LIBERALISATION AND ‘SWADESHI’

When Pandit Jawahar Lal Nehru was delivering his famous speech, ‘The Tryst with Destiny’ he would have never imagined that seventy-five years hence his country would be in shambles and the national economy in tatters.

Muhammed Bin Tughlaq, the fourteenth century monarch once said, “My kingdom is diseased, the physician cures the headache, fever follows. He strives to ally the fever and something else supervenes.”

These words are still a harsh reality today in the case of India. India is at the crossroads today and seems to be heading nowhere with a population of over one billion, i.e., 17.5% of the world’s population. Even after seventy-five years of freedom, there are 352 million people below the poverty line and the literacy rate is only 75%. At this juncture it has become imperative that we totally revamp our economic strategy and aim for the prosperity of the country.

Gandhiji and the ‘Swadeshi’ mantra

It was Mahatma Gandhi who propounded the concept of swadeshi or in other words ‘self reliance’. He stated that if this country was to prosper, it would have to adopt swadeshi. Gandhiji was not for mass production but for production by the masses. He treated every household as an economic unit and said that individual production would lead to the progress of the country. Mahatma Gandhi clearly explained the concept of Swadeshi through the columns of Young India on May 13, 1919, came in two versions: The pure Swadeshi vow which stipulated that only clothing made in India of yarn spun in the country would be worn, and the mixed Swadeshi vow which stipulated the wearing of cloth woven in India ‘whether made out of foreign or Indian yarn’.

That Swadeshi and foreign were not antithetical terms, was stressed in the notes appended to the pledge. The explanation said that use of cloth made of foreign yarn was permitted because, “it is physically impossible today to secure a supply of such handspun cloth for any large number of people”.

The concept took the centrestage when the saffron brigade marched into the corridors of power. The whole economy and specially the foreign investors became apprehensive thinking that the days of the licence quota raj were back. This was largely due to the fact that some hardliners in the BJP stressed the fact that foreign investment was not exactly welcome in this country. Mr. Jay Dubashi, BJP’s economic ideologue, said in Business Today, “No transnational will be asked to go. But they will be made to feel that they are not exactly welcome in this country.” Such kind of irresponsible political statements is bad for the economy and highlights the fact that certain people have grossly misunderstood the Swadeshi Mantra. Gandhiji had underlined that Swadeshi does not mean narrowness and exclusivism (Young India, September 21, 1921). He was of the view that Swadeshi which excludes the use of everything foreign because it is foreign, no matter how beneficial it may be and irrespective of the fact that it impoverishes nobody, is a narrow interpretation of Swadeshi. Any student of Gandhian economics would vouch for the fact that Gandhiji was not anti-foreign at all and that Gandhian ‘Swadeshi’ is more an injunction on consumption than on production. He wanted the consumers to go in for Khadi so that the village spinner and weaver could secure employment and thus supplement the production of yarn and cloth through the mills. The essence of swadeshi lay in Khadi and it was never meant to cover every industry.

The Saffron party’s economic think tanks seem to have wrongly interpreted the concept of swadeshi. The foolish tirades against globalisation and the World Trade Organisation have not gone down well in the business circuit with the exception of certain members of the Bombay Club. Swadeshi has become a mystery wrapped in an enigma.

Liberalisation – The need of the hour

India’s socio-economic development in today’s rapidly changing world, where maps are being redrawn, power equations rewritten, alliances formed between the unlikeliest, is possible only if India shakes off its stupor and awakens to ask for and achieve, her rightful position in the world trade. The hunger, poverty and unemployment of this nation cannot be solved by misleading slogans and the swadeshi rhetoric but by having a healthy economic infrastructure so that India may become an equal and aggressive partner in the world trade. The trade alliances of China and the United States, the disintegration of the U.S.S.R. have proved that no country can isolate itself from world trade. Hardliners should ponder about what would happen if other countries adopted the same attitude towards Indian companies and products. Even China has joined WTO in November 2001.

The effect of the free and competitive trade is healthy on the domestic economy. Since 1947, we have lived under the protectionist umbrella of socialist ideology isolated from overseas competition by quota restrictions, import licensing and yards of bureaucratic red tape. The entry of multinationals in 1991 forced the Indian industry to work shoulder to shoulder with them, to use latest technology, to facilitate research and development, to make profits and not be crippled by business institutes propped up by government funds and ideologies.

The Mexican fiasco at liberalisation cannot be stated as an analogy to Indian liberalisation because the collapse of the Mexican economy twice was due to sidelining of FDI (Foreign Direct Investment) in infrastructure and the shot in the arm tactic adopted by the Mexican government.

A cursory glance at the level of fiscal deficit, forex reserves and inflation would make it clear to the Swadeshi bandwagon that the Indian economy is definitely much stronger now than it was in 1991. The New Economic Policy in 1991 triggered the advent of liberalisation leading to a record industrial growth of 21.9%, overall investment of Rs. 333,000 crores and huge employment potential for the people.

Certain macro-economic parameters like inflation, fiscal deficit, development of infrastructure and the growth of industrial sector reveal a positive picture of the Indian economy and illustrate how well the concept of liberalisation has served India. During the past three years (1999-2000 to 2001-02) the real GDP grew at the average annual rate of nearly 5.2%.

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