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Marshall Plan's success should be a lesson to India

This the fiftieth year since India attained its independence from British rule, is also the fiftieth anniversary of the commencement of the Marshall Plan in post-war Europe. Those with longer memories than the currently dominant MTV generation will remember the Marshall Plan (engineered by the then US secretary of state George Marshall) as one of the world's first, and perhaps most successful, international aid programmes which financed the reconstruction of war-devastated Europe and particularly Germany.

And even as the Union (and Pakistan) government is drawing up grandiose plans to celebrate the golden jubilee of this nation's largely illusory independence, in Europe too characteristically low-profile celebrations in commemoration of the Marshall Plan have already begun. Recently almost the entire population of the Dutch city of Amsterdam turned out to greet and publicly thank President Bill Clinton for the massive infusion of US aid under the Marshall Plan which made the reconstruction of the Nazi-occupied Netherlands possible. Today the European Community nations are as prosperous as the US and, quite appropriately, President Clinton has mooted a new American-European Marshall Plan for the reconstruction and economic revival of Eastern Europe.

The swift and efficient utilisation of American aid by the post-war European nations enabled them to rise from the ashes of mankind's most destructive war to confer enviable living standards upon their populations. The European seizure of opportunity offers a marked contrast to the manner in which successive administrations in this country have misutilised and frittered away the massive aid flows canalised into post-independence India by the World Bank, the US and almost every other developed nation of significance.

Of India's total external debt of Rs 2830 billion (1993 figures) almost half has been received as external aid particularly from the IDA, the soft loan lending affiliate of the World Bank which provides long-term interest-free loans to developing nations. India is the largest recipient of IDA loans on which a mere service charge of 0.25 per cent is payable by the donee nation.

Unfortunately most of the concessional aid which post-independence India received was canalised into this nation's white elephant public sector enterprises (PSEs). For one reason or another most of them have never been able to generate the re-investible surpluses which could fuel growth in other sectors of the economy.

On the contrary because of careless and/ or inefficient management, the majority of PSEs and projects became abjectly dependent upon government budgetary support and have been chronically unable to finance their own growth and modernisation. Worse, the Union government canalised a significant proportion of such low interest concessional external aid into the term-lending financial institutions which shamelessly lent them out to industry at high rates of interest converting post-independence India into a high cost economy. A significant percentage of such easy money has also been utilised to subsidise ''non-merit'' goods and services for the better-off sections of Indian society. According to a recent government-sponsored study, the annual outlay on non-merit subsidies is estimated at a massive Rs 1214 billion per year.

Moreover with characteristic boorishness, despite receiving huge volumes of concessional foreign aid, post-independence India's leaders or people have never unreservedly thanked the donor nations or institutions. On the contrary the World Bank and the western nations are the favourite whipping boys of left-inspired politicians who view all efforts to help the impoverished people of this nation with extreme suspicion. Unmindful of the ruin it has visited upon the public, post-independence India's political class is given to citing the low per capita foreign assistance this populous nation receives ignoring the economic reality that efficiently utilised top-up foreign aid can have a beneficial catalytic effect upon the economies of recipient nations.

That's the moral of the story of Marshall Plan assistance which has transformed Europe into an economic powerhouse.

Little wonder that a growing number of people are beginning to believe that foreign aid is a con game of robbing the poor in the rich countries to profit the rich in the poor countries.