INDIAN AFFAIRS
By
Prof. K. V. RAO, M.A., M.Litt.
(
The
period under survey is a period of budgets, annual meetings and a variety of
celebrated occasions where speeches are made explaining Indian affairs. We have
two budgets in the Centre–the Railway Budget and the
General Budget–and 17 State budgets (of States A and B), and each of these is
accompanied by explanatory notes and speeches which supply us with a plethora
of details. Then we have the annual gatherings of the various Chambers of
Commerce which give us the view-point of the commercial community on the
economic development of the country. Then there was held the Kalyani session of the Indian National Congress which, to many people of the older generation, was an annual event
of sacred importance. We have to wade through an ocean of details.
The
presidential address of Pandit Nehru at Kalyani has
put succinctly what is known to all of us but not fully realised–the end and aim of our national
effort. “After the attainment of independence,” said Pandit Nehru, “our urgent
task has been to devote ourselves to the economic
betterment of our people, to raise their standard of living, to remove the
curse of poverty and to promote equality and social justice. The extent to
which we succeed or fail in this great task will be the measure of our
achievement. That remains, therefore, and will remain, out first duty and
concern.” That the Government of India as well as the Governments of all the
other States are striving to achieve this end is well-known to all, and one can
easily list a number of achievements which can do credit to any nation. What
any critic can say is not that we have not achieved anything, but that we are
not able to do what we have to and can do, taking into consideration our needs
and resources. The question therefore arises why we are not able to do much.
If
we search for an answer, Pandit Nehru himself gives us some clues. In the first
place he says that “the world presses in upon us from all directions and we
cannot remain unconcerned with what happens elsewhere...” At another place he
wonders, “how far it (the voice raised in Kalyani
Congress) has reached your ears and your hearts...” It is certainly not fair to
take some stray sentences from here and there in a long speech and play upon
them, but the two sentences open a great vista of thought which it is
worthwhile to pursue.
We are trying to do our best to improve ourselves in
our own way, but that does not mean that we can remain oblivious to what is
happening elsewhere in the world. It is an Atomic age and no country can think
itself isolated. It is all true, but the legitimate question to ask is whether
we are not thinking ourselves closer to the world than what we actually are or
need be. The complaint is that we in India not only think too much in terms of
international politics–witness the large proportion of space devoted to foreign
affairs in any Daily–but also, which is worse, adopt an economic policy that is
best suited to a country which is the centre of an
international system. Will it not be possible for us to devise ways and means
whereby we can develop our resources according to our needs, irrespective of
the economic trends in the rest of the world? Our economics and politics, our
social and moral standards, are still those of
The
second point from Pandit Nehru’s speech is a more serious one. Is knowledge
spreading in
Even
a cursory reading of the speeches made by various industrialists in recent times shows that there is a gradual change for the better in
their outlook. They seem to realise now that they are
misunderstood in this country and that something should be done to create a
better impression of their role in Indian economy. There is no doubt that the
Indian industrialist does not enjoy a good reputation now. On the other hand he
is considered to be parasitic, anti-social and even anti-national. Even if this
is not true of all the industrialists–and certainly it is not–yet the blame
must be laid at the door of all for not disowning and condemning the
black-sheep among them openly. It is in this light that we must all welcome the
exhortation of M.R. Masani at Hyderabad: “In order to
ensure that the voice of free enterprise which has a significant role to play
in the mixed economy does not fall on deaf ears, it is essential that the
accredited spokesmen of enlightened free enterprise create a congenial climate
by coming forward with a Charter or a declaration of faith based on a policy of
‘clean hands’ and ‘nation first’ and expressing their readiness to live by it
in the spirit of Gandhiji’s concept of trusteeship.”
The
point to remember is that we want the private sector to play its part in our
country’s Plans based upon mixed economy and, therefore, it is everybody’s
business to see that the industrialist does not feel–as he feels today, as
testified by D.M. Khatau of the Associated Cement
Companies Ltd. –that “the morale of the industrialist is at a low ebb.” But at
the same time it is asking for the impossible to expect the capitalist to
become a trustee in the Gandhian concept under the
present circumstances. There are two reasons for it. In the first place, a
reasonable margin of profit is a sine qua non of industrial enterprise.
