The Economics of Independence:Then and Now

The Economics of Independence: Then and Now

Rich in essence, poor in reality- great potential, sorry performance; with large doses of terrifying chaos in the Kumbh Mela of a masala mix. India conforms to the “riddle wrapped in a mystery, inside an enigma” formulation originally applied to Russia by Winston Churchill. But this has indeed been the story of our economic journey since 15^th August 1947.

At first, the poverty was nearly overwhelming, leavened only by the dignity the Mahatma could bring to it. And this dignity, symbolised by wearing of homespun Khadi, in protest against colonial dominance via the mills of Lancashire; carried over in the first flush.

Now, the whole business of Khadi seems as quaint as the Boston Tea Party. Netas on constituency visits or the election trail today are more partial to mulmul under waistcoats that may or may not be bullet-proof.

Besides, they are usually inside air-conditioned helicopters, freezing rest houses, or high end SUVs, unless it is absolutely essential to brave the elements. There is also the upmarket donning of Linen, as far away from Khadi and its symbolism, as chalk is to cheese.

A good deal of the credit for the early shunning of princely ostentation also goes to the simple, jail-bred personal habits of Pandit Nehru. And, his understandable, for the times, passion for Socialism, accompanied by its horrid hand-maiden, the “planned” economy.

This tentacular Planning Commission led development, turned us into a doctrinaire nation, while pointlessly fighting the demonstrated genius Indians naturally have for innovation, jugaad and entrepreneurship.  

This bias towards sarkari oversight soon spread to most of the Government ministries concerned with development such as Commerce, Heavy Industry, Finance etc. till the dreaded “Licence-Permit Raj” of the Nehru/Indira Gandhi years dominated all legitimate economic activity.

Unfortunately, despite the sea-change in circumstances since 1991, it always threatens to come back, in new forms, such as the punitive GAAR, the corruption-ridden “Change of Land Use” (CLU) norms, “Regularisations” and its opposite, the threat of “sealings”, demolitions, acquisitions and so on. Overall there is just too much Government!

Perhaps the State as bully and extortionist is embedded into our DNA from ancient times, before Socialism, before the Mughals. It may even be regarded as a kind of entrepreneurship of the powerful as old as the toll barrier and torture.

It is therefore neither a secret nor a surprise why so much of the true vitality of our economic reality exists outside the margins of the official economy. Even officialdom privately admits happiness about this “unofficial economy”. It is a safety valve and an enabler against the stultification of the policy line.

The major official reason for always imposing an economic bridle on entrepreneurship is to uplift the poor, bracketed always in the context of “limited resources”, without however the will to unshackle the means to produce more. But shouldn’t the rate of growth argument hold good here too, if this evergreen polarity is not to perpetuate itself?

Yet, most of the political classes refuse to directly link the prosperity of business endeavour with the much talked about “trickle-down” effect. The anti, largely Socialist argument, is that the rich get richer but the poor get poorer in a free market economy.

This despite the shortcomings of Socialism and its inability to deliver the desired, not to mention the promised, results. Still, many of its adherents, including Mr. Nehru and Mrs. Indira Gandhi, not to mention the Lohiaites, the Communists and sundry others, seem to stubbornly prefer the promises of the Socialist dream over the reality of sloth, fudging, shoddiness, under-performance and chronic shortages.

Wasting time, resources and opportunity for most of our independent years has resulted in India being pushed to the back of the class in most matters. Our lofty sanctimony and unsolicited advice to others may have reduced, but our wilful under-achieving ways persist to this day.

The way forward promises incremental growth at best, if the past is any barometer. If however, a political dispensation ever arrives that views the rich and poor as yoked together, rather than residing on different planets, we might then see what we have only seen in fits and starts so far.

India has no real excuse for being only a $ 1 trillion economy or double that if one counts the “black” economy. It could be multiples larger, quite easily, but for that to happen, we have to shed the doctrinaire and still over-regulated present dispensation. The Government has to change, essentially from jailer to facilitator. It is such policy shifting that can become the golden key to the future.    

(758 words)

11 August 2012

Gautam Mukherjee