INDIAN AFFAIRS

By Prof. K. V. RAO, M.A., M.Litt.

(S. C. College, Puri)

Bagehot once described the English government as a government by discussion. We can describe our government as one by Commissions, Conferences and tours; and I do not say it in any jocular or disparaging mood. When Bagehot wrote his book, Parliament was at the height of its glory, and England’s was then a parliamentary government because Parliament could really legislate and control the executive effectively. But today, England is really a ‘parliamentary bureaucracy’, and it is the executive that controls the Parliament; and if still discussion takes place there, it is not the place where decisions are taken, and that too not certainly as a result of any discussion in this august–and also, out-worn–body. Here in India, we have deliberately adopted the ‘parliamentary system based on the English model’, and here also we have to expect a change into ‘parliamentary bureaucracy’, unless we realise the danger and take steps to stop the rot, because for one thing we do not want to make our costly institution of a Parliament to become a stale ornament. But there are many competitors to it and they are becoming more and more powerful.

There was a time when real discussion–real in the sense that it could effectively sway the minds of the members and hence their votes–took place there; but today in a party-controlled House, none of those acrobatics are possible. So also there was a day when important announcements regarding policy and decisions were first made in the House, but today, public meetings and Press conferences and the radio have appropriated that privilege; in fact, Ministers are more frank outside the House, and these pronouncements are made outside, even when the House is in session! So also answers to the questions. More are answered outside than inside, where there is no Speaker to stop the questioner or the Minister under the strict rules of the House. Then there are other agencies. For instance there is the Planning Commission whose constitutional position is still an enigma to me–though I have nothing but praise for the work it is doing. But here I am concerned with the other Commissions; we can find at least half a dozen of them functioning at any time of the year. Just now the Shroff Committee, the Railway Accidents Committee and the Jute Committee have concluded their labours, besides those that are now in active existence on an All-India level–the Taxation Enquiry Commission, the Slates Reorganisation Commission, the Railway corruption Enquiry Commission, the Backward Classes Enquiry Commission and so on. And then there are the Conferences: those of Ministers, of the Speakers, their Secretaries, and so on, at various levels and for various purposes. And all these in addition to the various conferences and Committee meetings, like that of the All-India Women’s Conference, or that of the Federation of the Indian Chambers, which have a profound influence on the Government of the day. There are also the political conferences, especially the AICC and the Working Committee of the Congress ranking as a class by themselves, in view of their close connection with the Government of the day. All these enable discussion to take place at all levels and on all matters, but their influence on the status and function of the legislature is very profound; and we cannot ignore it.

Last come the tours of the Ministers for various purposes, the most important of which is ‘fact-finding’. If Ministers are to find facts for themselves, in the constituencies, what is the role of the Members of Parliament, not to speak of the reports of the officers themselves? Why should we elect our representatives? Can the Minister find for himself any hidden facts in his hurricane tour which the local representative cannot and would not? And it would be very embarrassing to the concerned legislators if the facts discovered by the Minister are at variance with his own facts, and especially if the two belong to two different parties.

The Ministers are also undertaking another kind of tour, to train themselves in the intricacies of their job. There seems to be somewhere a notion that a Minister ought to know the technical aspect of the problem as well as the public opinion on it. Thus it is that a Health Minister should know how the malaria germ spreads or polio should be controlled. I have still copies of the statements of the Health and Agriculture Ministers at the Centre on polio and rice cultivation according to the Japanese method, respectively.

We should not forget that we are still new to the methods of democratic administration, and that we are still to learn and evolve the best way of demarcating the lines of boundaries of legislative control, ministerial functions and the actual business of the experts of the departments, so that there will be no fall in the efficiency of administration due to overlapping; especially the time and energy of the Minister should not be wasted in personal fact-finding and propaganda. Fact-finding should be left to the legislators and officers, propaganda should be left to the party machine and actual administration to the permanent executive. Ministers should govern, but not administer; that should be their motto.

