On the one hand, we have
unbounded opportunities and incomparable advantages to seize them.
On the other, there is the fate that will surely befall us if we
falter. Unemployment will reach such proportions that social
unrest will become unmanageable. Similarly, if the rates of growth
of India and China continue to differ by the margins of the past
15 years, within the next 15 years the
Chinese economy will be
six times that of India. And the consequences will be worse than
we can imagine.
Economic strength is
itself power. To take one instance, because China has been able to
attract so many more to invest than we have, China today is able
to mobilise so many more—American firms, for instance—as lobbyists
to advance its interests.
strength gives China the wherewithal to go in for comprehensive
modernisation of its armed forces. Indeed, that there is so much
talk of China’s economic transformation obscures what China is
already doing, what its economic modernisation already enables it
to do in the military sphere.
Will a China six times
stronger than India not administer another slap at us? Indeed,
will it have to administer a slap? Will an India dwarfed to that
extent not learn to pay heed to China’s interests subliminally?
Now it is nobody’s case
that China is free of problems. Quite the contrary. The
achievements—the incredible infrastructure built in Shanghai, for
instance—themselves remind us of problems it may be storing up:
this infrastructure has been built by getting the country’s banks
to lend money to the special purpose vehicles that were created
for building the projects. But everything has to be paid for in
economics: what is the rate of return of these projects today, and
how does it compare with what is needed to repay the investments?
There is moreover a
fundamental issue. The 21st century is going to be the century of
knowledge—of its continuous unraveling and of its continuous
application. One of the central lessons of the 20th century is
that where the state is pervasive, creativity does not flourish.
The Chinese have indeed transformed their state. But it remains
pervasive. How will they ensure creativity—of the kind, say,
youngsters in our IT firms have displayed?
So we have many things
working for us. In many ways, this is India’s moment, even vis a
vis China. For the first time, observers have begun to voice
questions in public about China—its statistics; the fact, for
instance, as a German investor said recently at a conference I was
deputed to attend, that, ‘‘If you want your factory to come up
quickly, go to China; if you want to make money, go to India.’’ On
the other side, everyone’s noticing Indians make a mark in every
sphere: writers, scientists, doctors, IT, cricket, beauty
So it is the moment for
India. It is a moment. But, it is only a moment. What should we do
to ensure we grasp it?
First, we should begin to
notice what is happening around us. We have become what an
American author calls ‘‘Negaholics’’—addicted to the negative as
an alcoholic is to drink. Ever so many of us are unaware of even
the elementary examples that have been listed above.
Nor is that the result
merely of inattention. We look for, we latch on to the negative;
even if some achievement breaks on to our mental screen it does
not percolate into our awareness, we do not see that it is part of
a pattern, that it is not an isolated fluke. Indeed, our instinct
is not to believe evidence of that accomplishment.
Remember how eager many
commentators were to find fault with NSS data that established a
steep decline in proportions living below the poverty line? These
are symptoms of a habit. Remember the exercise that books on
creative thinking recommend? Is there much blue around you? You
would not have noticed much. Now make an effort to look only for
blue things around you. You will notice so many that, though they
were lying around, had not registered.
It is especially important
that those who are in public life—who hold public office, who
participate in public discourse—break out of this addiction to the
negative. Because of my work, I have had occasion to travel abroad
several times in the past two-three years. Each time I have been
struck by the contrast between the way India is looked upon
abroad, and the way we look upon it here.
There is an equally
telling symptom here at home—there is much greater confidence in
the Indian industrial class than there is in the rhetoric of
politicians who ostensibly are shouting on behalf of and to save
The result is our
discourse continues to be mired in fear, so many of us just keep
repeating slogans of 30 years ago. We should listen to the new
Next we should be alert to
what the critics of reform are doing where they are in power. In
New Delhi, the CPI(M) shouts against even the slightest attempt to
reform—for instance, privatise—a public sector unit, they bring
woe upon anyone who may say that repeated revival attempts having
failed, such and such firm has to be shut down.
