Liberalism is about continuous improvement and our party is always on the lookout for ever better policy ideas. I therefore looked through the recent recommendations of thirteen economists led by Raghuram Rajan very carefully.

Our party agrees with the economists about labour reforms, removal of import tariffs and the need to reduce the fiscal deficit. But beyond such relatively obvious recommendations (which are already part of our manifesto), it was hard to identify any area of reform. In fact, the report almost appears to read like a government report, with feeble, cosmetic suggestions. It also promoted GST as a real reform, despite it being globally acknowledged as an extremely incompetent design and implementation. I was looking for a bolder approach, the best possible advice for India.

Since 1991, no government has put in the hard yards to deliver real reform. That is because of their reluctance to undertake governance reforms without which no further economic reform is possible. Instead, as Gurcharan Das pointed out, India continues to “grow at night” because the government has comprehensively failed in its core functions and the people have decided to simply ignore it.

The cluster of policies that India follows are best classified as socialism. This cluster includes incentives in the electoral and bureaucratic systems that motivate corruption and incompetence.

The first and most significant recommendation should have been to abolish socialism.

The lack of such a systems focus in the report is unfortunate, since it does recognise the abysmal performance of the government in virtually every area. It notes that “Our record on primary education is dismal”. But then goes on to recommend an expansion in the role of government instead of supporting private enterprise through vouchers. The report doesn’t explain why a government system that has so badly failed for 70 years will now suddenly become effective. Indeed, when India’s governments have failed to deliver even the most basic functions of security and justice, what makes anyone think that such governments can deliver education?

The report then says that “Healthcare is another area of major concern. In particular, the public system has largely been abandoned by the patients seeking regular primary care”. But then it wants more government (more government hospitals) instead of asking the government to focus only on the poor through a private health insurance voucher.

These economists do recognise widespread corruption and inefficiency, e.g. “Replace price support schemes that are costly (because of corruption and inefficiencies in procurement and storage)” but then call for a mere reduction (not abolition) of such schemes. They fail to explain why the government should be a businessman in the first place, buying and selling grain? Does it not have enough on its hand? Have they forgotten India’s age-old caution about “Jahaan ka raja vyapari, vahaan ki praja bhikari”?

The only reference to governance reforms in the report is a suggestion that India doesn’t have enough government employees. Our party totally disagrees. Adding more government employees without reforming the underlying incentives of our socialist system will only aggravate the misery of the poor.

The government in India is too large today – not necessarily because it has too many employees (in fact our party argues for a massive increase in police and judicial employees) but because it does too many things, and therefore does everything badly. One would have expected a sophisticated analysis of government employees’ incentives but they did not even ask the question.

They support the continuation of public sector banks with further taxpayer subsidy (further “capitalisation”). This is a terrible recommendation, which merely justifies the deep socialism that Indira Gandhi introduced into India.

In the end it almost felt that these are socialist economists who have so much faith in government (despite all evidence to the contrary) that they refuse to ask the most basic questions. As a result they have ended up recommending very small and cosmetic changes and even in some places have recommended an increase in the role of government.

Fortunately, Western governments are advised by real economists – those who begin all policy analysis by asking the most basic questions about the role of government. These economists should read the Victorian Guide to Regulation, which outlines how good policy is made. On the other hand, India doesn’t even have the most basic policy making capability. And the West only considers the very best economists. In my daily job as an economist in Australia I only consider the works of the very best economists the world has ever seen, such as Adam Smith, Bastiat, JS Mill, F.A. Hayek, Milton Friedman, James Buchanan, Ronald Coase, Hardold Demsetz and Vernon Smith, even Kautilya.

These economists also seem largely unaware of the advances in economics and practical governance across the world. I’ve already alluded to their poor advice on education, since they should have asked the government get out of managing education. But also on matters such as land titles, they are unaware that in state of Victoria in Australia, where I work, the government has privatised the land titles system – under regulatory oversight. There is no need for government to directly manage virtually anything. Let the government deliver security and justice, that would be good enough.

Instead of our party having learnt much from this report, these economists could consider studying Swarna Bharat Party’s manifesto carefully. If they do so they would learn how an accountable government can be created using the principles of new public management, and how honest leaders can be motivated to enter politics through state funding of elections on a per vote basis: which is the only way India’s world-highest levels of corruption can be eliminated. And they would learn how sound money can be created in India.

The most powerful predictor of a nation’s performance is its level of freedom. India’s levels of freedom are close to the lowest in the world. That is what these economists should have focused on, for economics means nothing if it is not a means to increase human liberty.

Fortunately, India is well placed today to leverage its virtually total collapse of government in all fields into a modern liberal government with the smallest footprint in the world, a government that just regulates the private sector appropriately and performs its core functions well. That is what our party is committed to delivering.