Dr Manmohan Singh, a prime minister by accident is one of the greatest visionaries that our nation witnessed after Independence. He led the country on the twin paths of liberalization and market economy. He helped our economy to restore back on some freedom that we lost after our Independence in 1950. The industrial and banking sector reforms, under his guidance gave momentum to the economy to move on its own by reducing policy centric rigidities. Step towards globalization was to help the country to become competitive in the world market and give equal right to all to maximize their shares and dues. What remains as a real achievement was the backtrack on the inefficient license raj system, which is held responsible for the past predicament and present laboriousness of our country.
A major issue with policy making is that the models that are prescribed and followed are based on so many assumptions and are mostly case sensitive. India was subjected to the decisions of those who thought we resembled the Soviet Union and ignored the political, social and cultural dissemblance. The Mahalanobis Strategy failed not because it was unplanned and mis implemented but because of the fact that it was not suited to our economy. Heavy industrialization was surely not the way to curb the growing dependence on other nations and to reduce the excess burden of employment on agriculture sector.
After the second five year plan, India was forced to industrialize on certain set parameters that our policy makers thought were suited to our economy as they were to other successful countries. Most of us today hold the industrial sector responsible for lower average living standards due to high level of unemployment in the unorganized sector. Had there been a proper industrial incentive system in sixties, labour intensive industrial growth could have absorbed the surplus labour arising out of the oppressed agriculture sector. During seventies and eighties, we continued with the same policies and thus the pool of disguised employment and unskilled labor force was build over time. In the Indian context it was not a demand side problem, the supply side economics failed because of the inappropriate policy measures that were carved out based on certain benchmarks.
I believe that the word freedom holds good in every sense. Planning and administration gave rise to the concept of power and thus came exploitation. I support the free economy framework that was given by Adam Smith, where the individuals act according to their own interests and in the process, society's interests are maximized.
Welfare encompasses all of us, so leave it on the individual discretion. This was the philosophy that tutored the economic reforms in 1991. The efforts put in by Dr Manmohan Singh and his crew need to be appreciated in larger context where our workers, entrepreneurs, industrial and commercial units gained the independence to act according to market forces. Restrictions will never solve any problems, rather will only exacerbate the existing gap between the developing and developed world. Set the individuals, economies and countries free .... and then see the change !!
I believe that the word freedom holds good in every sense. Planning and administration gave rise to the concept of power and thus came exploitation. I support the free economy framework that was given by Adam Smith, where the individuals act according to their own interests and in the process, society's interests are maximized.
Welfare encompasses all of us, so leave it on the individual discretion. This was the philosophy that tutored the economic reforms in 1991. The efforts put in by Dr Manmohan Singh and his crew need to be appreciated in larger context where our workers, entrepreneurs, industrial and commercial units gained the independence to act according to market forces. Restrictions will never solve any problems, rather will only exacerbate the existing gap between the developing and developed world. Set the individuals, economies and countries free .... and then see the change !!
2 comments:
Your dissertation on the subject is commendable.
You have analysed the problem with surgical precision.
As a layman on the subject of economics I have definitely no pretensions to be very knowledgeable by any yard stick but I dare possess certain view points which I would like to share with you. In the final analysis my views would only go to corroborate and compliment your theory which you have so well laid bare
When the nation finally gained freedom from the British Empire, our leaders were in a tearing hurry to get rid off everything which spelt of western origin. They set up their own economic agenda, a "swadeshi" agenda.
Nehru and Gandhi ensured freedom from every western influence. As a consequence we were isolated and insulated from the huge progress made by the west in science and technology. Gandhi was in favour of small cottage industries at village level. Nehru on the other hand considered industrialization as a cure for all economic ill of th e nation.
After the devastation caused by the second world war, when nations got down to the business of rebuilding their economies, three kinds of economics theories were prevalent viz; The capitalistic regulated economy of US; The European mixed economy model and the state controlled economy of Stalin's Russia and other communists.
