India's Path to Economic Freedom
MUMBAI - Asia Society India Centre hosted Edwin Feulner, President of the Heritage Foundation, in conversation with Kumar Ketkar, editor of Loksatta. The focus of the discussion was the Economic Freedom Index, a yearly survey that examines 10 factors (among them business, trade, and fiscal freedom, government size, property rights, and freedom from corruption)to determine how much "economic freedom" a given country has. Feulner posited this economic freedom as the impetus for societal transformation and improved quality of life.
Feulner argued that economic intervention by the state always takes place on behalf of wealthy elites, and never has the intended effect of helping those in real need. The best way to address that group's needs is to improve its economic freedom—but according to him, two thirds of the world’s population’s economic freedom is inhibited by bureaucracy, limited credit, and corruption.
A little reform, however, can go a long way. Feulner cited the case of India, where economic reforms in the early 1990s led directly to India’s current economic growth by allowing for new trade and investment. He cautioned, however, that greater reforms are required in order to sustain this growth, adding that India’s inadequate infrastructure, complex bureaucracy, and slow rate of privatization will continue to hinder both its economic growth and economic freedom. (India currently occupies 115 out of 157 ranked countries on the Heritage Foundation’s Index.)
Feulner suggested certain reforms that he sees as ensuring India's continued economic growth, chief among them the need to lower trade barriers. When those are low, he explained, a wider variety of cheaper goods and services are available in the marketplace, items can be produced more efficiently, and domestic products can also be sold in more markets. Further, an open market attracts more investment. All these factors add up to long-term economic growth. Feulner concluded by stressing that protectionism holds off development, while economic freedom leads to prosperity.
Reported by Purwa Bansod, Asia Society India Centre