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 The
first in the series of articles that had appeared in this publication
nine months ago keyed-in by yours truly, began by referring to what
India's first Prime Minister Jawaharlal Nehru had wanted, namely,
a ''mixed'' economy-something not considered quite fashionable these
days. Instead of assimilating the best of capitalism and communism,
we ended up with the worst of both worlds, a mixed-up economy. Since
this is my last contribution to this magazine in a while, I thought
it would be apt to refer to chachaji yet again, this time, about
his reference to the ''temples of modern India''.
When Nehru coined this phrase, he was not merely
describing steel mills and fertiliser plants but large dams as well.
What he had in mind were projects like Bhakra-Nangal, which provide
the national capital territory the bulk of its water supply till
today. The benefits accruing from this particular hydroelectric
scheme-unlike almost all other large dams built in the country over
the last 55 years-have far exceeded costs. We as a nation, however,
did not learn our lessons well. Virtually every single major irrigation
project in the country not merely exceeded cost estimates, but also
failed to deliver the results expected in terms of quantum of power
generated or availability of water, or ability to control floods.
Unlike Bhakra-Nangal, almost all the large dams built in India displaced
innumerable poor people who were inadequately compensated and improperly
rehabilitated.
Many of the steel mills and fertiliser plants that were planned
or were set up during Nehru's time are white elephants at present.
They are overstaffed with political appointees, deploy outdated
technology, and have been milked dry by corrupt politicians and
bureaucrats. Yet even these projects had once played an important
role in the industrial development of the country-not merely to
create jobs, but to build an infrastructure where there was none
and to create facilities that would not have been established by
private entrepreneurs, simply because the investments required were
prohibitively high and the expected returns abysmally low.
It may be 'in' to criticise the public sector
and sing paeans of praise in favour of privatisation. It is undoubtedly
true that many government-run enterprises have bled the exchequer
(and continue to haemorrhage). But where would India be without
public sector corporations like the Indian Oil Corporation, the
Oil and Natural Gas Corporation, or Bharat Heavy Electricals Ltd.,
to name only three. To support the public sector does not imply
that one is justifying the inefficient way in which many of these
organisations function. The real challenge is reviving chronic loss-making
government-owned companies, not privatising profit-making ones.
Even a die-hard believer in the virtues of
free markets, Raghuram Rajan, the first Indian and the first economist
from a developing country to be designated Chief Economist at the
International Monetary Fund, argues that what is needed, but difficult
to obtain, is a fine balancing act between a less authoritarian
socialism and a more benign form of capitalism. When Rajan was recently
asked to name the most influential economists in the world, Keynes
and Marx found place in his list. This is not very surprising if
one considers the title of the book he co-authored, Saving Capitalism
from the Capitalists, not to mention the fact that he teaches finance
at the University of Chicago, the bastion of right-wing economists
such as Milton Friedman.
Nehru tried to tread the middle path. His detractors
at home said he pandered to the interests of big business, while
his critics abroad claimed he was too enamoured of Soviet Russia.
India may so far have taken the worst of both capitalism and socialism,
but does this necessarily mean that this country's economy is fated
to grow slowly? I, for one, am optimistic not to think so. But,
before that, our current rulers will have to forget about the construction
of temples of medieval India at Ayodhya and elsewhere. If that seems
to be a tall order right now, more productive pursuits would have
to wait a while.
The author is Director, School
of Convergence at IMI, New Delhi, and a journalist.
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