But in West Bengal the
state government has already shut down two state- owned units, it
is disinvesting 10 more. It’s just that the state government does
not talk of ‘‘disinvestment’’, it says it is just turning the firm
over to a joint venture partner!
Remember Ajit Jogi’s
hysterics over Balco? Remember his threat ‘‘Should anyone from
Sterlite enter Chattisgarh, we will break his legs’’? Since then
his refrain is ‘‘Sterlite is scripting the success-story of
Chattisgarh’’! More important, he is today the leader in public
sector reform! Including privatisation! The Indian Express reports
he has already closed thirty seven public sector units.
Remember all that
shouting, ‘‘Why are you selling profit-making companies?’’ The
Housing Board—HUDAC—Jogi has just closed down has been a
profitable concern, reports The Indian Express. Remember all that
shouting ‘‘But the land of Balco is itself worth Rs 1,000 crores’’?
Reporting about that Housing Board, the Express correspondent
writes from Raipur, ‘‘The assets ... also include some prime
properties and a land bank of approximately 600 acres of land. In
Raipur itself, HUDAC owns 300 acres of prime land near Tatibandha—an
upcoming commercial area. Bhilai and Durg towns are also key urban
towns where HUDAC had purchased land ... Other assets, according
to the HUDAC balance sheet, include hundreds of unsold HIG, MIG,
LIG and EWS houses, shops in urban complexes and other properties
A simple rule of
self-denial among political parties would help: ‘‘Do not block
another party from doing what your own party is doing where it is
in power.’’ As parties are unlikely to deny themselves even this
much, journalists and others should bring the rule into being in
effect: keep an eye on what the party is doing where it is in
power, recall what it was doing when it was in power and, each
time the party tries to stop a rival from prosecuting a reform,
broadcast those facts, grill its leaders on them.
There is a more
intractable problem—a central dissociation between democracy as we
know it in India and what is needed for rapid growth.
All change involves
dislocation. And this is where the strengths of yesterday become
the handicaps of today. BSNL has one of the world’s most extensive
networks of copper-wire. But people are switching to wireless
telephony. Every time there is a proposal for new technology, our
first thought is, ‘‘But what will happen to the thousands of
crores that have been sunk into that network?’’
Nor is the drag confined
to governments. As BSNL has been purchasing copper wire worth Rs
2,000 to 4,000 crore every year, 30 or more companies have come up
that can survive only if BSNL continues to purchase copper wire!
Their owners and the workers employed in them too would rather
that the switchover to new technologies is slower.
That is how over the
decades the Civil Aviation Policy becomes the policy for Air India
rather than for India. That is how our finances get sucked into
quicksand— that is how we continue to ‘‘protect’’ existing
producers of wheat and rice with ever higher minimum support
prices even as government godowns overflow with stocks, and even
though we know that these support prices are in fact preventing
the crop diversification that other programmes of government are
trying to promote; that is how a state like Maharashtra brings its
finances to the brink by continuing subsidies to sugar growers;
that is how over the years we squander Rs 10,000 or 15,000 crores
keeping obsolete mills of the National Textile Corporation (NTC)
on artificial respirators rather than using the money to modernise
the textile industry; that is how we continue to guarantee
procurement of tobacco, of all things, even as we spend crores
admonishing people to abjure it; that is how, ostensibly to
protect existing tenants, we continue rent control laws, thereby
discourage investment in housing and thus ensure both housing
shortage and urban decay.
voice-over-internet for long, we set the police upon youngsters
who have begun using the technology; for years we won’t allow
personnel of IT firms to avail of the Closed User Group
facility—lest the revenues of BSNL get affected ... It is as if we
were to block the introduction of the automobile to protect
carpenters who are making tongas. Without doubt, one of the
reasons West Germany and Japan forged ahead of the United kingdom
after World War II was that the entire industrial stock of those
two countries had been bombed out of existence while that of the
latter had survived.
In the end, all such
efforts fail. One cannot block technology any more than one can
block time: in the end Bangladesh has had to close down the
largest jute mill in the world, in the end we are having to close
down NTC mills ... But over the years we ensure our country’s
progress is slowed down, and our governmental finances are brought
to the brink.
