AMBITION and Reality in Independent India!

By

Prof. Dr. Guru Balakrishnan

 

{One has to know – ‘Indeed, if it was for the fact, that  the creditor – foreigner were Rulers of India, the debt  service charge  would hardly  have  the ‘Emotional  Impact, it did.

 

Proportion of NDP (National domestic product),  the  debt  was 136% in 1861;  and 15% in 1899, the ‘Drain’ amounted to between to between  1% and 2.5% of NDP, over the same period.

 

Home charges were Rs.8 (eight) Crores in 1861; Rs.29 (twenty nine ) crores in 1894; and Rs.24.5 (twenty four and half ) crores in 1899 of NDP, over the same period, (per se reliable statistical data).

 

In contemporary term  of debt servicing  burden , is hardly remarkable, any one would agree.}  

 

With the above preamble, I write down the facts, as per preserved records available, to  us, in our own Archives;

 

I have to say how our Nationalists cheated the innocent public; so too the present genere of politicians , either deliberately or ignorantly:  

 

Nehru spoke before Planning Committee of the Congress Party (Indian National Congress) – , great Big EMPTY take :

 

He said:

 

‘The aim  was DECLARED, to be to ensure  an Adequate Standard of Living for the Masses, (like any strategic Politician, obviously unlike any great Statesman (but yet we called him as a great Statesman – indeed, a great Fakester then;  and, indeed mesmerized by his charm,

 

{like (Laloo Prasad in Bihar; or Mulyam Singh Yadav or Mayawati, in the UP; further on Krunanidhi in T.N…),  did in Bihar/UP/TN, in the later period to bring up his(their) rowdy elements filled party to power: (but ‘then’ Congress workers were not that ‘bad’ roudies,  then!)}  

 

In otherwords, to get rid of  the ‘Appalling Powerrty’ of the people.

 

The ‘irreducible minimum’ – interim of Money – had been  estimated by Economists at figures, from Rs.15/-  to Rs.25/-, per capita per month  ….;

 

We calculated, that a nearly a progressive standard of living would necessitate the increase  of the National wealth by 500 to 600 % (percentage), was, however,  ‘Too Big’, just for us ; and we  aimed  at 200 to 300 percentage increase, within ten years (Nehru (1945, page. 333).’

 

Question :

 

How ‘Ambitious (here obvious ‘greed’ (as it was, next to ‘Impossible’!) the Aim  that was to be,  just in Ten years?’

 

{ A rate of growth  of 200 to 300 percent over just in ten years, that means, you needed, a growth rate of 7% to 11%  per annum, is to be contrasted  with “much  more, ‘modest goals’,” , set out  in the plans, subsequently, to say,  – NOTHING  ABOUT  the EVEN  more Modest Achievement.}

 

A  minimum of  ‘Living Standard of Rs.15/- in ‘pre-war prices’ would mean , at least  ‘twice’, as much as,  by the ‘mid 1950s’. ( Does any one even today, may not, be able, to achieve say after 55 years, (that is in 2016, if the conditions prevailed then really adapted the present standards in mid 1950!). (It should convince you in 2016 even we could not really touch tha ambitious living standards except for people like Ambanis, Mallayya, some soft ware professionals, then all public servants since the 6th central pay commission recommendations which were adopted by great Dr. Manmohan singh government, as the PM then.

 

Obvious, how people are fooled, if you go through the data and the narration below you will definitely come ; but no congress man would accep, as they were the beneficiaries, so too all other politicians.

 

Today you could have noted 33 crore people are draught affected, living practically with no water, apart from drinking water, if you have read S C, warning to the government; if no reasonable monsoon a lot might die of starvation; as starvation deaths loom large on India, today.

 

That is your great political ‘shameful’ democratic rule, just they would tell you when you die sim;y say Bharat Mata Ki Jai, bring Khohinoor Diamond, and some blessed National slogans – saying you would end in Heaven; but in fact you would end in ovens only!.

 

Thus, ‘Poverty’ just beacame a great ‘Joke’, then itself, like today; like that  ‘well-to-do’ would ‘joke’, at the ‘poor people’; even today, in 2016!

