India is like a tree with several varieties of fruits hanging from it. We dream. We are encouraged to dream. Our leaders after independence have nudged us to dream and partner the government in its developmental tasks. Centuries of foreign rule had robbed us of all our innate entrepreneurial capabilities. Our own production units were closed down, converting us in to a mere market for foreign goods, which used machines for mass production. We had lost our own models of economic development. Market for our own goods had shrunk. Unemployment brought poverty and backwardness. Our struggle for freedom from the foreign rule was inspired by the dream of regaining our old position of economic glory, summed up in the epithet saune ki chidiyaa or the golden bird. The question was: where to start?
At the dawn of our independence the world was divided in two models: the capitalist model & the socialist model. Capitalism was synonymous with colonization and its consequences. Who better than India knew the ugly face of capitalism, demonstrated by operations of the East India Company and the British rule? Socialism was a new creed. It had a magnetic appeal because of the magic of its rhetoric. The one was associated with the rich and the other with the poor. A poor country like India was naturally drawn to the latter. It was a conscious but careful choice. India wanted to draw from both models the best features for its own strategy of economic development. In lay discourse it came to be called the middle path. Credit for devising this policy was given to the first Prime Minister, Jawahar Lal Nehru. It is called Nehruvian policy even today.
For all these years since 1947 the Nehruvian economic policies have been the stated development charter of the country, with amendments, modifications, liberalization and small doses of reforms from time to time. However the Nehruvian economic policy approach did not satisfy the industry, business or entrepreneurial requirements because it turned out to be slow & costly. It got regular flak from international agencies like the World Bank, IMF and developed country governments. There is no denying the fact that it was indeed slow and tilted towards socialistic pattern, but this was the only course for a country short on capital, technology, plant & machinery. None of these important elements of economic development was available easily or at easy terms. A country as big as India needed to plan for the improvement of the economic conditions of its vast population. For years, we had to import food grains like wheat to feed our people.
This model, debated for decades, has become a hot issue after Narendra Modi becoming the Prime Minister. One view in India has been advocating adoption of swadeshi or indigenous model. There is a strong opinion within the political party of the Prime Minister i.e. the BJP, about swadeshi. A perceived conflict between the Nehruvian and indigenous models is getting more than rightful attention. The Nehruvian model neither ignored indigenous means of production nor closed down existing facilities. Rather it lent full support to village industries and small units. It only acknowledged the gap between the capabilities of the two for facing the challenge of accelerated development, for which modern industrialization was the only choice. It was the awareness of the fact that the swadeshi model lacked the potential to fulfill the total developmental requirements. This fact cannot be controverted even today and yet the advocates of swadeshi stubbornly go on with their movement without any blue print of development. The conflict between the Nehruvian and swadeshi models, therefore, is misconceived. The remedy for the abject poverty of the masses is economic reforms on a vast scale at a faster pace than ever and a change in attitude. Nothing should hold us up; India has paid a very heavy price in the form of lost opportunities because of our hatred for capitalism inspired by the rhetoric of socialism and its success in a few countries. The left rhetoric is engrossing but hollow for sustained development for improving the living standards of the masses across all sections of society. Thus, the task cut out for the new government is nothing less than a very big challenge. Since Prime Minister Modi has woven dreams of acche din (good days) ahead, expectations are high. The Prime Minister is sincere about his promise and his interactions with the people generally and bureaucracy in particular tend to strengthen it. But it hardly can be fixed with band aids. It demands change of gear. Success of Modi will depend on the fact whether he is ready to do that.
Criticism is always welcome. So I hold no apology for the Nehruvian policy. However, it must be noted that today nobody would have been talking of development or growth had the Nehruvian policies not been implemented. The difference of growth and development in different states within India even while the Nehruvian policies were being implemented validates the point that those who marched along had achieved vastly better results than those who failed to act in time. Nehru should not be treated as one individual alone but a collective decision of the best minds at a given point of time when nothing better was on the table. Today it is a different India that is talking development. Modi is a product of the Nehruvian policies, whichever way you interpret them. Those who dislike the very name Nehru should place on the table their vision of development during the period 1947-1957 or 1967 that should have been acted upon. Similarly those who tend to portray Nehru as a demigod should also remember that even during the British Rule Indians were getting educated abroad in Europe & America. Nehru himself was educated in England. So were several other freedom fighters, who knew better than Nehru what was needed for India. They chose to delegate the responsibility to Jawaharlal Nehru after due deliberation and we must respect that. Rest is matter for research in social sciences. That post mortem not being the focus of this article, I revert to the main issue: strategy now.
