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India’s Economy: A
Journey in Time and Space
There is no doubt, however, that economic ‘reforms’ have acquired the status of a mantra by now, even with sections that used to deride them not long ago. A recurring refrain of the ‘reforms’ discourse is that even the Left swears by them in states under its control. There is a striking need to demystify the discourse and to tell the people what a set of formulations that have already become tried formulas really mean. The volume under review merits note for trying to meet this need. It is the centenary volume of monthly ‘Economic Developments in India’ (EDI), launched in 1998, and covers the period up to December 2005. It is a compilation of papers on different aspects of what is repeatedly described as a new development strategy that made India depart successfully from a path of slow growth. The authors of the papers are also architects of the strategy, and include Vijay L. Kelkar, Bimal Jalan, C.H. Hanumantha Rao, Rakesh Mohan, C. Rangarajan, Arvind Virmani, Montek Ahluwalia and Y. V. Reddy. A certain view of recent history goes with the ‘reforms’ package. To go by the gospel according to most of our authors, India was inching along at a ‘Hindu rate of growth’ under a hidebound ‘socialist economy’ until the 1980s and more specifically the 1990s when it took the first steps towards a free-market economy and embarked on the high road towards ever-accelerating development. Kelkar’s paper, titled India: On the Growth Turnpike, sets the general tone for the whole volume. It sees India "at the threshold of a ‘golden age of growth’. "The paper prophecies that "India – riding the wave of growth fundamentals such as demographic transition, human capital accumulation, improved incentive structures, diffusion of new technologies such as IT, total factor productivity accelerators through ‘network industries’, and an improved security environment – will be growing at new growth rates which can be above 10 per cent per annum i.e. double-digit growth rates." Most other papers perceive the same thing with reference to different sectors of development. There is no denying the mass of data provided through the volume that make it valuable reference material. But all the graphs and tables do not answer a few glaring and uncomfortable questions. A basic question is about the veracity of the view of recent history that we talked about and that sounds like an economic extension of the end-of-history theory. There is something surprising and a bit suspicious about the sudden discovery by the West of dramatic Asian departures from development strategies that may not have suited motivated experts at Davos. Pankaj Mishra, an economic writer of no pro-‘reforms’ pedigree, puts it succinctly: "If the rise of India and China seems dramatic, it is because not so long ago India appeared in the western imagination as a poor, backward and often violent nation. With its needy millions and Luddite communist regime, China seemed sunk even deeper into darkness." Adds Mishra: "Indian and Chinese elites borrow no less eagerly than their western counterparts from the discourse of neo-orientalism as they attribute India and China’s recent economic growth to the free markets they embraced in the 1980s and 1990s. But even a casual glance at their claims will reveal them to be caricatures of a complex political and economic reality." Some of the papers, presenting variations on the volume’s theme, also raise questions. None of them of course asks why about 100,000 farmers committed suicide in 1993-2003, the golden age of growth. But N. A. Mujumdar raises a related issue. "Is there", he asks, "a surplus of foodgrains in today’s India? India continues to be the abode of 260 million people who are in a state of chronic semi-starvation, as admitted by the Planning Commission. Against this background, how does one justify the export of foodgrains on a massive scale as in 2003-04?" Some might be surprised that Montek Ahluwalia raises a somewhat similar question. Talking of the last Lok Sabha poll, he says: "...the previous government went into the election under the slogan ‘India Shining’ suggesting that its economic policies had produced results which justified its re-election. The electorate clearly thought otherwise." He thinks this was not only because of the growth rates falling below expectations. "Such growth that occurred was also seen as benefiting only a few. The software and business process outsourcing sectors where clearly ‘shining’ but performance in critical areas such as agriculture was unforgivably poor." R. Nagaraj asks several pertinent questions about the policy on foreign direct investment (FDI), showing that its purpose has been defeated in notable instances. He points out, just for one example, that the FDI has not always served to increase competition as it was supposed to: "...foreign firms often acquired dominant positions by taking over domestic firms (and brands). This...is best illustrated by Coca Cola’s acquisition of the dominant domestic competitor, Thums Up, and Hindustan Lever’s — Indian subsidiary of Unilever — acquisition of its largest domestic rival and the second-largest firm in the industry, TOMCO, and the largest cosmetics firm, Lakme." The questions will have to be answered, and the contradictions they suggest resolved equitably, before the ‘reforms’ begin to appear a concrete reality to India’s poor.
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TIME was when matters
economic seemed more concrete than most other things in the world.
Economic growth, for example, appeared something more visible and
measurable than, say, political liberty or social justice. No longer,
alas. The economic boom, which our leaders and media luminaries never
tire of celebrating, appears an entirely remote abstraction to many lay
people. The magic of soaring Sensex figures, which put stars in the eyes
of the dreamers of Dalal Street, hardly seems related to any material
progress in living standards even for the majority of the middle class,
let alone the masses.