 

The ‘poverty level’, when fixed  in 1960s at Rs.15/-, indeed, was. ‘Way below’ then itself, what would have  matched ‘Expectations’ ?; of Independence Movement; any might, if bestowed with common sense, would think today.

 

Any could say today , ‘how our ancestors were just duped us’, like, what Robert Walpole as PM of England said, ‘If you want to hang a dog, (just) call it Mad and Hang it!’ ; same kind of clever ploy was Nehruism  then , just because, ‘everone just depended on this one Man – but Mr . Mohamed Ali Jinnah really ‘fathomed Nehru’, not even, beloved M. K. Gandhi.

 

Jinnah correctly told Gandhiji, ‘Nehru is not like you; so we definitely need partition of India’, then.

 

{ He again lost out in Pakistan too, after Partion, as politicians as a class, any where is ‘same same’, a most un-reliable class.

 

Poverty level, when fixed in 1960s at Rs.15/- pm per capita indeed, was very much ‘way below’ even by the end of 1950 itself:

 

 

  • Reason,  for this,  ‘downward  revision’, is not ‘too far ‘ to look;

 

 

 

  • ‘Shock for planners’ of post- independent  India was to be  – ‘there was  an acute  shortage of  ‘invisible’ surplus;

 

 

 

  • Expectation:  ‘Surplus’  since (Myopia) falsity was explict, and would be ‘enhanced’ ( beginning of all kinds of ‘white lies’, in every aspect    of planning;  (‘false assurances’, same continues even today; as a great ‘Talisman’);
  • for all ‘Development plans’, by ‘Drain’ , ending , the ‘priority way – today you see NREGA, and the like ‘Subsidies’; – who pays, ‘only the very tax payer himself’;- that is the very poor man himself;

 

 

 

  • politicians just like monkey in the ‘story of ‘Monkey and the Butter’ play the  plan of ‘distribution’! ; using some ‘so called’  – ‘priority ‘ priori:

 

 

 

  • ‘How to allocate the  ‘resources’ to industrial development?

 

 

 

  • ‘Real  issue’ is:  ‘Lack of  ‘real’ Surplus, due to ‘low productivity’, in Agriculture;

 

 

 

  • Agrarian policy, but concentrated on , ‘Land Reform’ – issue of ‘distribution’ of  the surplus  lands,   rather than on ENHANCEMENT of the lands: Without water what would you produce on land?

 

 

 

  • Policy suggest, ‘Raising Productivity’ on land, (expansion of  the unit  of cultivation by pooling of lands);

 

 

 

  • Obvious: ‘Lack’ of real surplus of resources are there since in 1950s too;

 

 

 

  • Professor Kaldor suggestion met with political  Resistance (Obvious politicians took the shots at the cost of people, then too)-

 

 

 

  • Led to ‘Efforts to avoidable’ taxation;

 

 

 

  • Nehru ‘dream of cooperative farming  ran aground since ‘shot down’ by  Choudhary Charan Singh;

 

 

 

  • ( what good you got from independence – only new rich (Nove riche) thrived at the cost of poor’ and the old rich:

 

 

 

  • A  quote from Maharajah of Dharampur told Protima Bedi in 1987 , when she wanted to buy ten acres of land , near Bangalore from his 150 acres, on just a Rupee  lakh   – as follows: –

 

He says:

 

 

  • ‘I call it a high way robbery…if it was not for us, there wouldn’t  be  – ‘No Union of India’.

 

 

 

  • How can we manage ?

 

 

 

  •  Any businessman  have, won’t think if he was to go to Mysore.

 

 

 

  • But, ‘I have to  think fifty times before I go to ‘petrol pump’, and ask  them to fill up his  (car)  for some Rs. 400,- or  Rs. 450,-.

 

 

 

  • And the villagers   encroached (my) fifty acres of my land.
  • I don’t have the money  to ‘fence’  my property; and so, I keep losing more and more  acres every year of my land.

 

 

 

  • I have ‘court cases’, pending everywhere;

 

 

 

  • and ‘No Money’ to look after  my property’ he bemoaned’;

 

 

 

  • When Prothima told him:

 

 

 

  • ‘If I get back your ‘fifty acres’, which  have been encroached  byvillagers, will you give me  some land free?;
  • He said,
  • ‘If you can do it, i’ll ‘give you half’ of what you get for me’.