The new government would do better if it makes clear choices and devises a new model to achieve its goals. The choice is between: economic intelligence or current project approval procedures. The present project approval methods slow down commissioning of strategic projects by decades (the coal based power projects are a case in point) whereas the need, indeed the opportunity, might call for decisions in hours. That kind of fast decision making is possible only if we put value to economic intelligence rather than premium on delaying procedures where everyone only puts spokes by way of objections whenever his/her approval is required without even knowing the ABC of the project. Let me give an illustration. Media reports say that a new fiber optic has been developed which will change the world of internet communication. How long should India take to get this technology? Should it not grab it? That is possible only if we are investing in economic intelligence and processing it for our use. Instead, we expect (rather ask years later), our embassies abroad for such information. Thereafter it takes years to decide whether the technology should be canalized through a public sector enterprise or allowed to be imported by the private sector. Serious (!) discussions are held in various high powered committees comprising experts from the technical field, bureaucrats and other stakeholders for years, as was done in respect of the fiber optics technology initially in the 1980s when the decision to entrust the NRDC (National Research & Development Corporation) with its responsibility delayed the decision considerably. Such important decisions cannot be taken any faster in government, but are the staple of private businesses; in government careers are at risk if anything goes wrong, in private sector money alone is at risk. Even the evaluation techniques of the two are different: for government regional development may outweigh economic consideration or social-cost benefit considerations might influence decision making affecting the health of the project adversely later, but for the private sector business interest would be supreme and if there is the right opportunity worth investing it will finalize technical and/or financial collaborations even before the news gets broken to the market. The time difference may be of the order of several months or years and it is as valuable an input for the entrepreneur as capital or machinery, land or skilled manpower. Prime Minister Narendra Modi sounds convincing when he asserts that it is not the business of the government to be in business. Its true import can be appreciated in a case like this.
For accelerated development it is essential that the country scouts for the latest technological developments, market surveys and other critical economic information to match countries like China, Japan, USA, European countries, Australia and every big or small country. Ideas can sprout anywhere in the world and we need to acquire the wisdom without any delay. It should be possible if we develop our own growth model. There is no problem if it is called the Modi Model. There is nothing sacrosanct about the Nehruvian model, it already stands modified to suit the requirements. Now it is time for competition. To be competitive, we need to devise new sturdy strategy fast. It calls for commitment of all stakeholders. The absence of a committed and trustworthy leadership after Nehru had driven away committed public servants, leaving the field open for sycophants and corrupt elements to abuse the licensing strategy for personal gain or crony capitalism. The country has been exploited by such elements so much that India came to be considered a country where ease of business was only an economic fable. Modi has raised the hope of dismantling the anthills of such elements, but what is required is its replacement. All developed countries are investing on economic intelligence, even industrial espionage, for decades. Why should India lag behind?
Whenever technological upgrade is talked, questions are raised about the perceived loss of jobs. Introduction of new technology, though disruptive, also creates new jobs. In many cases it leads to net addition to jobs. But it saves a lot in the form of reduced waste and rejects and higher consumer satisfaction. HMT (Hindustan Machine Tools), a government of India enterprise, is closing down its watch making facilities due to losses over decades. Watch making operations of HMT are no match for Swiss watch makers, for had it been so, the HMT would not have even thought of closing down in the next 100 years considering the domestic market for watches. The question of making losses would never have arisen. It would have been in the black all these years. But it is not a watch manufacturing country in the same way the Swiss companies are. The difference is technology. Wrist watches had remained a product reserved for development in the small scale sector for decades, even as making requisite brass plates for watch hands has so far not been possible in the country. Big ideas of setting up a Horology Centre have not materialized so far. The small scale industry has been importing watch movements from abroad and marking them as locally produced and selling. While the business has grown manifold, little progress has been made for development of skills, technology and facilities for making it into a cottage industry as in Switzerland, to create jobs for the millions to replace the harmful industry like beedi making (rolling locally made cigarettes). The market holds promise of large scale job creation besides livelihood for another million people. Wrist watches are now valued pieces of jewellery, crafted by artisans for very high skills, helping expansion of the market for their products while also retaining their traditional markets. They craft custom made pieces of great value. They are costly. They are good business. They are worth emulation. Even then the public sector HMT makes losses and decides to close down operations. This culture of inverse logic needs to be abandoned. As vested interests and influences, low on economic intelligence would not take kindly to any such idea, only the new government can show the necessary boldness to step in and take healthy decisions.
