This is the Cato Daily Podcast for Friday, June 3rd, 2011. I'm Caleb Brown.

The factors that contribute to development aren't so obvious, but elusive also are the political factors to

economic reform. Swami I. R. is a research fellow at the Center for Global

Liberty and Prosperity at the Cato Institute. He spoke on the economic reforms in India Wednesday.

When India became independent in 1947,

the socialist government that took over saw free trade as a tool of British colonialism to keep it poor.

To keep it poor.

So the general idea was that we must have economic independence to buttress political independence.

And the entire ethos of economic policy for three decades

was more and more self-sufficiency and more and more public sector dominance.

These were supposed to be the two basic principles which would achieve prosperity.

It wasn't Soviet-style planning, it was a mixed

economy, but at the same time there were enormous licensing requirements of

a very on arrest nature. You couldn't produce anything without a license,

you couldn't import a thing without a license. If you committed the sin of actually producing

more than your licensed capacity, here you might have, your shareholders might applaud you. India you were in danger of

going to jail you exceeded their licensed capacity.

Everybody was free to consume what he wanted because there were controls on what could be produced, what could be important.

I mean in this particular way of life, prosperity was best achieved when nobody had the freedom either to produce or to consume what you wanted.

There was supposed to be this lovely big benevolent government which would determine these

particular things. Now to begin with this kind of planned approach gave India

3.5% growth. In the 1950s that was regarded as

...