Some economists put it even at 40 to 50 per cent for venturing on new projects.
Secondly large-scale production and trade enable large profits to be made, and
a little dishonesty somewhere will result in a gain of a few lakhs at the other end; and this, along with the present
atmosphere of greed which induces people to make easy money within the shortest
possible time, is constantly tempting all people–in all walks of life–to
stretch their conscience a bit. To take an example, for a wholesaler dealing
with a million maunds of wheat at controlled rates,
mixing one seer of dust per maund would result in a
large profit, while the whole deal may go undetected or some higher quarters
may be purchased: almost every one has his own price. While we do not deny that
there are some honest officers and honest merchants and industrialists, their
honesty should not be constantly put to test, with ample- opportunities of
making large, illegal profits. And while some people make
large amounts of money, whether legal or not, we cannot prevent others from
thinking of similar methods and similar ends. The remedy lies in first
doing away with opportunities for making big money at one stroke, and secondly
‘institutionalising’ these sources of making big
money. I will revert to it later on.
Taking
for granted that the private sector is honest and that it is wanted, let us see
what the industrialists say about what they want us to do to make them play
their part. The most vital thing they want to know is where they stand in the
Following
from the above is the second one about the Government’s policy of rationalisation.
This
hesitancy of having the cake and eating it too, clearly brings us to the real
nature of the problem in our country, and it is time we are determined upon certain
things and proceed along those lines without further hesitancy. Let us see some
of the inconsistencies in our present policy. Rationalisation means
retrenchment and therefore it has to wait; we do not want unemployment. At the
same time, the standard of life should increase and more should be produced.
How can we produce more unless more capital is employed, and how can the
standard of life of labour increase unless the labourer is enabled to produce more, which means placing
more capital at his disposal, which again means rationalisation? Again, while
we do not want retrenchment and unemployment in industry, we are having the
opposite policy with regard to land. We are trying to apply rationalisation
here by reducing the number of people per acre, both by consolidation and by
the introduction of machinery; and thus we are creating rural unemployment
while we want to avoid urban unemployment. Is it because urban labour is more organised and more
vocal than the rural mass?
And on it we superimpose plans to revitalise the villages by various means, including cottage industries. Does it occur to you that most of these villages in India are agricultural villages, and the only reason why they exist–i.e. people live together–is that they are all occupied on land? Once ‘rationalisation’ is introduced and man is divorced from the land in the village, he will no more be in the village; he will go to the nearest town for employment, thus adding to the unemployed. Then for whom are the cottage industries intended in the rural areas, if the rural areas are to be denuded of their surplus population, the few that remain having almost no spare time because they have more land now? What we have to understand is that, in our economy of old, cottage industry went along with small-scale farming. The village barber and the carpenter were all agriculturists as well as workers; and, if today, he is not an agriculturist, there is no reason why he should remain in the village.
Cottage
industries are said to be essential to our economy. That is a settled policy
with our Government today, but cottage industries imply that-people will have
spare time and that they could expect a fair return for using that spare time
in cottage industries. The ‘marginal cost’ of time will be high in towns so
that we need to maintain the surplus labour only in
the rural areas; while our ‘rationalisation’ of agriculture is giving us the
opposite results. Some more careful thinking is required whereby we can rationalise and integrate all our plans; otherwise we are
creating more problems than what we are solving today.
The
budgets are expected to be the means for financing the Plan and so, when the
Plan itself is known, nothing spectacular or unexpected could be expected from
them. To add to this, there is the Taxation Enquiry Commission at work and,
until the Commission finish their task, it would not be proper to launch on new
policies. But yet, no budget can be colourless
because all public finance is but a transfer of purchasing power, and this
transfer cannot take place without bringing about some socio-economic changes.