Why do we complain of shortage of power in India? Are we really short or wasting energy? Our incandescent lamps, power hungry industrial pumps, heavy electricity consuming vintage machinery etc. tell a different story. We have any number of excuses to justify for continuing with outdated technology. We love old, as old is more than always gold in our view. But technological advancement in the past 40 years has ushered in the 21st century with a bang. We cannot afford to be left behind. Just imagine the situation we would have been had we not embraced the computer technology in time. Like it or not, one will have to thank late Prime Minister Rajiv Gandhi for launching computerization in a big way in the country to welcome the 21st century. It was so because he was no line politician but a professional commercial pilot using computers daily. He knew what was coming up; he knew what was required and he pulled the stick to gather the right momentum at the right time. The result is India is today counted among the leaders in the field of software development. Today, if Prime Minister Narendra Modi takes pride in stating that India is no more the country of the rope trick performers but mouse movers, it is entirely due to Rajiv Gandhi. My book on this website, titled Initiator of Economic Reforms: Rajiv Gandhi, was not accepted for publication by a publisher only because it brings on record the revolutionary initiative of late Rajiv Gandhi for economic liberalization without which India would have continued to suffer the ill effects of the discredited Licence Raj. Development was a mantra not dear to many. I later came to know that the publisher was politically loyal to the party to which Modi belonged, and which has always criticized the Nehruvian policies. It goes to the credit of Modi that he has not only adopted development as a mantra but also raised it to the level of the magic mantra to win the elections. When prominent columnists wrote to give credit for economic liberalization to late PV Narasimha Rao, I commented that it was initiated by Rajiv Gandhi. Rajiv had brought about structural changes that was impossible for his successors to upturn. They had no other option but to continue with the reforms launched by him. I also informed the Congress Party President, who was none other than Rajiv’s widow Sonia Gandhi, about the book on this website. The Congress rather than carrying forward the policies of Rajiv fell for revival of the licence raj and the consequences were before the whole world- scams & scams of the enormity of 2G, Coalgate, Adarsh, CWG etc. Had the Congress marched on the genuine liberalization path shown by Rajiv, it would not have been reduced to such a pathetic condition. Can anybody afford to ignore the contribution of Rajiv Gandhi for computerization in India? Innate hatred for innovators, initiators, pioneers, researchers, scholars and entrepreneurs is the weakness of the ignorant, backward, petty politicians. In contrast, Narendra Modi has displayed a better appreciation for the development brought about by the Nehruvian policies and Rajiv’s contribution and converted it into his own vision, mission and First Five Year Plan of Narendra Modi, silently disowning the advocates of flawed concepts of swadeshi. What Rajiv had successfully done cannot be undone by anybody, how so much they might hate him. What Modi has done and has the potential to do, shall not be undone by his successors. The direction is clear: the Prime Minister has to lead the nation in similar or still better manner rather than leaving economic decisions to officials or chambers of commerce. If radicalism is required to be shown, it is in matters of development- economic, social, political, judicial and cultural. When Prime Minister Modi said something during the elections to the parliament, people trusted every word he uttered. We only hope he does not have to ever say ”trust me”.
Development & promotion of entrepreneurship is our very old model of development. Distance from modern technology had reduced our producers to bare livelihood earning artisan class. Let us take one illustration. I have witnessed several attempts to help the cobbler occupying a little space by the roadside in every small town. It is a pathetic situation to see him carry on his trade even after 60 years of planned development and scores of programmes to help him. Is he a slow learner or are the government agencies tardy at service delivery? What should by now have become a high grade trade for the millions of cobblers continues to be a poor man’s business for subsistence level livelihood only. Only two companies had dominated the market – Bata & Flex- for decades before flex was destroyed via public sector route. After the market was opened, Reebok and Lotto etc. have pocketed a large chunk of the market. The gap in the demand and supply of quality footwear has made them sell shoes for more than rupees 10000 (ten thousand) a pair. Had we invested in technology, our poor cobbler would have regained his enterprise, market position and pride of business, living an improved life style and educating his children in good schools instead of keeping them with him by the roadside braving the fumes, dust, sun, wind, cold and rain. The underserved sector needs footwear in the range of more than 100 million pairs annually for school children, college students, office goers, women and men. Our half -hearted attempts at just improving the conditions and not changing them completely have yielded no better results than in the watch industry segment. This is so when we boast of being one of the largest exporters of hides & skins; a large population of cattle and wild life and finest craftsmen. What is lacking is tools, technology and material. The huge market for leather goods has been beckoning them for long. Only if they could be helped to craft the leather goods like shoes, Ladies’ hand bags, purses, belts, saddles and hundreds of other items, India would have been dominating the world market. We have not even identified the prospects correctly, for that falls under the category of economic intelligence. The result: we are happy to buy fake purses and handbags of international brands at attractive price whenever we happen to go abroad and feel happy to be the proud possessor of such prized products! India simply exports the larger quantity of hides and skin instead of turning them into finished products of international quality, creating millions of jobs and improving the awful economic conditions of world class artisans.
