India and socialism - 1
I am not an economist. I am an engineer. I do not have the intellectual rigor to debate the finer points of economic policy decisions. I am also not aware of many facts that accompany commentaries like this. After following the Indian economy closely for many years and comparing the present with what we had in the past, I felt compelled to write my opinion in this blog. Lot of the views mentioned in this commentary might seem amateurish to the professionals who deal with these kinds of facts and figures on a daily basis in their work. I would encourage them to point out the flaws. I have written this commentary because I strongly believe that it is the duty of every thoughtful Indian to oppose the policy decisions taken by the leftists in the name of providing social and economic justice to the masses. It is time that Indians decide to throw the leftists in the trash can of history where they truly belong.
Once upon a time, long time ago, India was a country that was in the grip of socialists and the communists. These two ideologies were considered to be panacea for all the ills afflicting the society. The mantra popularized by different pundits in-charge of the country was - every individual of the society has to work for greater good. Collectivism was in vogue. Indian society equated the concept of profit to the concept of exploitation. Nobody had ever heard of the concept of generation of wealth. Mercifully, we are finally on a road to recovery from our stunted immediate past.
I believe, this whole nonsense was started by our first prime minister, Pandit Jawahar Lal Nehru. Pandit Nehru was a man of exceptional knowledge. He was the son of a wealthy lawyer - Motilal Nehru, from Allahabad and belonged to a Kashmiri Brahmin family. He was educated in the best of schools in England - Harrow and Cambridge. Inspired by Gandhiji and revolted by the Jalianwala Bag massacre, Pandit Nehru joined the independence movement and quickly rose to become one of the most important leaders. He was the blue-eyed boy of Gandhiji.
After independence from the British in 1947, Pandit Nehru became the first prime minister of India. His liberalism and vision in those initial years after independence made India emerge as secular, democratic, and sovereign nation. He was a statesman par excellence. I am grateful to Pandit Nehru and the first generation of leaders of our nation who understood how important it is for India to incorporate concepts like separation of religion from government and equality of all men irrespective of caste, creed, religion etc. in our constitution. Although many of these concepts were borrowed from different constitutions around the world, yet they played an important part in shaping India's destiny.
After the encomiums, let us turn our gaze to the other side of Pandit Nehru. In the terminology of Star Wars, Pandit Nehru had an equivalent share of the dark side also. He was afflicted by a vice that single-handedly corrupts the thinking process of a capable and rational man - hubris. Pandit Nehru aspired to be one of the leaders of the newly independent nations all around the world. He brushed aside pragmatism for idealism in order to pursue his contorted version of the perfect society in an ideal world order. In spite of being an amateur historian, he forgot the basic lessons of history regarding economics as well as politics. His series of mistakes in Kashmir, foreign policies with respect to China, USA, USSR, and the socialistic policies in the case of economy has cost India dearly.
During Pandit Nehru's tenure of 17 years as India's prime minister, he and Congress party went virtually unchallenged during elections. This happened in spite of his gross errors in judgement. The re-election of Nehru and the Congress party again and again in consecutive elections was mainly on account of India trying to take her first steps to be a responsible and democratic nation. It takes people who have been enslaved for more than two hundered years some time to understand what freedom means and the responsibility it carries. The polity was still not matured enough to consider throwing out a man of the stature of Pandit Nehru from power. In today's world I can vouch that a politician like Pandit Nehru with a propensity to create blunders the size of Himalayas will not be able to rule India for more than five years.
As Pandit Nehru assured himself to be infallible, he promoted a coterie of people that surrounded him. These people were mirror images of Nehru. All they did was to serve as "yes" men to his policy decisions. People who had the guts to say "no" to something that Panditji liked fell from his grace. This led to a rot in the system that nobody ever dared to correct and Panditji went on making mistakes. The resignation of Gen. K.S. Thimmayya (then acting chief of staff of Indian Army) over the issue of the promotion of Lt. Gen. B. M. Kaul is a famous case to support the venality of Pandit Nehru. Eventually, Lt. Gen. B. M. Kaul played a significant role in leading the Indian Army to its worst defeat in the 1962 Indo-China war.
