If a straight question were asked whether Nehru had a well-defined economic ideology which could be given one of the known labels, the answer would perhaps be in the negative. While some would consider this as a saving grace, others like this writer would consider it as gravely unfortunate.

by G Harindra Kumar

INDIA's economic policy, since Independence, has a fairly clear vision of the ultimate goal, its social and economic colour and content, and the broad path to be followed in reaching it, though every street is not named. It is well-known that it was mainly because of Nehru's insistence that the ultimate goal of the Socialist Pattern of Society has been adopted. It may be contended that this itself is a proof of Nehru's doctrinaire predilection. There is enough evidence in Nehru's speeches and writings to show that his image of socialism was doctrinaire in its flavour. He has often been chided by critics for the vagueness of his ideas. Nehru's socialism was born out of a deep attachment to the values of ethics and social justice. Suffice to say, his intellectual commitment whatsoever to its mechanics is prescribed as per Marxist text-books. However, proponents of Nehru vaguely argue that he had no great respect for many of the abiding insights of Marxist thought, that he did not subscribe uncritically to Marxist dogmas or its orthodox remedies. But, what they fail to understand is that his perception to Marxist economics was not imaginative but resolutely imitative in its approach. Indian leftists however, ardently defend even to this day that Nehru was never a Marxist ideologue but a hybrid variety which suited the time and age.  This was the observation of one among the foremost patrons of Nehruvian economics namely, Mohanlal Lallubhai Dantwala, considered by many as the father of Indian Agricultural Economics. Subsequently all Congress and opposition Prime Ministers following Nehru adhered to the same economic philosophy which unquestionably wrecked India's economic growth potential.

While Europe and Japan emerged as economic epicentres after Word War II, India plunged into the Stygian depths of what was wilfully called as the Hindu-growth rate by liberals and Marxists. America was already on the path of becoming a unilateral superpower both militarily and economically immediately after Word War II, this was pre-empted even before the fall of the Soviet Union and its satellite sates.

The other Asian economies grew despite its morass combination of outright dictatorships and authoritarian regimes followed a sagacious path of economic growth. Prime examples are Taiwan, South Korea and other mini economies collectively called the Asian Tigers. They became economic powerhouses in their own right, forming a formidable supply chain to the developed economies of Europe and North America.

The so-called Sangh Parivar’s ethno-nationalist agenda has its own problems, the foremost being its anti-modern edge. The Swadeshi Jagran Manch (SJM) has long advocated national self-reliance and opposes policies seeking more foreign direct investment. Modi is shackled by this pernicious concept, his entanglement is evident at the snail pace of economic reforms carried out during his tenure as PM for the last 6 years.

Some of the ways to improve the economy of India are as follows:

1. India should adopt the approach of selectivity in regard to globalisation, liberalisation and privatisation. The onus of making the right kind of choices should not be left to the bureaucracy or the political system alone, but it should be the joint responsibility of four wings of the society namely, intellectuals, businessmen, bureaucracy, and the politicians.

2. There should not be any doubt about the strong role that the State has to play even in the context of market driven paradigm of development. The legal system, the regulatory system, and the monitoring functions of the State need to be strengthened and made effective.

3. Foreign direct investment should be permitted and encouraged across the board bereft of any restrictive conditionalities. The stipulations that the right to invest by the multinationals should become a legal right without any interventions of the State, which is envisaged in the proposed Multilateral Agreement on Investment (MAI). India along with other likeminded countries, should influence the WTO and other fora to include code of conduct and the obligations of the multinationals for transferring technology, sharing information and promoting employment, in any multilateral agreement.

4. The approach of globalising the financial markets without commensurate globalisation of the real sector could have dangerous consequences of excessive short term debt resulting in instabilities and crisis situations of the Mexican type. There are already many signals of instabilities driven by volatile capital markets, and these need to be checked by enforcement of proper disciplines on the capital markets.

5. It is not yet the right time for bringing about total convertibility of the Indian currency since many of the necessary conditions for total convertibility to be successful are not yet met.

6. India should endeavour to strengthen the infrastructure, and human resources covering areas such as universal literacy and health for all, for improving what one may call as the social capability of the economy for taking advantages of the globally competitive environment.

7. As indicated by the recent theories of the industrial organisations, it is necessary that the industrial organisation structure should be based upon the principles of blending competition and cooperation on the lines of industrial clusters and cooperative societies, for facilitating optimum utilisation of the scarce resources of knowledge and information.

The sweeping statement that competition alone promotes efficiency in resource use and resource allocation has been belied by the recent experiences of flexible forms of industrial organisations which combine competition with cooperation.

8. India should take leadership role on various international economic issues for mobilising support from likeminded countries of the world for strengthening the bargaining positions of the developing countries on the current issues of negotiations. For example, the Singapore meeting on WTO has decided to set up a working group for setting the implications of the proposed multilateral agreement on investment.

The developing countries will have to get ready to present their stand on this issue. Similarly, the issues of social clause and labour standards would be soon becoming major issues of negotiations in the WTO. India should take initiatives to organised intellectual debates and consultations at the political level for evolving a consensus.

9. Liberalisation should necessarily mean democratisation of the decision making process in the economy. This kind of liberalisation would require significant effort to reform and motivate the bureaucracy both at the level of the central government and at the state governments. India’s image in the global scene would be very poor unless the bureaucratic procedures are streamlined and the delay of bureaucratic sanctions and permits are considerably reduced. Unfortunately, there have not been adequate initiatives to bring about this revolution in the functioning of the bureaucracy. Concerted efforts are required in this regard to enable India to take full advantage of the emerging competitive environment.

10. India is best suited to continue to be in the framework of mixed economy, in which the public sector, private sector and the cooperative sector coexist. The present exercise of privatising even the profit making public sector is not warranted because privatisation is only a modality for improving the efficiency in resource use and resource allocation. In any case, selling a few scrip’s of the public sector to the people at large does not at all mean privatisation.

For a truly effective privatisation, the approach of preserving power for appointments of the executive and also interventions in the commercial decision making process of the public sector need to be fully eliminated.

Privatisation should not be pursued as an end in itself. In fact, many of the private sector units are also suffering from endemic sickness and as such privatisation per se cannot be considered as a virtue in itself for an efficient production system. The weaknesses of corporate management both in the public and the private sectors need to be addressed in an objective way instead of viewing the problem as an ideological issue.

11. The final point which needs to be made with all emphasis at our command is that India should not give up its aspirations for maintaining and strengthening the paradigm of intellectual self- reliance for taking its own decisions to serve its national interest in the best possible manner without denying to itself the advantages of the emerging new opportunities and challenges of development.

As of now, Modi and the RSS remain happy with each other, and the symbiotic relationship is likely to last so long as it proves useful. Whatever the longer-term consequences for India, one thing is for sure: The RSS lacks any credible alternative to Modi—and Modi knows it.

Our Bureau