Subramanian Swamy - RESET: Regaining India’s Economic Legacy

RESET

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Rupa Publications India Pvt. Ltd 2019

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Copyright Subramanian Swamy 2019

The views and opinions expressed in this book are the authors own and the facts are as reported by him which have been verified to the extent possible, and the publishers are not in any way liable for the same.

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ISBN: 978-93-5333-651-6

First impression 2019

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CONTENTS

PREFACE

India: In Search of a Renaissance

In the autumn of 1969, I returned to India after a seven-year stay in the United States (US). The first two years were spent in getting a PhD from Harvard University, whereafter I joined the Harvard faculty for five years to teach Economics to graduate and undergraduate students. Upon my return to India, I joined the Indian Institute of Technology (IIT), Delhi, as a Professor of Economics. But soon after, I ran into a controversy around socialist planning, which was then the official policy. I challenged the then conventional wisdom that socialist planning was a superior route for economic progress as compared to a competitive market economy. I also questioned whether social justice was optimized through socialist redistribution of income by progressive taxation and nationalization, rather than by a rapid growth in the gross domestic product (GDP) caused by encouraging investment through incentives, and based on innovation, and through employment generation.

I also felt there was a third way of economic development which would harmonize a number of objectives, such as growth, social justice and creating room for spiritual values. Both socialism titled Swadeshi Plan in 1970, which was presented on the floor of the Lok Sabha by Atal Bihari Vajpayee, the then Parliamentary leader of the Bharatiya Jana Sangh. The monograph was an instant hit in the country, partly because during the Budget session of 1970, Mrs Indira Gandhi, as the prime minister, ridiculed the monograph on the floor of the Parliament. She said that the Plan had overambitious goals and referred to me as Santa Claus. The political influence and blackmail of the Soviet Union to obtain intellectual compliance for Soviet planning, however, was so strong that few dared then to speak up against the futility of Indians continuing with the Soviet model. However, since I did, the establishment, following Mrs Gandhis speech, as if on cue, ensured the termination of my professorship at IIT Delhi. The professorship was restored retrospectively two decades later by a Delhi court, but by then, I had become a Cabinet minister. Hence, though I resumed my professorship in March 1991, I resigned the very next day, and also recovered at an 8 per cent interest rate decades of my past unpaid basic salary and other emoluments.

After termination of the professorship in 1972, my ideas on India-specific economic development became part of my lectures around the country. But I could not find the time needed to convert the Swadeshi Plan monograph into a book. After years of becoming a Member of Parliament (MP) in 1974, and then combating the Emergency declared by Mrs Gandhi in 1975, it has become possible to devote time for it, and hence this book has now been penned.

In this book, I have, for the period of 150 years from 1870 to 2019, focused not so much on the historical narrative of Indias economic developmentor the lack of itbut on distilling out the consequences of the economic ideology adopted in three main phases. First, British imperialism (18701947), during which period, according to me, $71 trillion worth of resources was drained off to Britain. Thereafter, the Soviet command economy model took root (195090), which ended with the collapse of the Union of Soviet Socialist Republics (USSR) in 1991. Thus, liberation from state commandism came through the economic reforms (19912019) initiated by me in 199091, and during 199296 by assisting P.V. Narasimha Rao while holding a Cabinet rank in his government.

Over the past several millennia of acknowledged civilized history of the world, Indiaidentified globally as Hindustan (or just Yindu to the Chinese long before it was known as Hind to the Arabs)was, by contemporary standards, the most developed and civilized nation, until AD 1750, by which time foreign aggression had already taken its toll and emaciated India economically. India, thus, as the Global Number 1 economically declined from the end of the twelfth century to become the poorest by 1947.

From 1870 to 1947, British imperialism in India was structured by a policy of killing domestic entrepreneurship, blocking innovations and extracting resources from agriculture through land-revenue collectors called zamindars. The contrast is visible in statistical data of development between the directly British-ruled provinces of India and the indirectly administered princely states by appointed regents of British imperialists. The damage done by imperialism to Indias agricultural performance through arbitrary cruel revenue extraction and siphoning it off to Britain or for local administration contrasts sharply with the economic performance in agriculture of princely states, which had better development and growth rates of output in agriculture. The fact is that foreign-ruled governments which funnel funds out of a nation, as the British government did in India for a century (and could not do in China due to that nations indigenous governance), wreck all the inter-sectoral balances in the economy and thus destabilize and impoverish the nation.

By bleeding agriculture to the bone, exporting and draining national resources estimated at $71 trillion at current prices, and by blocking native innovation, the British rule set India two centuries back in development. India thus missed the Industrial Revolution. Indias industrial development at Independence was spotty and served British trade interests and not the setting up of industrialization in India. By 1947, India, once the worlds richest, had become the poorest, with a per capita income of just $150. But India survived, retaining the substance of its ancient culture and religionunlike nations such as Persia, Egypt, Rome and Greece, which were forced to abandon their culture and convert to the religion and culture of their invaders. India is globally the most prominent exception. It remained defiant and unconverted by foreign rule, despite two major brutal and diabolical foreign onslaughts: one of Muslims and the other of Christian subversion via imperialism, totalling an 800-year span of Indias history.

For free India, since 1947, to regain the earlier highest global position, and to recover from the past exploitation and imposed psychological damage, it was first important to reverse the regression and move people from negativity to an optimistic outlook. This required an innovational dynamic mindset of the new Indian leadership. Upon achieving freedom, this negativity began to diminish but very slowly, because after Gandhis and Patels untimely deaths, the Nehru governments decision to accept the history of India as written by paid British scholars, such as Max Mueller and his slavish Indian tutees, who had imposed into