Thoughts on economics and liberty

Preparing for my talk for the Horasis conference – draft notes for comment

I have started thinking about my talk at the Horasis conference in June. I’ll probably get 3-5 minutes to talk. This is a placeholder post – I’ll review and improve the structure of the talk till I think I’ve got it right.

Happy for your inputs. And this is good material to share around, anyway. My message is for EVERYONE in India, not just for the participants at the Horasis conference.



I want to start with the story of Nehru and Lee Kuan Yew. In his official biography JRD Tata said that Nehru had told him that he hated the mention of the very word word profit. Nehru insisted. He said: ‘Never talk to me about the word profit; it is a dirty word.’”

At around the same time, Lee Kuan Yew in Singapore was telling his people that “You make profit into a dirty word and Singapore dies.”


What you see around you – here Switzerland – is almost entirely attributable to one thing: to liberty. And that includes respect for private enterprise.

All successful countries allow people to do most of the things themselves. The government does only a few things, the essential governance and infrastructure. This is the simple secret of success.

India was lucky to get Ambedkar’s Constitution. As a result, the idea of liberty is enshrined in the Constitution. Without the protections Ambedkar included in the Constitution, India would have been a failed state by now.

But that Constitution has been seriously eroded by the socialists. Every aspect of India has been taken over and distorted by socialist ideas.


I want to talk briefly about one impact of socialism which very few people understand. But it is the most insidious impact and costs India very dearly. This is the way the socialist incentives have infiltrated the design of our governance system.

There was a very good reason why Chankya wrote in Arthashastra that Ministers and senior officials should be paid very highly. There was a very good reason why Lee Kuan Yew insisted on very high salaries for himself, his ministers, and bureaucrats of Singapore.

But in India Nehru’s model drove down the wages of ministers and bureaucrats to a level that forced them into corruption. Our politicians not only have to spend crores of rupees to get elected, they are then paid a miniscule amount. Our bureaucrats are not only paid poorly, they are tenured for life and no one can remove them for non-performance.

I have explained this at great length in my book, Breaking Free of Nehru. Basically, India’s governance system is designed for corruption. Our politicians are necessarily corrupt, so also are most of our bureaucrats. And on top of these politicians and bureaucrats are necessarily incompetent.

I have worked both in the Indian system (in the IAS) and in the Australian system. I would say that only a very small fraction of the IAS would qualify to enter the basic policy roles in government in Australia, and an even smaller fraction would move up the ladder to senior positions. The competence of the Australian bureaucracy is so superior to the Indian, it is simply not comparable.

We now have worst possible governance system in the world. This is one of the most devious and deadly contributions of socialism to India.


In January 2001 I resigned from the IAS. It was abundantly clear that the system simply could not be reformed from within. There was no choice but to change the way India thinks. This had to be political, a fight for liberty.

The last person to fight against socialism in India was Rajaji. In 1959, nearly six decades ago, Rajaji was 80 years old but deemed it necessary to fight Nehru’s socialist obsession. Rajaji’s Swatantra Party got 44 seats in Parliament in 1967 – the same as the Congress has today (with its 45 seats).

But this voice of liberty died with Rajaji’s death. Even after the liberalisation of the 1990s no one came forward to talk about liberty. So liberalisation has stalled.

In the meanwhile formerly communist countries like China and Vietnam have gone far ahead in terms of market friendly policies and are flourishing.

I spent most of the last 15 years trying to work with other parties. That did not work. No party is liberal in any genuine sense.


Finally, in 2013, I decided to proceed with creation of a new party – Swarna Bharat Party. It is India’s first genuinely liberal party. We have an outstanding manifesto, that takes into account the world’s best practice.

Since July 2016 we have started reaching out to the people. In April 2017 I wrote a central op-ed for the Times of India on the party. I have a few copies with me if you wish to read it.

SBP is offering India an unprecedented vision – of total change and transformation that will make it a Golden India. I believe India can become the world’s richest and best governed nation within one generation, with most changes taking place in the first three years of SBP’s governance.

Gurcharan Das, the author of India Unbound has joined SBP – a clear signal that there is no other party with this kind of leadership.

I’m grateful to Frank Ricther for identifying SBP in its very early stages and inviting me to speak at this conference.


Anyway, so what next?

My message today is simple: We have act.

I invite you to step forward and get involved. There is no possibility of your achieving your potential under the governance system that India has today.

For the first few years, the party’s task will mainly be educational – to identify and build leaders, to enter the debates across the country.

How can you connect with the party? You can go to its website and write to

Or you can write to me at and we can discuss over phone and someone from the party can meet  you. I am in India for a short time from next week, and if possible can meet some of you at length in India.

Once again, I’m grateful to Frank for inviting me to introduce you to Swarna Bharat Party. He is not involved in the party in any way, but perhaps thought it worthwhile for you to get to know about the party.

I’d be happy to answer any questions you may have.



India is one of the world’s worst governed countries. There is chronic inefficiency in every aspect of governance. There is chronic corruption (including in the judiciary). The rule of law is very weak. There is no fundamental right to property. The people can’t count on the courts to enforce contracts, adjudicate disputes, protect property rights, and punish fraud and other crimes. The justice system is slow and heavily backlogged. The bureaucracy is extremely corrupt and inefficient. Take the example of James Tooley, one of the brightest thinkers on education the world has ever produced. And what does India do? It imprisons him on bogus charges. He wrote about his experience in a book Imprisoned in India.

Sixty years of socialism has left India with grinding poverty and rotting infrastructure. Mumbai is awash in slums, trains are crammed to capacity. The worst hit by India’s socialist policies are the poorest of the poor. The antidote to poverty is free-market capitalism and free trade. Socialism creates and promotes poverty.

The country remains trapped in a timewarp. Religious views are dictating policy.

Doing business in India is a huge challenge. Businesses face hurdles at every step, that raise the cost of doing business in India. To make matters worse, onerous labour laws prevent business owners from formally hiring workers. Vast swathes of promising sectors such as the mining industry effectively remain closed to business. The the vast overwhelming majority of businesses and employment are in the informal sector, to minimise interaction with the corrupt bureaucracy.

India continues to underperform in attracting foreign investment. Investing in India is high risk business. Indians have been themselves taking their money abroad since the systems in India prevent them from an honest living. “Make in India” can only work after India’s governance is modernised and India’s leadership takes the people out of their medieval mindset. We need to open up the economy to all forms of trade and investment. We need foreign investment in retail, infrastructure and service industries.



Sanjeev Sabhlok

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2 thoughts on “Preparing for my talk for the Horasis conference – draft notes for comment
  1. Raj

    You sound promising and convincing enough in my belief. A big thanks to that man, Frank Ritcher. Things startin to get exciting eh? :)

    Let’s see what it all comes to. Time’ll certainly tell us.

  2. Rakesh Pujari

    For the time allotted, this is a very good speech. One thing that I can think off the top of my head is to stress on the fact that contrary to the popular opinion in India (especially the “intellectuals”), it isn’t the people who can’t (or won’t) implement the “good” policies in place in Indian governance structures.

    The public policies in India – being steeped in Nehruvian socialism to this day – are terrible to begin with, due to the distorted incentive structures inherent in them, hence it isn’t possible to achieve any success by implementing them, regardless of the competence/integrity of the minister/bureaucrat in charge of them.

    If you have the time, you can also include an example that I love to use as an analogy – A bad chef can create a mess of a dish out of perfectly good ingredients because he doesn’t know how to cook; however, even the best chef in the world cannot create an edible dish if the ingredients are rotten to begin with.


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