Thus we get from the status quo budget an impression that
the burden of taxation is being shifted slightly towards the middle-class. We
also clearly see that deficit financing has come to stay. It is not only the Centre that has produced a deficit budget, but also as many
as twelve States. Deficit is no more a nightmare. But there is a difference in
kind between the policies of the Centre and the
Units. In the Centre, it is a question of policy
based on some theoretical considerations and the Finance Minister has explained
that basis quite clearly. In the Units the reason is different. To a large
extent, I personally believe, it is due to the feeling that the Centre has a responsibility to see that the States go on an
even keel. The common devil seems to be the financial allocations in the
Constitution–the Centre gets too much. I
put the blame to some extent at the door of the Finance Commission which inter
alia took the ‘needs’ of the Units into consideration
while making their recommendations. In a memorandum I submitted to the
Commission in 1952, I told them that deficit budgets might become the order of
the day, unless the needs of the Unit are co-related to the efforts of the Unit
to get the maximum revenues possible. While supporting the basis of ‘needs’, I
suggested the formula that the Commission should distribute money among all the
Units so as to make the per capita expenditure on social services the
same all over India–that is the meaning of ‘equal protection’ of Art. 14 when
applied to a Welfare State–after ensuring that the ratio of per capita taxation
to the taxable capacity in each State is equal. If that had been done, we would
not have heard of deficit budgets any longer. But there seems to be no actual
danger of deficits materialising as–and
this has happened before–the Units as well as
the Centre may not be spending all the money they put
down in the budget!
The T.C. elections and
the subsequent accession to power of the P.S.P. there give us a number of
lessons in democracy if only we can learn them. If sceptics
say that it does not conform to any of the precedents in England, we can only
tell them that democracy is not the monopoly of England and nothing prevents us
from evolving our own patterns to suit our needs and circumstances. But whoever
can say that it does not conform to any fixed pattern? Parliamentary democracy
means that a general election puts some people in the Legislature, and a
Ministry ‘collectively responsible’ to it, i.
e., supported by the majority, will be appointed by the titular Head; and
that is what has happened in that State. No doubt it has resulted in putting in
power a party of 19 members who could get only 19 per cent of
the votes polled, but as long as the Congress supports the P.S.P. it is
democracy and nothing but that.
Difficulty
comes only when we extend the meaning of democracy–that it is a Government by
the majority, chosen by the majority of the voters, and that the party in power
has a mandate approved by the majority at the elections. The question now is:
whose election programme shall be put into effect in that State? If it is that
of the P.S.P., it is certainly a fraud on the electorate because only 19 per
cent of the electorate are behind that policy. If it is that of the Congress,
then it becomes P.S.P. in office but the Congress in power, and then there is
no reason why the P.S.P. should not give back the ‘gadi’
to the Congress instead of enacting a puppet show.
A
more interesting question is how the Congress could support the P.S.P. policy
when it opposed it in the elections. And a still more interesting question is:
what next? The principle of parliamentary democracy as developed in England is
based on a number of myths which now stand exploded. One such is that an
average sector is a rational individual–something like ‘the economic man’ of
Adam Smith–capable of taking an independent view on a rational basis qua individual,
whereas the truth is–as old as Aristotle–man has always been a social animal
and behaved as such, so that what he thinks and how he votes is always dictated
by what group or caste he belongs to. Our Constitution has no doubt abolished
caste and religion, but the elector so freed has entered into new and more
rigid groups, such as Communism, etc. British democracy again works on the
assumption that there are several ‘free’ voters–what they call ‘floating
vote’–who would think and vote. But the recent elections in T.C. have
revealed a great truth and a source of grave danger to our ideal of a
democracy, namely, that electors belong to fixed groups. Thus the election has
revealed that there are a fixed number of Leftist voters–about a million–who
would always vote for the Left. There are a fixed number of Tamil voters who
always vote for the T.N.C.C., and the P.S.P, and the Congress must share the
rest. Thus it is clear that unless the P.S.P. and the Congress come to an
understanding, no Government of the ‘Right’ on a stable basis is ever possible.
In fact it shows that at no time is a stable Government possible at all, and so
the conclusion is irresistible that another election–the essential prelude to a
Parliamentary Executive–is useless, and never likely to improve matters at all unless
the Leftists combine and the Rightists are split into more and more parties. If
this happens, the Leftists can easily distribute their voting strength among
various constituencies and get an absolute majority.
What
is true of T.C. is also true of the other States, where it will become more and
more difficult to form stable Ministries. As early as 1947 some of us were
arguing that a Parliamentary Executive was unsuitable for the Units. It is time
again to think about it, as we are now thinking of amending our Constitution.