The problem becomes all
the more acute in a democracy, all the more so in what we have
made of democracy. The electorate has been so fractured by caste
and the rest that it does not respond to national issues. To
attain office and retain it, therefore, parties have to aggregate
votes, section by section. Each section liable to be dislocated by
change—the tobacco farmer no less than the textile mill owner and
the powerloom operator—is able to suborn parties and politicians
to block that change.
Of course, in due time a
constituency will arise of those who have benefited from the
change—the IT professionals, the ones who will prosper if only we
were to allow our entrepreneurs to set up institutions of higher
learning ... But they are in the womb of the future. And the ones
who will be dislocated are ones who will defeat the party today.
As the horizon of political parties seldom extends beyond the
forthcoming election, even a bit of aggressive shouting can ensure
that reform is deferred.
There is another factor
that confounds everyone into submission. All politicians are
nervous—witness our nerves before every reshuffle! Politicians
faced with elections are more so. And no one quite knows what
issues are on the people’s mind. So the moment a step is mooted,
everyone can, and does, proclaim, ‘‘Not just now, elections are
round the corner. People will turn against us.’’
Was disinvestment an issue
in any of the elections during the past five years? If free power
could have won elections, how come the Akalis in Punjab, the DMK
in Tamil Nadu were swept away? I well remember a meeting in a
state on the eve of elections there, and what was being said ‘‘on
the sidelines’, ‘‘Please get (the chief minister) to abolish (a
local tax) ... If only it is removed, we will sweep the urban
areas.’’ It was abolished. The urban areas swept away the
There isn’t much that can
be done about the politicians’ nervousness, except to go on
pointing out reforms are not the issue they are made out to be:
internal bickering has brought defeat to parties not issues like
disinvestment or tariffs.
But the problem—the
dislocations that change will cause—is real and we have to attend
to it. Four things can help.
We should multiply outlays
on activities that will engage large numbers, and are things that
we should be doing in any case. The Planning Commission has
prepared three first-rate reports, for instance—on biofuels, on
bamboo cultivation and products, and on medicinal plants. Each of
these can engage millions. As can organic farming, diversification
into vegetables and fruit and floriculture. As can water
When activities like these
flourish, incomes will multiply, nutrition will improve, fewer
will flock to urban slums. Indeed, through them the country would
register gains even in foreign exchange—outlays on biofuels would
save on imported crude; organic farming, medicinal plants would
bring foreign exchange.
Similarly, projects that
entail huge earthworks—the Prime Minister’s Quadrilateral and gram
sadak projects, the linking of rivers—can absorb millions who may
be dislocated and at the same time unleash the country’s
productive potential. They are the real social security that will
cushion our people.
But the main solutions
lie, as usual, not in the economic realm. They lie in political
arrangements, in discourse. We must reduce the frequency of
elections: schedule elections, as the vice-president and the
deputy prime minister have proposed, to state assemblies and to
the Lok Sabha simultaneously; fixed terms for legislatures even as
individual ministers can be voted away for dereliction.
Even before such changes
are put into effect, and even after they have been instituted, we
have to make everyone see that change cannot be blocked. The more
we succeed within India in delaying it, the greater the lead that
others will get over us. Schemes to rehabilitate and reposition
workers or farmers who may be dislocated must, of course, be
devised and executed. But the project or technology must not be
Soon enough that project
will have to be executed in any case; soon that technology will
come to be adopted. Time will have been lost. Resources that could
have been used for modernisation of that enterprise, that
industry, for the prosperity of that very region would have been
wasted in keeping that obsolete technology or enterprise
And we must with evidence
induce everyone to see that more often than not the resources
needed to take care of and re-equip those who will be dislocated
are embedded in the obsolete enterprises themselves. Look at the
land NTC’s mills have in Mumbai. If only the government would be
allowed to sell it, more than enough would be available to retrain
and re-equip every single worker in those mills, as well as to
modernise the mills that are to survive.
Not the details of
economic policy—that is not where the impediments lie. The way we
look at things, our discourse, the drag of interests that are
vested in the way things are—these are what we need to change.