Pandit Nehru believed in the control of the flow of capital by the government. His choice of medicine to lift the Indians out of poverty was a "mixed economy" comprising of the government as the big brother and the existence of a private sector under its shadow. He had remarkable faith in the concept of five-year plans, an idea borrowed from the erstwhile Soviet Union. The combination of all these factors led to the creation of a bloated bureaucracy, promotion of something that was later on termed as "License Raj", and a small but venal private sector that thrived in the protectionist policies spawned by the corrupt "babus" of the government.
Let me resort to an anecdote in order to express my thoughts more coherently. Once, while having a discussion with my father, I came to know that it took nearly one and half to two years for a person in India to order a "Bajaj Super" scooter during the early 70s. A person who wanted to buy a scooter had to apply for a permit from the government. Once the permit was obtained, it took another six to eight months for the company to deliver the final product to the consumer. Market forces that encourage making efficient use of investment capital were never encouraged. Wastage of money by investing in myriad poverty removal schemes without creation of wealth in real sense of the term became the norm of the day. All this was overseen by the government whose employees made their money by dishing out licenses and permits in return for monetary and other kinds of favors.
A nexus between the private company owners and the bureacracy managed to keep the competition from entering the market. This prevented the consumers from getting the biggest bang for their buck. The technology behind the final product was never upgraded as the companies selling these products never felt the need to upgrade either their manufacturing facilities or their final product. Stagnation replaced innovation. Mediocrity managed to get a stranglehold over merit.
People who have the hunger and the desire to change the society in a big way can not thrive in a controlled environment. Entrepreneurship and availability of resources to provide investment in order to set up new ventures and fund research is very crucial for a society that shuns wastage. A better society does not mean only social equality but also a society that shuns wastage of its resources. Bloated public sector entities that swallowed billions of dollars of money without producing a single penny in return have caused lot of damage to India. If the money that the government invested in these monsters would have been spent on improving basic infrastructure of India, we would have created conditions to promote industry and improve the standard of living of the people in the true sense. My definition of the infrastructure of a nation includes not only roads, railways, power, ports, airports, telecommunications but also health, education, and sanitation facilities for the common people. In brief, as a nation, our development was held hostage by a small community of people who benefitted from these companies either as their employees or as their contractors.
To be fair to the role played by public sector companies in India in the first five decades since independence, I have to also acknowledge that some public sector companies like BHEL, NTPC, SAIL, ONGC, GAIL, Indian Oil, BPCL, HPCL, IPCL etc. performed creditably in those years. But most of these companies could have been better with some competition to stimulate them. I have seen how my father struggled to imbibe the concepts of efficiency, accountability, and productivity in the minds of the employees of one of these companies throughout his entire career. I do not know whether he succeeded in his endeavours but I can definitely say that he tried his best.
India produced excellent men and women who could have changed the shape of the country if they would have been provided the freedom to operate as per their vision. They were forced to tow an official line that stifled their creativity and freedom. This resulted in the great "brain drain" to the west. Patriotism has its limitations. Neither is it able to fill your stomach nor is it able to fill up the void that you feel when your ideas do not have any chance to see the light of success.
I am not one of those who believe that market forces will solve every problem that is prevalent in today's India. However, I do believe that a market suitably imbibed with a set of rules that encourage fair competition amongst its participants does bring out the best results. These results eventually lead to a solution that is the most efficient and optimized in terms of the usage of the invested capital in the market. The government of India owes it to all the tax payers in India (already miniscule in numbers as compared to the size of the Indian economy) to efficiently use their contribution in nation building. A socialist mindset inherently prevents this from happening. The worst part is that all this is justified in the name of the upliftment of poor.
(To be continued ....)