John Samuel
The economic growth of India has not dramatically got accelerated in 1992!!
Is it
true that Indian policy makers and the Finance Minister of India all of a
sudden got an epiphany that resulted in dramatic economic growth in 1992? No!
It is not. And still the latest issue of The Economist tends to preach
Indian policy makers about the need to accelerate the economic growth that
appeared on the Indian horizon in 1992! The problem with the recent lead
article of The Economist ( September 29, 2012) on India is that it tends
to sell more myth on economy and politics of India, rather than an informed
analysis of India’s economic or political history. And this is not the first
time such myths were pedalled with veneer of analysis from London. India, the erstwhile 'jewel' on the 'crown' of the British Colony, managed to survive
and thrive as a functional democracy, in spite of all the predictions of dooms
and dissolution by a cottage industry of Euro-American pundits in the
1950s-1970s. The general impression is that India witnessed a dramatic economic
growth all of a sudden in 1992 when at last Manmohan Singh appeared on the
scene.
The Economist repeats the same lie spread by the so-called 'reform' ( whatever it means!!) minded
journalists, who conceal more history rather than reveal. The foremost lie is
that India has begun to 'progress' only in 1992!!! The second falsification is
that India's balance of crisis (1991) was due to the
so-called 'Hindu' growth rate. The third propagated myth is that Nehru was
responsible for the 'stunted' growth. Many of those who do not bother to recognise India's social, political or economic history tend to spread the utter lie that
Manmohan Singh began to 'save' India in 1992- and before it was all the
so-called 'Hindu' rate of growth. The problem with the e free market' ecomistic-evangelists
are that they read history as per their
convenience and their 'empirical' data for dressing up their pet argument about the epiphany in 1992. In
the process the tend to ignore the depth and breadth of the political and social history
of the country.
It is not
to say that there was no economic reform in 1992; it is also not to say that
the then Finance Minister Manmohan Singh did not have role. It is simply to say
there was a larger political economy and political history behind the shift- and
the shift was partly due to political and economic compulsions of the Narasimha
Rao government, rather than due to the Finance Minister he chose to develop or
implement the policies. The fact of the matter is that India has been growing steadily
and building institutional and knowledge capacity ever since 1950s- and the
growth accelerated in the 1980s- as India achieved a certain optimal level of
internal productive and knowledge capacity to produce, consume and also to
market. So let us look at the myths perpetuated by the ‘reform’ evangelists . In any
case, Manmohan Singh also not appeared on the scene in 1992, he was behind the
curtain ever since 1970s. It is a lack of appreciation of the complex
politics and history of India that tend to attribute India's economic growth to
few policies and a fine gentle man!!.
The economic growth of India has not dramatically got accelerated in 1992!!
Atul Kohili
has very well argued this in a well researched paper published in EPW (2006,
April):
“A number
of scholars have in recent years demonstrated that, though growth in
manufacturing in the 1990s was somewhat lower than in the 1980s, the shift in
growth trend since 1991-92 was not statistically significant [see e g, Nagaraj
2003, and Table 3 in Part I of this paper]. The stunning fact is then this: in
spite of all the noise about reforms – for and against – the growth rate of
India’s manufacturing industry was not influenced all that greatly by the reforms.
The real break in growth occurred around 1980. Since then nothing dramatic
has changed in terms of the aggregate outcomes.The growth data is further
supported by employment data: employment in manufacturing remained constant
around 12 percent of the workforce during the 1980s and the 1990.
"The
“big bang” rhetoric of a dramatic policy shift aside, India’s economic policies during the
1990s altered only incrementally, responding to objective changes, the evolving
views of key policy makers, and to a variety of political pressures " (
For more details read- Atul Kohli , EPW, April 8 ,2006 )
Here are
the three myths entrenched in the lead article of The Economist.
1)
Myth number one: Few leaders in 1947 chose to make India democratic. This
is a typical 'narrow' and 'shallow' reading of the history by a significant
number of journalists in the global North! This position tends to reduce the
struggle for Independence to few political 'elites' - Gandhi and Nehru. The
fact of the matter is that struggle for India's freedom began in the 1850s and
became a mass movement of struggle for the people to demand freedom, dignity
and rights. India's struggle for Independence was on the one hand a social
reform movement and on the other hand one of the best example in the recent
history of massive trend to democratisation of society and broader political
process owned by a large section of people. With all its problems of cast,
creed, religion and language, there is nothing similar like India's freedom
struggle in any of the colonies or for that matter elsewhere in the world.
