India accomplished two major miracles in the 30 years between the late 1960s and the late 1990s. In the 1960s, India transformed itself from a basket case in food production—when even the Food and Agricultural Organization of the UN had given up hope—and started making rapid strides in its fields. In the 1990s, India made a shift from the lower half of the single-digit rates of economic growth to the upper half. Gone are the days of the Hindu rate of growth of 3% to which India was stuck for five decades after independence. And the 11th Plan now contemplates rates of growth that may turn double-digit.
A third long-needed miracle could take place in the coming two decades—provided some lessons are learnt from the first two.
The food miracle was achieved by simply giving up the inhibitions about the Green Revolution technology. The worsening of relationships with Pakistan and the arm-twisting by the US using PL 480 (food aid) shipments as a weapon propelled the first non-dynasty prime minister to take courage in both hands, to urge people to give up one meal a week and to let his minister for agriculture go ahead and introduce the high-yielding varieties of wheat and associated Green Revolution technologies. The Green Revolution was a success par excellence and, naturally, had many claimants to its paternity.
The quantum jump in the rate of economic growth, by contrast, had no political or technocrat heroes. A nation forced to pawn its gold reserves had willy-nilly to move away from the Nehruvian concepts of paramountcy of the public sector, industry as spearhead of economic development and licence-permit-quotas as the solution for all problems of scarcity.
Manmohan Singh as the finance minister under former prime minister P.V. Narasimha Rao ushered in the first-generation economic reforms. These reforms in the 1990s were strictly limited to the financial and industrial sectors and left agriculture largely untouched. Singh was very hesitant to accept the enormity of the departure he had ushered in—just as modest as he is now about underlining the enormity of the departure he is making from the Nehruvian doctrine of neutrality in signing the nuclear deal with the US.
Hence, the changes made under those reforms were superficial. Most of the structures and paraphernalia related to the socialistic economy remained in place. The India-Bharat divide continued to worsen. People at large and entrepreneurs, in particular, got the impression that the 1990s’ economic reforms represented a short-term lucid interval before the dynasty returned with socialistic sloganeering. For full eight years after Singh’s first budget, there were no signs of the quantum jump in the rates of GDP growth that was subsequently to make its appearance. Indian entrepreneurs were still hesitant to unleash their capacity for adventure and innovation. It can also be said that for seven long years they were trying to forget the nightmare of the socialistic misadventure of four decades.
It was only with the coming into power of the first totally non-Congress government at the Centre, which boldly went ahead with “Pokhran”, futures trading, new telecommunications and intellectual property rights policies and spoke not so much of “eradicating poverty”, as of “India shining” that the Indian entrepreneur felt reasonably assured that he could spread his wings and take off.
It is noteworthy that it was only after 1998 that we witnessed the rate of GDP growth shifting to the upper half of the single digit and touching 10.3% for a brief quarter in 2004, as well as the emergence of the first Indian multinationals and dominance of the software industry by Indians.
The National Democratic Alliance and the United Progressive Alliance (UPA) finance ministers vie with each other to claim the credit for this new incarnation of the Indian economy and industry. The fact is that the credit does not go to either for any positive action taken. The fact that the rate of growth in the agricultural sector has not kept pace with other sectors and has, in fact, dipped even below the pre-1990 levels clearly proves that the quantum jump in overall economic growth is not related to any actively pursued governmental policy.
The higher rates of growth have happened in spite of the government rather than because of the government. The increase in the rate of GDP growth is directly related to the extent to which the government abstains from making a nuisance of itself by interfering in the free market forces.
The present rate of growth under the UPA would have been even higher if the Congress party had shown vis-à-vis the Left Front the same determination in economic matters as it showed in the matter of the nuclear treaty.
It is a pity that even the tide of suicides of more than 150,000 farmers has not awakened the government to the need to bring economic reforms to agriculture, notwithstanding platitudes of priority sector credit and pointless and empty bailout packages.
If economic reforms come to agriculture, if the property rights of land are vested absolutely in the farmer, if entry and exit into agriculture is made smoother and easier, if the crass infrastructural infirmities in the field of marketing, laboratory and information network are attenuated, if foreign institutional investments and foreign direct investments are allowed in agriculture as also in commodity markets, agriculture will, without doubt, show a boom that might be even higher than that of the Indian stock market.
The coming 20 years might produce yet another miracle and India, on the strength of the genius of its people and of its institutions freed from the shackles of Nehruvian socialism, might shift to an era of abundance with rates of growth as high as 15%.
Sharad Joshi is a Rajya Sabha MP and founder of Shetkari Sanghatana.