The situation gets repeated in most areas of very high growth and employment potential. Regular advertisements from the government authority responsible for laying down “standards” warn people: Don’t buy these products if they don’t have ISI mark — cement, household electrical goods, steel products, packaged food & drinking water, medical equipment, electronic items like TV, microwave ovens and many more consumer products. As far as I know, there are no Indian Standards for services like the plumber, electrician, carpenter, mason, Air Conditioner/ TV servicing under Annual Maintenance Agreement for gadgets costing over Rs. 1,00,000. Unless the harassed consumer decides to put some sense in the head of corporates, domestic or multi-nationals like Samsung, Nokia or others, the damage done to their gadget by the authorized service centre mechanic is not even attended to. The government has so far not commissioned any survey on the waste of consumer wealth and life due to these products and services of poor standards. Rather their product figures are added to the contribution from the small & medium & large industry in the country. Is it industrialization or shadow industrialization? Technology upgrade and highest standards have the potential of more than 10% annual growth by themselves and equal or more exports growth. There has been capital shortage, but that logic fails in the face of 100 times more black money in the country and abroad. Actually we have not realized the value of these growth inputs and shown an attitude of everything goes on or what is its local equivalent sab chalata hai.
The road transport facility of Delhi presents a very good example. The incompetent and corrupt government in Delhi and its officers had shown total callousness to the woes of the commuting public. The worst city bus service in developing countries was run under the name of DTC (Delhi Transport Corporation). It was an exercise in gymnastics, aerobics, wrestling and endurance for the commuting public. Getting the bus was possible only at starting points. Buses won’t stop at the designated spot to take or drop passengers. Spotting a bus, all commuters would rush to board it. In the process injuries to many were regular. It could take several hours to get the bus. Meanwhile the waiting commuters had to endure the harsh Delhi summers, winters and rains. The plight of the commuters was exploited by politicians and officials by adding the ugliest private services called the blue line and red line, which were nicknamed killer-lines on the roads. Then came the change of government and the idea of the metro bloomed. The metro was working in England and elsewhere, if one were to draw on others’ experience. As the intentions of the government of the time were honest, the right technical man came forward to take the responsibility of implementing the project. Today, Delhi metro is the life line for the commuters of Delhi and the NCR (National Capital Region).There are demands for the Delhi metro services in almost every town coming under the NCR. But for someone who decided to challenge the sab chalata hai attitude, Delhi residents would have been continuing with the painful experience of the DTC services. This success needs emulation by every public service provider engaged on skill development.
The new government under Modi has to change the sab chalata hai attitude in the interest of sustainable growth and better job creation. Indian car manufacturer Hindustan Motors, manufacturers of the Ambassador brand, have closed down, for having failed to scale up technology, restrictions under the licensing regime and trade unionism of a curious kind. The ease of doing business in India acquires significance in this situation. Here are entrepreneurs, trained workers, ready market, finance but not the right kind of technology. Such amount of technology in so vast a field can’t be acquired from abroad easily. For this the only answer is R&D. There is no use quoting China every time growth strategy is considered, but we need to invest heavily in R&D. How can we hope to develop technology for cryogenic engines, submarines, light aircraft, consumer electronics, medical equipment, robotics etc. without investing heavily in R&D? We don’t even employ the right brains for research as our payments for researchers are shabbily poor and insulting, impelling them to go to countries like the USA where their skills are not only fully recognized, rewarded and also honoured. When they get international awards for their achievements, we laud the achievements of the awardee as a Person of Indian Origin (PIO/NRI). But we don’t pay for pioneers, achievers, discoverers, initiators, risk takers and change initiators. Can we pay a few millions to a young research scholars for inventing for the country a product of great import substitution value? Our payment models, which artificially keep payments to all below the highest paid bureaucrat or Member of Parliament, can hardly visualize such radical payment schemes. When we were trying to develop OCR (Optical Character Recognition) for Hindi, the bureaucrat ordered the technical team to produce it by a date falling after two months! What product development can be envisaged with such standards of supervisors?
