4 min read.Updated: 22 Jul 2021, 10:43 PM ISTRahul Jacob
It’s a mind-boggling exercise trying to be self-reliant in its official sense of buying Indian when confronted with a surfeit of options that seem to suggest everything is made elsewhere
At a small dinner, a multi-millionaire said that with our economy in the doldrums, he felt he ought to spend more. The trouble was there was little he needed to buy. This emblematic Bengaluru tycoon-with-a-social-conscience conversation was a couple of months before the outbreak of covid but prescient in anticipating the problems that lay ahead. Central banks have flooded the world with easy money, creating stock market bubbles and absurd e-commerce valuations. In India, especially, this phenomenon of the rich getting richer and the less well-off turning destitute has been made worse by New Delhi’s meagre income support.
If there is a time when it has seemed a national duty to spend, it is the age of covid. During the second lockdown, I decided not to put off the purchases I usually do because the range of choices is so bewildering. Thirty years after Manmohan Singh opened up the economy in 1991, choosing even an air fryer requires a day or two of research. I complicated this by trying to skew my spending towards home-grown companies, adhering to the Narendra Modi government’s call for self-reliance. (The procurement of Israeli-made spyware Pegasus was apparently not very nationalistic, which is a shame; snooping on one another could be a national job creator.)
The first impulse-shopping triggered by my Instagram feed would even have pleased Mahatma Gandhi. Bengaluru-based Vimor Foundation was conducting a solidarity sale to raise funds to deliver foodgrains and lentils to its weavers. I bought brightly coloured sarees as gifts, and thin, abrasive handloom towels that dry quickly in the monsoon. But, in our inter-connected world—i.e., a world all too dependent on supply chains that rely on China—things quickly got complicated. Seeking to buy a new tennis racket that wasn’t made in China, I collided with the reality that nearly all the racket-makers have moved production from Taiwan to China over the past couple of decades. My only non-Chinese made option was Japan’s Yonex. (Wimbledon does not play by these rules; its players’ towels are made by Welspun in Gujarat, Tata-owned Jaguar is its official car and Oppo its mobile phone.) Similarly, my only choice as I try to upgrade my five-year-old mobile phone is to stick with Samsung, mostly manufactured in Vietnam.
An Indian-made alternative is not really an option, unless I return to the antique wooden rackets of my childhood. It turns out that atma nirbhar is a devilishly difficult code to live by—as a consumer and manufacturer. My problems were echoed by a furniture exporter I interviewed last year who complained of non-tariff barriers and higher duties on the Chinese-made glue and sand paper he needed to remain competitive in his exports to US retailers. Battles at the Ladakh border notwithstanding, we remain dependent on China for penicillin, paracetamol and much more. Imports from China between January and June hit $43 billion, 19% more than in the first six months of 2019. Official rhetoric points one way, ground realities another.
This is despite a steady increase in tariffs that have affected 70% of our imports, according to research by Shoumitro Chatterjee and Arvind Subramanian, which showed India turning its back on a decline in average tariffs from over 100% when reforms started in 1991 to 13% in 2014. While opening India to internal and global competition on 24 July 1991, Manmohan Singh quoted Victor Hugo when he said that “no power could stop an idea whose time has come." Unfortunately, outdated import substitution regimes can quickly be resurrected and old oligopolies replaced by new ones.
Meanwhile, Pew Research reported in March, even before our second wave hit, that the number of India’s poor (with incomes of less than $2 a day) had grown by 75 million, while the middle class had declined by 32 million, which is surely an undercount.
I have found that more effective than trying to spend on myself was to transfer to my ex-driver and former help in Delhi and a fabulously efficient carpenter and airport driver in Bengaluru the equivalent of a few months’ basic income. Nearly all had been clobbered by lockdowns. In a speech (bit.ly/36MIUi5) last month, Claudio Borio of the Bank of International Settlements warned that “higher inequality goes hand-in-hand with deeper recessions". “On the one hand, recessions increase inequality; on the other, inequality deepens recessions."
As I walk the streets near me, it is hard not to notice that a biryani joint, which took the space vacated by a luxury mattress store, has closed in just a month or so. ‘To let’ signs dot the neighbourhood—as do grand new mansions with piles of construction debris dumped outside. A hair-stylist who opened six months ago has shut shop.
Like people who rushed to beaches as seawater receded drastically and were drowned by the huge waves of the 2004 tsunami that followed, they must’ve thought ‘long covid’ an ordinary downturn. In one of the world’s most unequal countries, they optimistically believed they could stand against the tide.
Rahul Jacob is a Mint columnist and a former Financial Times foreign correspondent.
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