 

 

From the above exchanges one can see is, ‘old Maharajas are replaced by new gentry like ‘Charan Singhs’ is obvious’.

 

(This situation surfaced worse,  after ‘Privy purses’ was ‘struck down’ by supreme court, due to Art 31 was amended; thus, after smt . Indira Gandhi as PM‘abolished the privy purses’, all of you may know this situation.)

 

Strategy of ‘planned development’, was to INVEST all , in ‘Capital goods industry’, NOT FOR EXPORT:  but to  BUILD UP Self Sufficienct Economy ‘immunise from – foreign trade.

(Obviously ended in Low GROWTH – great Mahalanobis  Strategy existed  then;

 

Professor P R  Brahmmannda was ‘INNOCENT in all  these strategy moves (else he would have agitated fiercely).

 

Professor proposed,

 

‘Wage goods Strategy’ but his Model was not Mathematically as elegant like that of PC Mahalanobis’s Model.

 

In fact,

 

it is  ‘big INTERNAL drain’;  and great  Economic ‘UNDER-ACHIEVEMENT’  :

 

 

  • Led to ‘lack of surplus:

 

 

‘ that put a Brake on Growth;

 

 

  • In 1950, Pound sterling  had run out for Indians.

 

 

 

  • Good Harvest  of 1954-55  did not repeat

 

 

Led to ‘INFLATION’;

 

 

  • Foreign Aid like PL 640 and PL 660 from the USA:

 

 

 

  • and ‘Deficit Financing’  helped ‘fill the Gap’;
  • ‘Constraint on Agricultural productivity’ was lifted  during 1960s by Green Revolution strategy luckily helped;

 

 

 

  • Happy combination of ‘foreign technology’; and  private sector ;

 

 

i.e  Farmers’ response  to  government’s   incentives helped a little;

 

 

  • Windfall of Green Revolution  was ‘Hors du’ plan;

 

 

 

  • Possibility existed  of ‘Lifting ‘somewhat’ the Indian Economy -( after all India is like Canadian type Agricultural Economy )- to high growth -,
  • once ‘Food  Grains Constraint  had been lifted’;

 

 

 

  • One needed to contain with ‘Drain’;

 

 

 

  • PRB is ‘eloquent’ about ‘this’  in his chapter 27 on the ‘Impact of the Drain’ –
  • in his work in 2001 – ‘Money, Income and Prices, in 19th century India – A Historical, Quantitative and Theoretical Study’ ; Mumbai , Himalaya Publishing;

 

 

He said,

 

‘the new dimention of poverty has no  direct relations to Naoraji’s Analysis;

but there could exist:  an ‘Internal Drain’,

which potentially kept

 

‘Large portions of population  , lived below Poverty Line (BPL);

 

{(Such a  ‘drain’ could be in-built  in Indians’ ‘Economic Formulations and in Planning strategies’

(MIP 19, p.519)}

 

PRB , precient opponent to PC Maholanobis’ strategy – PRB was indeed entitled to a point ‘ to the internal drain’ ;

 

but he doesn’t elaborate by ‘further speaking’ –

 

what it is? ;

 

but ‘goes on to talk  in ‘general terms, about contracts, and Exploitation’

 

Internal drain is:-

 

 

  • Is made up of ‘Diverting Surplus’ into capital  intensive  industries –

 

 

 

  • ‘surplus’  absorbing ; rather than ‘Surplus Enhansing’;

 

 

 

  • (but ‘Loss-Making’ industries, like HSL, SAIL,Coal  mines, etc…
  • Public sector employment like FCI, PDI, etc  accounted for 15% Labor forces, with ‘real wages rising  faster than the real growth, of the Economy,

 

 

 

  • (obvious ‘surplus drains’) like in Heavy Electrical companies;
  • and in most of all PSUs…behaved( as if some charitable organisations!)  

