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We have always had among us men, great and small, in large numbers,
who were admirers of the British. In fact, Jawaharlal Nehru, the
first Prime Minister of India, who held that position for 18 years,
told Kenneth Galbraith that he would be the last English Prime
Minister of India! Such political leadership, the ICS cadre and
the successor, the IAS and the English-educated elite of India saw
to it that independence meant only a change of the rulers and no
change of the character of the rule. Viceroy was quickly renamed as
Rashtrapati and the Viceregal Bhavan as the Rashtrapati Bhavan,
Privy Council as Supreme Court and a written constitution, copied
largely from the Government of India Act 1935 enacted by the
British, continued to do more legitimately what the British did.
There was very little of Indianism in our Constitution except that
it was printed on a paper that had line drawings of scenes from
Ramayana as the background.
Blind infatuation with socialism all around
To make the matters worse, Nehru was infatuated with socialism and
Russia. The whole national mind divided into pro-Russian and
pro-American groups and parties, which left the Indian nation
without a view of its own. Socialism of the Russian variety was
adopted (mixed with democracy) without any debate about whether it
would suit Indian culture and life style. The 1962 humiliation at
the hands of China did not change the Indian attitude to socialism;
nor did it evoke any debate. The advent of Indira Gandhi meant a
strong extra-dose of socialism of a less honest variety.
The greatest tragedy of socialism, in India particularly, was to
make it ideologically legitimate for people to depend on the state.
Ms Gandhi actually conducted a public campaign in the name of the
poor, soliciting greater dependence of the people on the state. To
defeat her and her Emergency, the Janata Party had to go in for
competitive socialism of the same variety. This dishonest wailing
for the poor - which is actually for their votes - at the cost of
the nation, slowly resulted in a. highly over-burdened state. The
inadequate attention given to agriculture after the First Five Year
Plan led to the food and foreign exchange crisis and devaluation of
the rupee in 1966. Competitive socialism between all political
parties led to a flabby and overburdened state and the full impact
of the heaviness of the state began to be felt after 1980,
particularly during Indira Gandhi's second reign. A comparison of
what the state of the Indian economy was despite the socialist
thrust until 1980 and afterwards, is revealing. Living within and
without means
The balance sheet of the Government of India as of March 1980
showed a net surplus of assets over liabilities of Rs. 1000 crore.
It meant that from 1950 to 1980, India had been living within its
means; its revenue expenditure fully covered by revenue earnings.
Its interest liabilities were Rs. 1300 crore a year. In these 30
years, we had three large scale wars (1962, 1965 and 1971), food
crisis and food imports, and an unprecedented refugee problem. The
rupee was devalued by 46 per cent in 1966. And yet the government
did not borrow for its day to day expenses; it limited its expenses
to the income earned.
If we look at the balance sheet of the Government of India as of
March 1997, it shows excess of liabilities over assets of Rs.
235,660 crore; the figure will go up by another Rs. 100,000 crore
if the debt due in foreign exchange is valued at the present parity
of the foreign currencies in rupee terms. The interest burden of
the government now is Rs. 68,000 crore a year. There is no
sovereign rate of borrowing; the government has to pay interest
like any businessman, at commercial rates. The entire excess of
liabilities over assets of Rs. 235,660 crore is the result of
revenue deficits in successive Central budgets from 1980. The
projected excess of liabilities over assets as of March 1998 is Rs.
265,270 crore - a rise of Rs. 39,600 crore in our negative net
worth as a nation in just one year!
And on borrowed funds
Is this merely a matter of accounting? Not at all. It is a
macro-economic phenomenon which is directly relatable to the
inflation in the economy occasioned by spending without earning and
the consequent erosion in the value of the rupee. The dollar
equalled eight rupees in 1980 rising from Rs. 3.80 in 1950. Today
the dollar equals Rs. 36. During the period from 1985, the
half-hearted external liberalisation instituted by the Rajiv Gandhi
regime to activate, particularly the automobile and other consumer
durable sectors, merely produced deficits in external trade without
any noticeable addition to national economic activity. This also
equally contributed to the fall in rupee value. Thus, thanks partly
to government's revenue deficits from 1980 and partly to the trade
deficits on the external front, the rupee nose-dived to less than
quarter of its value in 17 years. It set-off as an immediate
consequence, a spiral of inflationary rise in costs and prices as
most of the imports of India is on commodity account and less on
capital account. So fall in the rupee value fuelled high cost
imports which in turn caused inflation and erosion in the value of
the rupee. Similarly, the government's current spending out of
borrowing resulted in inflation, which also led to erosion in rupee
value. Sheer rise in government consumption as seen in fiscal
deficits and in private consumption as indicated by external trade
deficits pulled down the Indian economy hundred fathoms deep, since
1980.