The new mantra in India for a few years has been Skill Development. A commission was set up by the previous government, putting all the existing infrastructure under one authority. The new government of Modi has taken it one step farther by creating a ministry of Skill Development. The biggest achievement of the Nehruvian model was establishment of institutions for skill development throughout the length and breadth of India. Even under Nehru’s time, such institutions had reached right down to block level. These blocks had trained manpower to guide development in agriculture, industry, health, education and a few other areas. Small Industry Service Institutes, which were manned by technical officers, were set up in all state capitals. Employment Exchanges were provided at district level. Industrial Training Institutes were set up at hundreds of places to turn out skilled manpower for industry and service in large numbers. KVIC (Khadi & Village Industries Commission), concentrated on training for the rural youth short on formal education and training, providing training in activities like bee keeping, soap making, hand paper making, safety matches, candles, fragrance sticks, khadi cloth and apparel and leather sandals. It also advanced soft loans, raw material & marketing assistance Training facilities, common services, scarce raw material distribution, concessional finance and marketing assistance from the SIDO (Small Industry Development Organization) helped contribute significantly to the growth of the small industrial units in every state and development of a valuable pool of managers and entrepreneurs. It attracted technical personnel to take up manufacturing in a big way. Before the creation of the new ministry of skill development, this infrastructure stood in place for several years. However, that was not sufficient. Bringing latest technology to the small or even medium scale enterprises was discouragingly costly affairs, depressing margins to a level where doing business was simply not possible, unless one was prepared to cut corners. That situation impacted the skill development of both the owner-manager as also the government agency personnel. While technology was registering fast development, these two engines of growth were stagnating. The gap between the availability & requirement of the producer and the mentor rendered most public skill development infrastructure underutilized. Improving the situation needs huge investment, which is unlikely to become available in the near future. Small doses of investment are bound to yield unsatisfactory result because of growth constraints on public servants manning these organizations. The remedy lies in skilled entrepreneurs to enter manufacturing in a big way. The government can extend them all required help like removing all impediments to setting up industries, guaranteed power & water connection, finance at negligible interest rate. It is anytime preferable to encourage quality self-employment than providing government jobs, since it contributes to overall economic development, job creation and improving living standards. The success made by entrepreneurs in the IT sector has contributed to enhancing the prestige of the nation besides being inspiring to thousands of young men and women. If the skill development programme of the new government succeeds in delivering better services than so far, it would have turned a corner in the country’s economic development as valuable as that of late Prime Minister Jawahar Lal Nehru.
Gujarat in India is unlike many other states. It has many first to its credit. Its industrial growth is an example of the synergy of the political executive, bureaucracy and entrepreneur working in harmony for the general good of the people. As the new Prime Minister Narendra Modi comes from Gujarat, it is not too much of expectation that he will make the best use of his experience of the remarkable business acumen of the average Gujarati- be it a chaiwallah or a chief minister. The Ministry of Skill Development will leave a permanent mark on the industrial map of India if it achieves the legitimate goal of skill development to the extent where the product of goods and services matches the very best anywhere in the world and where the government doesn’t have to warn the consumers of spurious or sub-standard products through advertisements in the nation newspapers. The industry & business chambers have to come forward to take up the responsibility of achieving these goals and make India the best place to do business during the term of this government as the country can hardly afford to delay matters. The world is changing fast and we might be functioning in a new world economic order by the year 2020. Modernity is witnessing revival of medievalism and development is under attack from destruction. It can’t be summed up in small terms like terrorism or counter terrorism- it is leading the world towards devastation of an unprecedented kind. Only economically strong nations will be able to withstand this avalanche. It is high time for them to march hand in hand with the governments of the developing nations. For us in India, it is time to create only white money; time to stop creation of black money. Build your castles, but first build your nation. If the nation is strong, every one of us is strong. What else is Acche Din?