 

 

 

  • (they are even today existing)  –

 

 

 

  • INDEED COSTED the GDP nearly 15% –  assuming further alarming ‘proportions’ –

 

 

Industries enjoyed a positive tariff around 45% ;

 

Agriculture  – negative tariff about 20%;

 

Like Soviet Planning  of 5 year plans :

 

Agriculture surplus financed  

                                                                  industrial investment:

 

Industries enjoyed No

                                                                  Comparative Advantages;

 

Largely Loss Making set up;

 

Investment did not lead to ‘Rapid

         Growth’ nor ‘Eliminated

          Poverty;

 

India’s per capita  income  did not register the pre-independence level (peak) (1929-1960, (Per Maddison ‘s figures);

 

Poverty graph did not begin to move down till twenty years later  during the 1980s;

 

IMPORTANT PLANK of  ECONOMIC DOGMA just ABANDONED – very visible:

 

Smt. Indira Gandhi as PM suddenly found old policy was no longer useful for India, so she in 1980s, ‘abanded self-sufficiency dogma’ – that, as if, there was ‘enough investible surplus  at home’ (a great Myopia!)

 

Foreign Debt just soared  from $.20 billions to $.80 billions (Maddison, p.166),

 

without any matching supportive income

 

 

  • revenue, like  foreign remittances like today just because export of man power to advanced countries ,

 

 

 

  • then by ‘labor export to middle east’, that could not meet all expenses for India – only export of men is the economic product, other than goods that got exported;

 

 

Debt obviously needed to be serviced;

 

-GDP  growth  improved  from around 3.5% in 1950  to 1980, to  5.5%   in 1980s;

 

(Obviously not because of great governance , why, even today..);

 

Growth was not – ‘Export Oriented’, as was in the 19th century British India;

 

 

  • Not enough or sufficient  export surplus to service the Home charges of the 20th century;

 

 

 

  • Economy crashed in 1991;

 

 

 

  • Informal hoarding , unlike, the 19th century hoarding;

 

 

 

  • cash in large amounts (estimate varied – not less than 50% of GDP ) proportion to that  of 19th century Gold attained;

 

 

 

  • Part of it – Black Moneys, enter’ circuit of expenditure’ in REAL ESTATE, FILMS, CRIMES related activities;

 

 

 

  • but a large portion is just  ‘hoarded’ (as much ‘draining’  as other one);
  • Independent governments, not only  ‘re-invented’, but created  a New and Larger  One ;

 

 

 

  • Internal hoard (though move  involve  some double country);

 

 

 

  • India wanted  a large part  of the GDP than what ‘Dadabhoy Nauoroji’,  spotted the ‘Drain’;

 

 

 

  •  Consolation of wastage is  Not  by Foreigners  but by very Indian trhemselves.

 

 

      Lessons of 21st century:

 

 

  • What is needed is: Equity investment -FDI – foreign direct investment – as Equity not as debt.

 

 

 

  • New patterns of  – Capital   imports in the 21st century;
  •  –  Globalization (as against)  ‘Fixed interest borrowings of the 19th century;

 

 

 

  • China borrowed in this way;

 

 

 

  • Drain will be  there only,  if the ‘imported  capital’ benefits the economy  – generate profit  – if surplus generating;

 

 

 

  • 19th century, drain – ‘No one is certain’;  if it  exceeded  the ‘cost’:
  • Rulers then were Foreign, the ‘suspicion’ was  that any  investment they made  was not beneficial;

 

 

 

  • 21st century  enjoys  same advantage  in:

 

 

 

  • ‘Globalization Game’, because of ‘English Language’ ;

 

 

 

  • – Legal  system that the British imposed on Indians which it is followed  by Indians;

 

 

 

  • Not all railways and canals  are just ‘unseless’;

 

 

 

  • but indeed useful even today – see Buckingham canal still serves chennai city;

 

 

 

  • railways really connected all parts of India, in fact commerce is promoted very well both be passsenger traffic as also freight traffic;

 

 

 

  • Sit-down- do carefully analyze  – of the return on the investment;

 

 

– what was invested on railways or canals, still    gives returns;

 

 

  • Compare,  if to  the cost,  do get  a ‘ better estimate  of  unrequitted  proportion of the ‘Drain’;

 

 

 

  • Any Drain – internal  or external,  should be  minimized, if not eliminated altogether;

 

 

 

  • A Nation  ( even after 60 years plus  of independence as a quarter of the population  is POOR;

 

 

 

  • – cannot  afford  to waste  resources, very important one needs to note.

