Dominant Political Interests and Economic Policy-Making

Dominant Political Interests and Economic Policy-Making Arun Ghosh FOR quite some time, many aspects of economic policy-making in India have defied logic. Even in terms of the avowed policy of a 'market friendly' approach to development and the 'globalisation' of the economy, the declared policy of the central government especially in three crucial areas, namely, the development of the hydrocarbons sector, the development of power supply, and the development of telecommunications not only flouts all theory but files in the face of worldwide experience and worldwide practice. Nor can one say that all these policies are invariably dictated by the World Bank/IMF In fact, the World Rank recently turned down an application lor a loan from Messrs ENRON of VS to set up a 2015 MW LNG-based thermal power station in Maharashtra: and one cannot therefore say that the policy is entirely World Bank dictated. That the ENRON project is going ahead with foreign funding from the US Eximbank. rupee financing from the IDBI, and a government of India guarantee to ENRON that its dues would be paid - despite the World Bank categorically turning down the project as 'unviable' and not in the best interests of the Maharashtra State Electricity Board, is clear evidence that there are other forces at work; that the dramatic speed with which policy decisions are getting taken implies deeper political reasons for many aspects of recent economic policymaking. For, there is no longer any debate, no longer even an at tempt to justify or explain the rationale of economic policy. The only plausible explanation is that the dominant political interests in the country find it to their advantage to pursue these policies, no matter what the consequences to the country. This is the hypothesis that would be sought to be established in this brief essay.