## Wednesday, February 02, 2011

### India: a nascent social democracy?

As India embarks on the early stages of middle income, there is interest in a more expansive outlay of expenditure for the government. This motivates the question: Can India now embark on constructing an array of welfare programs, which would ultimately add up to an approximation to a welfare state or a social democracy?

Vijay Kelkar and I wrote a paper Indian social democracy: The resource perspective on this question, for the 10th `Indira Gandhi Conference' which took place in New Delhi recently.

#### 2 comments:

1. Instead of promoting small government, economic freedom, and productive and high employment capitalistic society in a nation struggling to get out of from 5-decades of heavy hand of socialism, it's sad to see smart folks like Kelkar and yourself are "planning" for a "social democracy" of high taxes, low productivity, arbitrary application of power, and perpetual corruption setting a route to permanent third tier nation.

Euroland could gild from pre-war industrialization and post-war growth into social democracy that it's struggling with currently. India doesn't have that luxury.

If politicians want more outlays for bigger leakages, instead of giving it shape and reason, how about fighting it with data and research and commonsense.

2. Very well thought out and lucid. But I would question some of the assumptions (not because I suspect these assumptions are incorrect but merely because they are too many variables to consider to guarantee that they would hold good in the Indian context). For example, the point made about lowering the tax rate to increase the base of tax paying Indians- is there any empirical proof of this from similar economies/societies across the world? There has to be a substantive increase in the number of tax payers to merit a cut in tax rates. Also, knowing that many of these suggestions are "bitter pills" for our polity, is there a intermediate level of reforms that could be put in place before making a final jump to reforms 2.0?

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