 

 

 

  • Internal  ‘Drain’  has to be cut per force  aggressively;

 

 

 

  • by any government  if it is worth the name;

 

 

 

  • Budget  deficit , for the purpose  of ‘subsidies’  should be very  cclosely ‘prunned’;

 

 

 

  • – Avoid  unnecessary taxes  on the Tax payer – a Kamadenu – kind – do not over suck;

 

 

 

  •  for haphazard taxation by any government would ‘rebound’ any time; (as happened in the USA, led to Boston Tea Party);

 

 

 

  • Excessive Taxation  would make the tax payer poor to very poor, more and more poorer;  

 

 

 

  • that might  ‘rewind like any spring’ ;  

 

 

‘Excessive taxing’ is indicating ‘bad to very bad days are on the people’, as also the governments;

 

 

  • Always Economy revolves on ‘men only’;
  • less on  other resources;

 

 

 

  • Man has to be Healthy – not terribly ‘depressed’,

 

 

 

  • ill health of any kind is a disaster to the country;

 

 

 

  • No extravagnce need to be tolerated – on the so called God Forsaken Ideas, ideals, rightly;

 

 

 

  • today Uttaranchal High Court warned Union government ought to allow the elected government need to function;

 

 

 

  • Union cannot force its governor as its agent to dissolve the assembly –

 

 

 

  • Then only, there will be Healthy  Democracy , local people would take care like ‘Lex Loci’ is ;

 


Politicians  need to take  care;

 

 if not situation  can become  ‘bleaker’; and weaken the state;

 

– (people) not a healthy sign;

 

Robust common sense shall prevail –

 

No one is boss over the other – just Appeal to the senses, nothing more;

 

– Nothing arbitrary of any kind shall be there;

 

– Else it would be an  ‘Ibrahim Lodi kind rule;

 

  • Budget deficit should not be there just to promote meaningless ideas of any kind;

 

 

 

  • – for budget deficit is the real ‘Hemlock’ (poison) that would choke you to death;

 

 

 

  • Irrational Subsidies should be avoided at all costs, for they are all  basically Regressive in approach;

 

 

 

  • People need to work at all cost;

 

 

 

  • Never encourage ‘idleness’;

 

 

 

  • For that would reverberate on you- the governments;

 

 

 

  • Eliminate any ‘hoarding’, for that chokes any development ;

 

 

 

  • – frugality is a must  – ‘A bird is worth two in the bush’;

 

 

Harness  the Hoardings:

 

 

  • Excessive Hoards are an example of  Acute  Liquidity Preference (ALP);

 

 

 

  • Follow the principle what  Silvasio Gesel  prescription in 1929, for Lord Keyness appreciated his prescriptions;

 

 

 

  • To understand Silvasio refer his book –  Ideas, The  Natural Economic Order – (read  English translation from his German work, by Phillip Pye, (Berin : Neo verlag).

 

===============Ends====================

 

References:

—————

 

India’s Economic Reforms;  Aluwalia. Isher and M.D. Little Delhi OUP

 

P R Brahmmananda (2001) Money, Income and Prices in the19trh century India;  A Historical , Quantitative ,  and Theoretical study’ , Mumbai, Himalaya Publishing.

 

Desai, Meghan , (1998) : Development perspectives : ‘Was there an Alternative  to Mahalonobis? In Aluwalia  And Little (1998) and reprinted (2004);

 

(2002), ‘The Possibility of  De-Globalization in Dolfima and Dennerenther, (2002);

Dolfsma , W & C. Dennereuther (edn.2002) – ‘Globalization, Inequality,      

                                  And Social Capital (Aldereshot Edward Elgar);

 

Gessel, Silvio (1929),  ‘The Natural Economic Order ,  translated by Phillip Pye (Berlin Neo – Ver lag)

 

Kidron, Michael, (1965)  Foreign investment in india (Oxford) OUP;

 

——————–   

finis.

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