Politics of distribution

We today are finding out the consequences of a hung national election verdict of may 2004.
The nature of political discourse has taken a decisive turn towards redistribution politics.
Manmohan singh's regime has enjoyed the single longest spell of fast economic expansion in india since 1947 and what does the UPA contributed to economic reforms
a) a hare brained national rural employment guarantee program which
b) a new obc quota bill
c) a stalled SEZ program - this SEZ program could have had a serious transformational effect
d) dismantled APM mechanism which for three years has become the albatross around its neck

In short, this government has managed to fritter away the exceptionally strong growth momentum built and is unable to expand the opportunity set. The government chooses to be blind to past experiences and is increasingly making interventionist choices which have significant distortionary economic effects.
Listen to what Manmohan and PC have to say about industry recently- warnings about price cartels in a highly supply constrained scenario, a sudden envy over executive pay and finally post the stinging results of UP election, a meek Manmohan adding his squeek to providing reservation for economically backward upper castes. None of these provide comfort of the government being in touch with ground realities of a vast section of population wanting to get rich and that too soon. Redistribution will benefit only a small section - only rapid growth and labour reform can expand the pie to accomodate the aspirations of such a large population.
And then the brilliant insight of making agriculture viable - blind to data provided by 2 centuries industrialization which makes agriculture mechanised. The one that takes the cake is religion specific credit quotas for bank- credit risk reform of last 15 years is now turning full cycle.

There is no conviction and this government is deeply influenced by the need to distribute its wealth by its intervention through ham handed schemes under the influence of the Left and allies like DMK. The DMK infact can take credit for descending to obscene levels of redistribution politics by promising TV sets to voter. Redistribution economics has come back to haunt us and given coalition governments are here to stay, it is going to take a crisis to get the reform programs on track.