Way to go: growth plus egalite

Globally, the power of the market was known by now but some thoughtful experts got worried about the view that a low wage rate and some unemployment kept the economy warm for globalisation. Indian politics is exuberant at the other pole, so some experts feel that some genteel feigning is all right. But does the difficulty lie in another dimension — that of the mind? We literally walk the talk in two minds. In one, we talk of the growth idea, the global continent, the partnership with the big corporation. That’s where the power and action is. But then there is the safety net, the need to protect people from the ravages of the market, the dying farmer, the Dalit and Adivasi. That’s where the ideals are and, bless them, what would our conscience do without them.

The philosophical Indian mind is anyway good at the double negative. One of our finance ministers even discovered the phrase, “negative inflation”, to say “prices are falling”. We, in fact, will do better by stating our world views positively. When Dani and Subrahmanian discovered Indian growth earlier this year at the IMF, they said it happened in the eighties, because we favoured the capitalist. They were a little late in discovering the “mystery” of Indian growth but at least they forced the issue conclusively. However, they and others now are worse in describing it. The argument that the policy systems of the eighties were designed to establish a cosy relationship between the capitalists and the establishment by tariffs and directed credit is incorrect. By the mid-eighties, the National Institute of Public Finance and Fiscal Policy stated that 65 per cent of Indian industry was out of control on prices, output and, to a large extent, on investment. Policy, then, broke the back of the one-to-one link between the babu and the sethji and was very clear that global reform was to come next. In the first round the efficient Indian firm was protected by tariffs and policies were harmonised and phased in a manner that ensured the efficient man did not suffer because his supplier was not reformed to the extent necessary. But industry had to cope with domestic competition and prices regulated by tariffs. A major churning took place. The proof lay in the results. India did well then in industry and infrastructure and it is only now that we are picking up the threads.

There was concern about the poor and the marginalised in the hinterland. Dual pricing was a part of the transitional stage in reform. Deliveries of essentials were attempted for the poor at lower prices. Models, later used by the ADB and World Bank, were developed where a dual market could be calibrated with a tariff. India also developed its mindset and policies but this was, alas, not followed through to ensure widespread growth in all our agro-climatic regions and among the poor in the hinterland.

Agricultural profitability and therefore private investment fell in the last decade because we globalised without preparation. As cotton, oilseeds and sugar production went down, income, output and then employment went down in agriculture. Urban inequality went up in a big way. Manufacturing output and infrastructure collapsed. We genuinely believe that you must get work and food. The road map for reviving profitability in major crops is a must. While earlier the argument was to integrate with world markets unilaterally, at least now everyone wants tariff policies to be used.

These concerns are real in a poor country. India will also develop an operative vision of life for its aam aadmi; the daridra narayan, Gandhiji talked of. She is still there, as you walk the land unless your eyes are closed. In the seminar/conference circuit, I am pleading for egalite to be rediscovered as we work to become a powerhouse of the world.