As a science graduate of Cambridge Nehru was greatly influenced by the policies of British liberal party and by the disciplined iron hand state control of Stalin's economic theories. This particular period revealed to Nehru a brilliant statistician named Mahalanobis. He helped inflame Nehru's flawed concept of democratic industrialization. What the nation urgently required was a massive boost in the agricultural sector and mechanising it and emphasis on the production of mass consumer products for the ever growing populace.Instead we promoted setting up of gigantic factories manufacturing steel and machinery for a population which was starved of food and consumable commodities for well over thirty years after independence. And now the scene was fully set up with limited access to western progress and dependence on Russian archaic economic policies. This obviously gave rise to shortages and thus followed another terror festooned on the people, the dis reputed licence permit quota system.The nations main tragedy was that we were governed by one man, Nehru. His decisions went unchallenged within and without parliament.
The nation's rulers were joined by another set of sadistic rulers, the bureaucracy. These educated mandarins would preside over such mighty decisions as to who would get licence to manufacture bread and biscuits and who would make shaving blades. The nation's growth rate stagnated at 1% till as recently as 1980.During this fateful year soon after the emergency fiasco, Indira Gandhi returned to power
The nation was faced with the infamous oil crises when we had insufficient money to buy crude.Indira Gandhi took a bold decision to seek western help and borrowed money from IMF to tide over the crises.This action was considered as a blasphemy of sorts but she went ahead nevertheless.Her son Raj iv Gandhi was to emulate her later during his rule. He borrowed larger sums.How sad that the nations prime minister had to admit publicly," Of every rupee that goes towards welfare of the downtrodden and needy only ten paise reaches them." When Chandrashekar took charge as prime minister the nation 's coffers were empty of foreign exchange,and we resorted to mortgaging our gold.
This more or less coincided with the collapse of the USSR triggered by Gorbachev. The monolith disintegrated to reveal an empty shell bereft of any solid economic base and this led our country to great hardship.In the UK Margaret Thatcher who influenced Indira Gandhi's thinking greatly was steadily easing the nation out of mixed economy and slowly dismantling state controls and privatising the entire economy.She was trying hard to catch up with the American model of free market economy. The gap was humongous.Indira Gandhi deliberated on these lines but it was for one of her most trusted lieutenants PV Narasimhan Rao to translate it into action through his new found genius Manmohan Singh. He was the one who ignited the flame of liberalization and put the nation on a path of no return from progress.The results are for all to see. But it is a tragedy of this great nation and a great travesty of justice to the people that we should be deprived of full liberalization by a section of communist partners in the ruling hierarchy who still choose to live in the era of Russian now defunct economics.
Rusy Modi the founder of Jamshedpur and man responsible for running the Tata Steel empire once commented." Governments have no business to be in business. They should stick to governing and leave business to businessmen." India has always been a nation of traders since the most ancient times and we did exceedi ngly well with nations like China,Egypt, Spain etc.. We have two live instances of greatest success stories in two fields in our country where governmental interference was negligible. One is the computer industry,courtesy Rajiv Gandhi and the other is our Bombay cinema. Both industries are in the global league today and highly respected.
From here onwards your article takes charge of the subject. My indulgence in the subject may please be overlooked.A layman must be permitted to express his views no matter what the subject.
Life has taught me to be observant. Look,watch,observe and analyse. Every thinking human mind has a right to it,with or without university degrees.My experience says, the less you talk the more you observe and vice versa.
I have this nasty habit of trespassing into forbidden territory sometimes. My friend Dr.Surinder Sharma Dean of Social Sciences MDU Rohtak always admired me for the courage to do so without being qualified.
God bless you my child.
Dhar Uncle
Uncle Dhar, Thank you for the comment once again. I am speechless, for the fact that you have summarized the Indian Economic thought process after independence precisely and scientifically in just one go. I have not seen a more multifaceted and well informed layman. The entire comment needs to put up as a post. Would like to sit with you someday and chat incessantly on this subject. Degree in economics never trained me the way this synoptic post did. I am thinking of taking a print out of your comment in order to share it with my students of Indian Economy Paper.Thank you once again. :)
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