Commentary/Dilip Thakore

Time for a decisive break from past economic policies

For independent India and for the world in general, that was a very significant moment in history. For it not only signalled the emancipation of 360 million cruelly short-changed Indians from the overt injustices and million petty indignities of imperial rule, it was the decisive moment which marked the beginning of the end of the British empire and the dawn of a new age of global decolonisation. Despite the ominous carnage of the partition of the subcontinent, independent India set sail upon an ocean of global goodwill fanned by favourable winds. When Jawaharlal Nehru, the nation's handsome first prime minister, spoke about free India's "tryst with destiny" he struck an emotional and aspirational chord in the breasts of free Indians and well-wishers of the proud new nation state all over the world.

There were, however, some high eminences who were sceptical about the future of the newly independent nation and in particular about the calibre and quality of the men and women who had emerged as the rulers of the world's most populous democracy. Foremost among them was former British prime minister, historian and war hero Winston Churchill, who was of the opinion that granting independence to India was tantamount to handing the fate of over 300 million Indians to "an oligarchy of the lawyers, politicians, fanatics and greedy merchants" who would ruin the nation and let loose the tide of anarchy within the population.

Almost half a century down freedom road, there is a growing number of people in India as well as abroad who are beginning to believe that Churchill's apocalyptic vision has been vindicated.

Not that there aren't any entries to be made on the credit side of the nation's freedom ledger. Despite the inevitable stresses and strains of regional and linguistic subnationalism, free India has remained united and, if anything, is even more closely integrated than ever before. More creditable, it has evolved into a fairly mature democracy in which the ballot has triumphed over the bullet and even self-confessed authoritarians have consistently respected the verdict of the electorate. Never before in human history has such a heterogeneous population remained so faithful for so long to an egalitarian ideal.

But then there is the debit side of the national ledger. The entries are many and tell a pathetic tale of misgovernment, missed opportunities, and worse. The obverse side of post-independence India's failed development effort is a sordid tale of great betrayals and petty intrigues and ambitions which have deprived hundreds of millions of the nation's citizens of the basic necessities of civilisation and have condemned them to a nasty, brutal, and perhaps too long an existence.

There is a school of thought within the Indian intelligentsia which, with some justification, decries breast-beating about lost opportunities and about what might have been. This school advocates positive thinking about the future and favours letting bygones be bygones in the national interest.

Undoubtedly, there is more than some substance in the power of positive thinking. But isn't history all about learning from the mistakes of the past? And what lessons can we derive from the study of history if we choose to bury the truth and the magnitude of the great betrayal and self-serving machinations of a small class which has reduced the modest hopes and dreams of over 500 million citizens of post-independence Indian to bitter ashes?

The plain historical truth is that eight grandiose five-year plans which promised the people a land of milk and honey notwithstanding, contemporary India is one of the poorest nations on planet Earth with a per capita annual income of $330. This pathetic per capita income compares very unfavourably with the per capita incomes of Thailand ($2,600), South Korea ($9,000) and Singapore ($23,000), nations which were as poor and backward as India was in 1947.

It can be argued that per capita income is not an accurate measure of national development because it links national currencies to the US dollar and is not reflective of the purchasing power of local currencies. To answer this argument, the United Nations Development Programme's economists have prepared the concept of purchasing power parity dollars (PPP$). Even after adjustments for the purchasing power of national currencies, India's annual PPP$ 1,150 compares unfavourably with Thailand's PPP$ 5,270 and South Korea's PPP $ 8,320 (1991 statistics). In the UNDP's classification, India is classified as a 'low human development' nation and ranks number 135 among the 173 nation-states assessed.

Unfortunately, even the poor PPP$ capita income statistic does not adequately reflect the true magnitude of deprivation and poverty in India 49 years after the nation attained its independence in a blaze of glory and great expectations. According to the Bombay-based Centre for Monitoring the Indian Economy, 70 per cent of India's 900 million people make do without any sanitation facility, 49 per cent without electricity, 76 per cent without brick and cement houses, and over one-third of the population of the major cities resides in squalid, dehumanising slums. And the most damning statistic of all is confirmed by the latest Human Development Report of the UNDP: 49.4 per cent of the adult population (including 74 per cent of the female population) is wholly illiterate.

Little wonder that 78 per cent of the nation's reproductive conceptions are unplanned and that the population is growing by 15 million per year, accentuating the shortage of the already scarce resources. Half a century after it attained Independence, the nation finds itself in a deep, dark hole from which it can dig itself out only with superhuman effort.

And because these stark realities of the failed national development effort are insufficiently highlighted by the media and are glossed over in public discourse, there is a casual gradualist attitude even within the new generation of reformists which is shaping new development policies. Common sense should dictate a decisive breakout of the suffocating framework of past policies which have plunged the republic into the deep hole in which it is mired.

Yet, despite five years of the supposedly radical economic reforms, the stranglehold of socialist dogma which has devastated this once high-potential nation and scotched the modest dreams and aspirations of an estimated 800 million people, has not been broken.

For example, not even one of the chronically loss-making central and state government owned public sector enterprises in which over Rs 5,000 billion of the citizens' savings have been invested has been privatised. These enterprises have realisable assets whose aggregate value is estimated at Rs 10,000 billion. If auctioned on a global basis, they could realise enough capital receipts to retire a substantial percentage of the federal government's massive public debt (interest payment in fiscal 1996-97 is budgeted at Rs 600 billion, almost half the federal government's annual budgeted revenue of Rs 1,300 billion) and provide sufficient resources for massive investment in primary education and human resources development.

But fearing a backlash from the Left, a decisive break from the comprehensively discredited public sector-led development model has not yet been attempted notwithstanding the stark reality that in Russia, from which the Indian left derived its inspiration for all these years, 16,500 public sector enterprises were privatised last year. And while most of India's myriad enterprises continue to haemorrhage, private sector industry is being bled by tax and waste. Central and state governments remain unwilling to reduce their current account deficits despite overwhelming evidence that a significant proportion of their revenue is being misappropriated by scamsters within their administrations.

In the milestone 50th year of India's independence, it is now time to honestly acknowledge that several grave errors of judgement were made in the formative years of the republic. Such honest acknowledgement is the prerequisite making a new and determined national development effort.

But such a national admission and development initiative will have to be led by the nation's educated middle class and intelligentsia. For it was this very class -- and not the subaltern political class with its brand of divisive particularist politics -- which won India's freedom from British rule. And until the educated middle class is persuaded (through electoral reforms and enforcement of the rule of law) to re-enter electoral politics and once again work for the greater good of the greatest number, the gains of political independence will continue to remain illusory for the overwhelming majority of free India's unfortunate citizens.

Dilip Thakore is the founder-editor of Business India and Business World and former eidtor of Debonair.