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Sunday, May 28, 2023

Way, way over the top.

There are many things that one can legitimately find fault with Indira Gandhi. But to term her as ‘the economic equivalent of a war criminal’ is way, way over the top.

It is true that the buck stops at the top. But to completely and callously ignore the role played by people considered to be experts in formulating the economic policies is to allow them to escape from their responsibilities. If anything, they are the ones who are the economic equivalent of war criminals.

Indira Gandhi inherited a system from her father, Jawaharlal Nehru. In the economic arena, he followed the advice given to him by a team led by P C Mahalanobis, amongst others. It is true that this advice aligned with Nehru’s own political outlook. Equally it can be said that Mahalanobis had the same political outlook.

But, Mahalanobis was supposed to do a theoretical exercise and offer advice on the basis of what is good for the people of Bharat. It can be legitimately said that there was an intellectual justification at the time for what Mahalanobis suggested, and many countries adopted a similar system. But by the late 1950s, it was clear that the remedies applied to improve the economy were not working.

While other countries like Japan and South Korea did a course correction, the analysis of the Bharatiya experts was that the remedies they offered were not implemented robustly enough. When she became the Prime Minister in 1966, Indira Gandhi inherited the disastrous policies, and the experts were responsible for them.

These experts were receiving their salaries from the people of the country, through the taxes and other levies that they had enforced on the people. Their loyalty should have been the welfare of the people, and not propagating an ideology that they had adopted.

To the credit of Indira Gandhi, it can be shown that the changes in the economic policy that started to happen under her watch, when she came back to power in 1980, were nudged by her, and not intellectually worked out by the experts. In some ways, the outlines of some of the changes could have been said to have started during the Janata Party regime that came to power post the Emergency in 1977.

For example, until the early 1980s, the cement industry was almost completely controlled by the government. Not only was there a need for a license to set up a plant, the price and the distribution was controlled by the government. And, as it happened, there was a huge shortage of cement. To resolve the issue, the experts decided that new plants should get a higher price than the old ones.

When the proposal was discussed with Indira Gandhi, she asked if there was no other way to deal with the issue. This nudge sent the experts back to the drawing board, and they came out with a proposal for partial decontrol. They could have decided to go for complete decontrol. But that would have gone against their ideological orientation, and the great urge to keep industry under their thumb.

When Bharat embarked on what is called liberalization in 1991, it was also because there was a back to the wall situation. The ideological orientation of the experts in making policy was not diluted – even as ginger steps were taken to open up the economy, it was always proclaimed that the policies of Nehru were being continued.

It is said that the draft outline of the first budget prepared by Manmohan Singh, in his capacity as the finance minister, was rejected by the then prime minister, Narsimha Rao, who then told the former what he wanted the budget to be.

Also, the major act of freeing entrepreneurs from some of the most pernicious controls implemented by the experts, namely the Industrial Development & Regulation Act and the Monopolies and Restrictive Trade Practices Act, was done by Rao who was also holding the industries portfolio at the time (it needs to be mentioned that industry associations did not ask for the removal).

Today, many of the experts are still strutting around, pontificating what is wrong with Bharat’s economy. But not offering any solutions. Nor acknowledging their own role in today’s mess. And they still draw salaries and/or pensions from the taxes paid by the people. There is no one who has called them out and asked them to acknowledge their mistakes.

During the first seven decades of Bharat’s independence, the per annum growth rate in each of the seven decades was as follows: 3,3,3,5,6,7,7. If the growth rate had increased moderately to: 4,5,6,7,8,8,8, the size of the economy would have been three times what it presently is, and close to the $5 trillion mark that has been set by the present government. And, even if we had kept the expenditure on social projects to the same level of percentage of GDP, the actual money spent would have been three times what it is today.

We should also look at a frightening scenario, namely that the nudges of the Janata Party in the late 70s, followed by the nudges of Indira Gandhi, did not happen. We would probably have had annual growth rates in each of the seven decades as follows: 3,3,3,4,4,5,5. The size of the economy today would have been half of what it is. The attendant social and economic problems would have been much more difficult than at present.

Dhume, and other members of the Khan Market Gang, should wake up and realise who really created the problem. They need to look at what happened in the past, not to point fingers at individuals, but to inform the people what mistakes were made, and how they can be corrected.

They would then be doing real service to the people of Bharat.

P.S.: I did not like the term ‘war criminal’ to be used in this case. However, if it makes people sit up and realise the gravity of the situation, then perhaps there is some redeeming value.

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Ashok Chowgule
Ashok Chowgule
Working President (External), Vishwa Hindu Parishad, Bharat.


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