Four 'reform' bills are at various stages of processing in US, one of them having been signed by President Obama into law. All these seek to undo the severe damage done to the economy by what Joseph Stiglitz calls 'ideology of the free market fundamentalism' of the past two decades. But here we still remain stuck in 1991's IMF bailout package of 'conditionalities'. For us 'reform' means more and more liberalization of financial sector, removing regulations on banks and insurance, scrapping FDI caps and opening more sectors for foreigners and wiping out all subsidies meant for the marginalized sections. Almost every day we hear of more such initiatives from the Planning Commission and PMO.

In US, they are doing just the reverse. So the word 'economic reform', like socialism, has acquired an opposite meaning. Last week, US Senate banking committee introduced a bill seeking sweeping financial sector reforms to impose stricter regulations on banks and financial companies. After its introduction, President Obama said: “We are now one step closer to passing the real financial reform that will bring oversight and accountability to our financial system, and help ensure that the American tax-payer never again pays the price for the irresponsibilities of our largest banks and financial institutions.” The entire Wall Street, especially its 13 mighty bankers, had lobbied hard against the bill. This is understandable as the bill seeks to tighten the government's control over the banks, including those within the federal banking system, derivatives trading, hedge funds and insurance.

Treasury secretary Tim Geithner asserted the bill was necessary to restrain the banks and others from resorting to free-for-all and to protect the interests of the consumers. But in India, Montek Singh Ahluwalia's Chamber talks and Pranab Mukherjee's budget speeches echo the US discourse of mid-80s. They are so similar - almost mimicking the old chants - to the arguments that big banks and responsible entrepreneurs will never invite their own doom. Market in free conditions is capable of taking care of stability, and self-regulation is the best way to the full play of entrepreneurship. State control will only destroy initiative and growth.

For over a year, there have been orchestrated demands for disciplining the RBI for what some of us call its chronically conservative outlook and economic bureaucracy. When the present RBI governor was appointed, many saw great hopes of more flexibility. But in an inflationary atmosphere there was little scope for relaxation and the same complaints about higher credit rates prevailed. The proposal now is to curtail the RBI's vast powers by setting up a Financial Stability and Development Council in North Bloc with overriding powers over RBI. Here is another cruel irony to it.

Like our reformers' FSDC, they in US have also promised to create Consumer Financial Protection Agency. While ours is to remove reasonable controls on banking, the US agency is aimed at warding off future risks from the irresponsible extravaganza by the private banks which had wantonly misused the liberalized regime of the euphoric free market days. The keystone of the new US initiative is stricter oversight by the proposed agency. On the other, our proposed agency is for more liberalization, the same that had precipitated the financial collapse in 2008 from which the world is still recovering.

In our reform lexicon, welfare schemes and subsidies for the marginalized remain most dirty word. Our conservative reformers equate these with 'fiscal irresponsibility' and privately curse Sonia Gandhi for her visionary initiatives for the present budgetary imbalances. But that is no more so in advanced economies of US and Europe. Much is known about Obama's landmark bill to break the insurance mafia of US and make medical insurance more affordable to their 'aam aadmi'. For this the administration has set apart huge funds as subsidies. They have now followed it up with a government-backed low mortgage payments scheme for millions of home-owners pushed into distress by the unregulated financial institutions during the 'meltdown' years. Under this, the unemployed will get more state aid. Then there is the $68 billion scheme to revitalize community colleagues and support for minority-serving educational institutions.

Some compare the US administration's present initiatives with Indira Gandhi's reform in 1969-72. Like the old 'Syndicate' (Congress), the Grant Old (Republican) Party and the powerful bankers and financial interests of Wall Street are up in arms against Obama. Almost the entire GOP has changed him with indulging in 'socialist utopia' and 'stateism'. And Nobel prize winner Paul Krugman calls the Republican's tirade against health reform 'right-wing extremism'. The New York Times this week reported that 'tens of millions of dollars' are being spent to lobby US lawmakers, run advertisements and start petition drives against the new reform to regulate the 'too-big-to-fail' banks and private institutions. Reports gave details of the joint meetings of business groups.

In Europe, tackling the private irresponsibility has begun from the most conservative Germany. Its finance minister Wolfgang this week announced banking/financial sector reform that include creation of a compulsory fund of Euro 1.2 billion by the industry to meet the costs of future bailouts. The French finance minister has instantly expressed interest in the proposal. Since the big 'meltdown', there has been an ideological build-up against the infallibility of the market. In his latest book 'Freefall' Stiglitz cited several uncovered fundamental flaws in the 20th century form of capitalism. He wants stronger state intervention to correct the distortions. '13 Bankers' by former McKinsey consultant Simon Johnson narrates how the financial oligarchy controls US politics and governments all over the world.

Back home, there is another interpretation to our reform establishment's conservative mindset. Some analysts believe that Indian reformers have finally switched their allegiance from the official establishments to non-state actors of Wall Street and other groups who are fighting bitter battles with their own governments. Even the World Bank and IMF have been rather evasive on the strategy shift in the developed world. These sections believe Delhi's stiff silence on the new US administration's reform measures is indicative of the Indian establishment's shifting allegiance. May be this is a rather hasty conclusion. (IPA Service)