India is unreasonably poor. The 2015 International Monetary Fund ranking of countries places India at the 140th position with an annual per capita gross domestic product of only $1,600. For China the figures are 73rd and $8,000. India had the potential to be at least a middle-income country with negligible poverty by the turn of the century. Why has India failed to realize that potential despite the fact that Indians are as capable of creating wealth as any other people.

A country would have reason to be poor if it suffered adverse conditions such as periodic devastating natural disasters, protracted civil strife and foreign wars, or insufficient human and natural resource endowment—none of which is true for India. Assuming that the gods are not maliciously inclined towards India, we can rule out divine decree as the cause of India’s poverty.

That leaves us with economic policy as a proximate cause. Centuries of economic history teaches us that bad policies fail to produce economic growth. The claim here is that India’s lack of progress is due to the Constitution since that determines the nature of the government, which in turn dictates those policies.

India’s Constitution has the dubious distinction of being the largest in the world and consequently unreadable, and largely unread. It gives the government enormous powers to intervene in the economy, to enact laws that discriminate among citizens based on attributes such as religion and caste, restricts freedom of speech, and limits the right to property. In short, it allows deliberate political and economic exploitation.

Undue government interference in the economy politicizes the economy, which in turn leads to the corruption of politics. By contrast, the US Constitution is short, guarantees the freedom of speech, protects property rights, prohibits discrimination among citizens, and limits the power of the government.

The most salient distinction between the US and Indian Constitutions lies in the relationship between the people and the government the Constitutions define. The US Constitution places the people as the principal and the government as its agent. This is evidenced in the limits that the Constitution imposes on the government. The Indian Constitution places the government as the master and people as its servants—as can be expected of an essentially colonial government. Like the British government before it, post-1947 Indian governments took on the role of the master and imposed limits on the economic and civic freedoms of Indians.

India is a functioning democracy with routine peaceful transfer of power following elections. Each election raises the hope that with different political leaders, governance would improve. Sadly, regardless of which party or leaders are in power, the policies hardly change.

Nobel laureate economist James Buchanan wrote, “It is folly to think that ‘better men’ elected to office will help us much, that ‘better policy’ will turn things around here. We need, and must have, basic constitutional reform, which must, of course, be preceded by basic constitutional discourse and discussion."

Constitutions provide the structure of rules and constraints within which political decisions are made. Very large constitutions encoding a vast set of rules point to a “low trust" society. India is not inherently a low trust society but it became so because of the adversarial relationship between the government and the people, established by the British and continued post independence.

The British government was not popularly chosen but was imposed by force on an unwilling population. The laws, rules, regulations were all designed to have comprehensive, oppressive control over the people. There cannot be a relationship of trust between oppressor and oppressed. The seeds of mistrust sowed by the colonial British Raj have led to a paternalistic government which treats citizens as irresponsible, immature children.

The Constitution’s colonial origins give the government near omnipotent powers that are not consistent with a free society. It allows the government to interfere and restrict economic and civic freedoms. India needs a new Constitution that constrains governmental power and restricts it to the proper role of the government in a free society, namely to protect life, liberty and property of the citizens. The new Constitution must prohibit discrimination and must guarantee that all laws follow a generality norm that apply equally to all regardless of sex, religion, group affiliation or origin.

The legitimacy of the government of a free society depends on the consent of the governed. Consent by the people even in principle is meaningless if the Constitution is a mysterious document revered by all but understood by few. The new Constitution must be readable and be read by all. Therefore it must be in plain language and not in legalese.

For India’s trajectory to change towards prosperity that has been denied to it for so long, India needs a new Constitution that rolls back the power of the state and vests power in its people where it rightfully belongs in a constitutional republic.

Atanu Dey is an economist based in the US.

Published as part of a series on the book Liberalism in India: Past, Present and Future published recently by Centre for Civil Society. The book is a collection of essays written in honour of the late S.V. Raju.

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