India's political party process too evolved through such broad based political
process. If India' still remains a relatively vibrant democracy and the only
one continued democracy of any decolonised country in the 1940s to 60s, the
credit goes to the broad political and social process that got entrenched over
a period of 150 years in India- and not because of two or three political
elites. It is also Birsa Munda, Ambedkar, Ayyankali, Phule, Pandita Ramabhai, Sree
Naryana Guru Vakkom Moulavi and umpteen number of local social- and cultural
activists(including socialists, communists and even 'communalists' or
conservatives) who authored story of a socially and politically vibrant India.
2) Myth
number 2: India began to economically 'grow' only in 1992, under Manmohan Singh
(it is interesting that this myth does not even recognise the role of Narasimha
Rao- as if Finance Minister of the country decides the policy choices!!!).
First look at the pattern of economic growth from the early 1980s. Then it
would be crystal clear that the growth in 1990s was simply a continuation of
the pattern rather than the new 'break through' to 'progress'. When India
became Independent the 'growth' rate was zero. The British left a country
impoverished and divided. The only positive residue of the British rule was the
institutional, rail and legal residues they left behind that helped to have a
primary institutional infrastructure and bureaucratic( particularly civil
service) to build a system of governance from the day one. I And it from
that zero growth rate India began to wake up and slowly and steadily built the social,
economic and political foundations (with all its problems). In the 1950s and 60s, there was a cottage industry of economic and
political 'scientists' predicting the doom and dissolution of India- and
governance 'experts' saying that India was too large, complex and diverse to
govern or even to think of a 'functional ‘democracy. The 'Economy mists'
'advice' for India may be treated in the same legacy of the 'western'
'academic' gaze of India or for that matter China.
3) Myth
Number 3: It is Nehru who did not have an 'economic' vision. This is the
most well known non-sense of an utter lie. Nehru did have a political, social
and economic vision. If Nehru did not invest in education, generation of power,
core industrial base, science and technology, India would not have been able to
even compete in the global market place.What was the story of countries which were' opened' up for America
and Europe to sell? None of these countries (particularly in Latin America,
Africa etc) developed their own productive or knowledge capacity. One of the
reasons that India could compete in the 2000s is that Nehru's insistence on
investing in higher education, engineering, science and basic framework for
industrialisation. Even in the so-called Hindu growth period, India produced
its own cars, buses, trucks and trains. India produced high quality engineers,
scientists, researchers and economists. It is this industrial and knowledge
capacity invested over a period of thirty years that helped India to compete relatively
better than other countries.
Look at
the most of first generation entrepreneurs in IT or other fields emerged in the
1980s, and 1990s. All of them are 'desi' products- products of the Indian
Universities or institutions. Whether they went to Silicon Valley or UK (Laxmi Mittal)
or became wealthy in India- all of them owe their education and capacity to the
economic vision of Nehru who realised that basic knowledge and technological
capacity is what make a nation to compete economically.
If today,
Tata, or Mahindra could make all the Japanese, American or Koreans cars to run
for money, it is because India also had a relatively protected and vibrant
private sectors nurtured under the Nehruvian policy. If there are a vibrant outsourcing
of IT and allied fields, it is also because of the relatively higher investment
in higher education.
If India
has Amul- one of the most celebrated brand and India had a Varghese
Kurian in the 1960s-1970s who transformed India's productive capacity, that has
nothing whatsoever to do with epiphany in 1992!. In fact, if India opened up
for the MNCs in the milk or agricultural sector in the 1960s, India would not
have developed the technical competence or even institutional infrastructure of
the white revolution.
The key
challenge for India is to develop the very Indian model of economic growth-
based on the productive capacity, knowledge competence and technological
breakthrough. India has to invest more in science, technology and create more
incentives to ensure that it becomes the real 'software' powerhouse of
knowledge, technology and basic capacity. India can only sustain its economic
growth when it is based on productive, human, social and political
capabilities. India does not have to be too 'closed'. India does not have to be
bureaucratic. India can open its doors to investment provided we have our own
economic, technical, human, natural resources; provided that India can indeed
grow in an equitable, inclusive just and sustainable manner. And the last thing that Indian
policy makers should listen to is the 'advice' of the Economist variety!
