectors, in fact, that are still controlled, managed and owned by the Government. One could loosely say that notwithstanding the vibrancy of the private sector in India, almost half of the Indian economy is in government hands. Even in sectors where government companies do not rule the roost, the Government still wields massive influence through approvals, control over the regulatory framework, allocation policies, clearances and licences, and so on.

Many reasons

One way or the other, therefore, it can be argued that India has not yet made the transition from a political democracy to an economic one. There are many reasons for this. First, many genuinely believe that only the government should operate in many sectors deemed to be in the “public interest”. This is usually a euphemism for controlling prices for the benefit of the aam aadmi but it only results in increasingly poor quality services and rising subsidies.

The second reason is that government control permits rent-seeking by those in power. Third, and most surprisingly, there is no real driver or imperative for change.

Our society has grown so accustomed to this lack of choice that we passively accept government control of vast swathes of the economy and the lack of choice and poor quality that comes with it.

We would protest mightily if our right to vote was taken away. We would not tolerate any infringement on our religious rights or our freedom of expression. The media reacts angrily if there is even a hint of curbing of their rights. We have even seen the evolution of a strong anti-corruption movement, and now the incipient development of a movement for gender equality and women’s protection.

Why not open up?

But surprisingly, when it comes to economic rights and freedom, there is no such movement, or even the beginnings of one. For example, why should the Railways not be privatised into multiple rail companies competing with each other on the basis of quality of service? Why should Coal India not be split into multiple entities and they, along with the rest of the private sector, be asked to compete for mining leases. Why should Air India, NTPC, BHEL, ONGC, and so on not be privatised and then sink or swim like any other company? Why should the Government not sell its stakes in various banks and actually do its job of regulating the sector through the RBI? Why should oil companies not be allowed to buy and sell petrol and diesel freely at market-determined prices? Why should discoms not compete with each other to provide electricity to households who have the choice to buy from different entities?

All this will require time, effort and substantial change in mindset. However, currently there is little dialogue and pressure within our system for this to happen. Nobody is agitating at Jantar Mantar or India Gate, for example. The media, economists and people seem to accept our current economic system as a fait accompli . And all of us tolerate the inefficiencies of government control such as over-manning, poor services, or rent-seeking. There are no pressure groups arguing for a reduction in government’s role and influence in the economy. In fact, quite the opposite.

Ossified status quo

This issue goes above and beyond politics. All our political parties need to think beyond the existing ossified status quo and only incrementally changing economic policies. And we the people need to re-think our own economic expectations from government. Ultimately, more economic freedom will result in more choice, a more efficient economy, with higher growth rates, a slimmer government focussed better on its core tasks of regulation and social welfare.

Rather than be distracted by mundane economic minutiae the Government can focus on other critical issues such as educating children, keeping them healthy and nourished, protecting our women, manning our borders, and so on.

(The author is Chairman and CEO, ReNew Power Ventures, Gurgaon.)

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