Debateless transition...
This uncontrolled drift led to the 1991 crisis which coincided with
the collapse of socialism, Berlin Wall and Soviet Union. So,
Narasimha Rao could easily discard socialism - again without any
debate as to how to dismantle the socialist order and at what pace
and in what stages and adopt globalisation through the market
route. This is despite the Constitution of India in the Preamble
and in the Articles 31B, 31C and 39(b) & (c) directing the
government to usher in a socialist pattern of economy. Result, an
economy which. now defies the Constitution! Today, we are
following American model instead of the Soviet model. Again there
is no debate or discussion on whether, like the Soviet model which
was found unsuitable, would the American model not be equally a
mismatch for India given the cultural, social and resource
variables.
The Japanese model
Again, we have effected a debateless transition as we did in the
Fifties, this time from socialism to capitalism. No other country
would have done it. We have not even attempted to learn from those
who have undergone the process of globalisation and have failed to
heed their warnings. When Japan gradually globalised since the
mid-eighteenth century, it carried on a massive national debate at
every stage and tried to achieve a minimum national consensus
before taking any far-reaching decision. Any developing nation must
achieve national consensus. "Achieve this, you can achieve
anything," said Takeshi Hayashi emphasising that national consensus
was the core of the Japanese success; "liberalise first, and
globalise in stages," said Okita when an Indian journalist asked
for his advice to India. This is the man who fashioned the
post-war Japanese recovery. "Cultural and national factors will
impede globalization as non-tariff barriers and financial
engineering will make global free trade difficult." said Akio
Morita in his letter to the Group 7 leaders in 1992; "national
culture exerts more durable influence on economics than the
reverse," said Francis Fukuyama who once saw the end of history
after socialism collapsed.
Clashes along the faultlines of religion and civilisation
"Capitalism is slowing and will stagnate and the East will try to
modernise without westernising and clashes will occur if the West
forced the East to westernise," said Lester Thurow writing on the
Future of Capitalism. "Beware the future conflict will not be
economic, but along the faultlines of civilisation and religion,"
said Samuel Huntington in his theory on the 'Clash of
Civilisations' as the alternative to clash of economic ideologies.
"China is too big for us to dictate to or ignore; they do not want
to be rule acceptors, but rule makers," said the Foreign Affairs
Magazine of US pointing to the psychology of China. This is how
the experienced world is speaking. Are we listening? Are our
leaders deaf? Seems so. Not an ounce of this wisdom is manifested
in the thoughts or actions of our leadership which is merely aping
the West in thought, idiom and action.
The unhappy divide
and pseudo nationalists
In India, far from seeking any national consensus, the Central
government today seeks and exists on the division of the nation
into secular (political touchables) and unsecular (political
untouchables). In fact, national consensus has to include (and
cannot exclude) the BJP which will mean the fall of this
government. Our trade teams and bureaucrats, businessmen and
professionals demean themselves - and demean the nation - to
solicit foreign investments. Our national leaders are making
speeches which show, in the least. the confidence and skill needed
to win the global game. in fact some of their speeches would be
treasonable in any country where some patriotic spirit is valued.
In point is what P Chidambaram spoke in London to the English
businessmen and repeated it to the Americans a few days later. He
said: "last time when you came, you were with us for 200 Years ...
this time we invite you to come and stay with us longer ... to make
profits." These are the ones who go and lay wreathe on the samadhi
of Mahatma Gandhi who gave every minute. of his life only to send
the Englishmen away. Now these gentlemen are calling the
Englishmen back; why did we send them first if they are so
desperately needed.
This shows the lack of character, courage, will and self-confidence
in the national leadership. Global trade is war. It cannot be
fought by pseudo-internationalists and global elitists for whom the
nation is a lodge and who can easily move out of India, if things
become difficult. It can be fought only by staunch nationalists -
as the leaders of Japan, China, Korea, Taiwan, and Malaysia do -
who have deep and abiding love for the nation. Given that kind of
leadership for which this nation is waiting since Independence. we
can do better than every one around and above us.
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