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Re: economic freedom



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What about social freedoms? The freedom from easily preventable diseases? 
Freedom from illiteracy? Indian children are dying *today* from diseases 
that cost only a few dollars to prevent.

The state must play a key role in the delivery of universal, free, 
compulsary education and free healthcare.

Are India's ruling classes willing to do this?


>From: Yazad Jal <yazad@ccsindia.org>
>Reply-To: debate@indiapolicy.org
>To: debate@indiapolicy.org
>Subject: economic freedom
>Date: Mon, 24 Jan 2000 10:38:28 -0800 (PST)
>
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>Please help make the Manifesto better, or accept it, and propagate it!
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>This is the unedited version of an op-ed article published in the
>Economic Times on 15 Jan 2000. For the Econ Times version see:
>
>http://www.economictimes.com/150100/15opin01.htm
>
>comments welcome!
>
>yazad jal
>
>
>A New Freedom Movement
>- Yazad Jal
>
>In India, the fight for independence and freedom from foreign rule began
>in earnest around 1900.  It took us less than fifty years after that to
>boot the British.  But were the next fifty years really the era of
>prosperity in India? India is the under-achiever of the 20th Century,
>with too many promises and too little progress.  What went wrong?  And
>more importantly, what can we do right?
>
>Any usual trot of excuses would list an exploding population, lack of
>education, poor infrastructure, inequality of income, corruption, the
>caste system, our "Indian mentality," etc.
>
>All of the above mislead us into making wrong policies.  Japan has a
>higher population density and is far richer.  Many countries in Africa
>have a far thinner population density and are poorer than India.  We
>have enough to sustain our one billion and more.  Kerala’s literacy rate
>is above 90% but its per capita income is half of Punjab’s whose
>literacy rate is barely 60%.  Is the "Indian mentality" such a terrible
>stumbling block?  Indians do very well all around the world, except in
>India itself!
>
>Looking deeper, the missing component that explains India’s poor
>progress is freedom.  Yes—freedom, economic freedom.  In 1947 we gained
>independence from an alien British Empire, but in 2000 we are still
>shackled by the omnipresent Indian State, a little better since 1991,
>but not enough.
>
>Canada’s Fraser Institute, along with 54 other institutes around the
>world including India’s Centre for Civil Society have published the
>Economic Freedom of the World: 2000 Annual Report.  The report is the
>fourth in a series that rates the level of economic freedom in 123
>countries.
>
>In the 2000 Report, Hong Kong and Singapore share the top rating of 9.4
>on a scale of 10.  New Zealand, the United States, and the United
>Kingdom make up the five freest economies in the world.  The least free
>economy is Myanmar (Burma), with the Democratic Republic of Congo
>(Zaire), Sierra Leone, Rwanda, and Madagascar ranking in the last five.
>India at 86th is barely above the bottom.
>
>There are astounding differences in economic and social outcomes between
>nations that are more economically free than those that are less free.
>Life expectancy is 20 years longer for people in the 24 most free
>countries (the top 20%) than in the 24 least free countries (the bottom
>20%).  Average income per person in the top 20% was $18,000 in 1997,
>compared to less than $2,000 for the bottom 20%.  No country with a
>persistently high economic freedom rating during the two decades failed
>to achieve a high level of income.  The extent of income inequality is
>lesser is the top 20% compared to any other segment.
>
>Even social indicators show a wide gap between the economically free and
>not-so-free.  The average Human Development Index for the top 20% is 0.9
>compared to less than 0.45 for the bottom 20% (maximum is 1).  For a
>variety of social and political indicators, economically freer countries
>fared better than the not-so-free.  Countries in the top 20% have far
>lower rates of adult illiteracy, poverty, and corruption.  They have
>better access to safe drinking water, more political rights and civil
>liberties, higher labour productivity, a more diverse ethnic structure.
>
>This isn’t a developed North versus underdeveloped South divide.
>Several countries from all areas in the world have improved remarkably
>in economic freedom, with corresponding benefits for their people.
>Chile's rating rose from 3.7 in 1975 to 8.2 in 1997.  Chile now ranks
>18th, up from 54th in 1975.  Thailand, with a score of 8.2, also ranked
>18th in 1997, rated 5.8 and ranked 36th in 1985.  The Phillipines scored
>4.9 in 1985 and 7.9 in 1997 and its ranking shot up from 67th to 31st.
>Peru ranked 108th with 2.3 in 1985 tripled its score to 7.9 and is
>ranked 31st in 1997. Between 1990 and 1997, El Salvador's rating rose
>from 5.0 to 8.3, and its ranking jumped from 67th to 14th.
>
>India’s progress has been rather slow; our score did improve from 4.1 to
>5.8 in the 90’s but that is not enough.  We need to dramatically improve
>in three major areas.
>
>Figures in brackets relate to India’s score in the relevant area in 1997
>
>The structure of our economy—(3.5).
>
>We have the government running far too many industries that should be
>wholly in private hands – from hotels to aluminium and steel factories.
>Private enterprise will do a far better job (and does so!) Price
>controls on a variety of areas distort economic activity and lead to
>exactly the opposite of what is intended. A classic example is the onion
>shortage in 1998.  The top marginal tax rate is 40% in India.  Better
>than earlier, but the plethora of confusing tax laws and poor policies
>exact a huge price. We need to privatise large swathes of our public
>sector, remove price controls and rationalise tax laws.
>
>Freedom to trade—(4.1)
>Since Nehruvian times there has been the mistaken conception that
>manufacturing is all-important and foreign trade should be side-stepped.
>The bogey of neo-colonialism resurfaces now as "swadeshi jagaran."  This
>attitude ignores basic human instinct as well as the rich tradition of
>Indian traders through millennia.  Barriers to trade deprive ordinary
>citizens, both producers and consumers of cheaper products. Import
>licences and quotas simply help those industries that are willing to pay
>off politicians for their economic protection.  We need a far more
>liberal trade policy and a reduction of import duties.
>
>Freedom of Exchange in Capital and Financial Markets—(3.8)
>"We’ve escaped the Asian Crises"–the smug smiles on Indian policy makers
>and pseudo-intellectuals were very evident during 1997-98.  Well, the
>East Asian economies have now recovered and are back on the prosperity
>track.  India still has exchange control.
>
>Economic freedom is not just an after dinner discussion topic over
>Belgian chocolates and Colombian coffee.  The lack of freedom and
>excessive regulation of the Indian State affects the poorest hardest.
>One small example is the knot of regulations covering cycle-rickshaw
>pullers in Delhi.  Delhi has approximately 2 lakh cycle-rickshaws that
>ply largely in residential colonies and university areas providing an
>affordable and available service compared to buses or auto-rickshaws.
>The Municipal Corporation of Delhi has mandated that rickshaw pullers
>have to be licensed and only 50,000 licences shall be given out.  In one
>fell sweep three-fourths of cycle-rickshaws are now illegal operations.
>Another seemingly irrational rule is that the holder of the
>cycle-rickshaw has to ply his cycle-rickshaw himself and cannot rent it
>out (corollary: one person can own only one cycle-rickshaw).  You can
>own multiple taxies or auto rickshaws or buses–but not the cheapest
>means of transport–the cycle-rickshaw!  These laws are manna from heaven
>for the police and petty bureaucracy who excel at squeezing bribes out
>of some of the poorest inhabitants of our capital city.  Economic
>freedom means removing such absurd laws and rules.
>
>We need a new freedom movement to remove the shackles still on us.
>
>Table: Economic Freedom in India
>                             		Year
>Components 			1970 	1980	1990 	1997
>I   Size of Government 		8.9 	8.7 	8.2 	8.0
>II  Structure of The Economy 	2.3 	1.7 	2.4 	3.5
>     and Use of Markets
>III Monetary Policy  		8.9 	8.1 	8.6 	8.7
>     and Price Stability
>IV  Freedom to Use Alternative 	0.0 	4.5 	4.0 	7.0
>     Currencies
>V   Legal Structure and  	3.2 	5.9 	4.0 	7.6
>     Property Rights
>VI  International Exchange: 	N/A 	0.7 	1.1	4.1
>     (Freedom to Trade with
>      Foreigners)
>VII Freedom of Exchange in 	3.6 	3.5 	3.5 	3.8
>     Capital and Financial Markets
>
>Weighted Average 		4.0 	4.3 	4.1 	5.8
>
>Ranking 			51 	77 	93 	86
>Total no. of countries ranked  	57 	107 	115 	123
>Percentile (best=99, worst=1) 	10.5 	28.0 	23.8 	30.1
>
>Source: Economic Freedom of the World: 2000 Annual Report.
>
>
>+-+-+-+-+-+-+-+-+-++-+-+-+-+-+-+-+-+-+-+-+-+-+
>Yazad Jal
>Research Associate, Centre for Civil Society
>B-12, Kailash Colony, New Delhi 110048, INDIA
>
>yazad@ccsindia.org or yazad@usa.net
>http://www.ccsindia.org
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>
>
>
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