Of the Commissions that are at work, let us take at random the work of the Taxation Enquiry Commission and analyse the position. It is asked to investigate into a number of points connected with our public finance, whose investigation has been a badly felt need for a long time. But the question is, what is their status and what is their function? Are they a body of experts who will do some research by eliciting some facts and public opinion and make a report? The membership of that Committee–its quality is of a very high order–warrants such an inference. But their function is such that it requires an assessment of public opinion, because, as public finance has a socia-economic purpose today, what order of society we should have in India is not a matter for experts to advise, but for the public to decide through the ballot-paper. Or take the Shroff Committee Report on the finances of the private sector. It is an excellent Report by a team of experts compiled within a short space of eight months. It was appointed by the Reserve Bank of India which is slowly becoming another fact-finding body on a large scale. This committee has made a number of observations and recommendations which are worth the consideration of the authorities concerned. But there is one point in the Report which is directly at variance with the point of view of the Planning Commission. The Shroff Committee is unable to substantiate the view of the Planning Commission that finance was by no means a major limiting factor to private industrial investment so far which of these views are we to believe? There is another conclusion of the Report that deserves the attention of all, that “while some progress has been registered in regard to investment in new capital it has not been commensurate with the expectations; and, in order to reach the planned targets, annual investment in new capital will have to be raised to about double that in the period 1951-53.

CONTROL OF THE FINANCES

While the private sector has complained of lack of capital formation, and the Government have responded with the formation of two other finance corporations to help the private sector, the story with the Government’s departments is the other way; it is money remaining unspent. While we need not exaggerate the implications of only about 52 crores remaining unspent, we cannot ignore the causes that have led to this; and this is what has caused another storm in the tea-cup at the Centre, of the Finance Minister offering his resignation. We have had three Finance Ministers since Independence; two of them resigned and went out of office, and the third has offered his resignation twice so far. While the towering personality of the Prime Minister has avoided on all the occasions the storm spreading beyond the tea-cup, we must ask ourselves if this matter cannot be regularised for all time to come.

Long ago Kautilya observed that ‘all undertakings depend upon finance’, and this is always remembered by Britain–that nation of shop-keepers whose religion consists of Sunday church and five per cent dividends, as Gunther put it. The British spread this idea to their colonies and dependencies where they invested large sums of money; and hence they gave ‘credit and financial stability’ equal importance with ‘law and order’–people in India are familiar with the ‘special responsibilities’ of the Governor-General. But it was true only in the days when the State was on the gold standard and it had, therefore, no control over the amount of money in circulation, with a constant threat of withdrawal of short-term deposits from the Central Bank which England experienced in 1930-31 for the last time. Under such circumstances, therefore, the Finance Minister had a strong responsibility to keep the ship of the country’s finances on an even keel, and this required a close liaison with the country’s Central Bank and a close watch on the spending of the other departments of the State; thus the policies and programmes of the other ministries depended on the money made available by the finance department. But circumstances have changed now in the second half of the 20th century. With a free hand to regulate the issue of the currency, independent of the gold reserves and their flow, and with the Central Bank nationalised, finance becomes a handmaid of policy, instead of its mistress; and this is realised more by the Finance Minister himself than by anybody else with his strong and bold policy of deficit-financing. Therefore one might feel that greater freedom might be given to the spending departments–they are, after all, what make the ‘welfare state’–than is in vogue till now. But strangely enough the feeling in the Finance Department is just in the opposite direction. A country running a planned economy on controlled money requires a far greater control and guidance from the finance department than in a laissez-faire state. And this necessity has become all the greater because the Finance Minister is an important member of the Planning Commission. The Planning Commission plans, the Reserve Bank creates the necessary atmosphere, and the Finance Department supplies the life-blood of money. The Finance Minister has a grip on all the three departments, and it is no wonder that the other departments feel that they have become mere administrative departments, acting according to the dictates of the Finance Department. The Constitution envisages the leadership of the Prime Minister, but not that of the Finance Minister. One way out of the difficulty is for the Prime Minister to assume the portfolio of Finance himself, or at least create a make-believe as in England where the Prime Minister is the First lord of the Treasury. But even then the problem will be only partly solved.

The real point to be grasped all is that the country’s economy is one and indivisible, and there must be one policy to be decided by the Cabinet as a whole, while the details will be worked out by the various ministries to aid which the Finance Ministry has to function. That is the meaning of collective responsibility in a welfare state, that all will act in fulfilment of a single economic policy, but not the barren legal injunction that all the Ministers stand or fall together. The major question to ask ourselves now is: Is there a unified economic policy followed by the Cabinet as a whole, and does the Cabinet make it? Are all our efforts and the activities of the departments and men directed towards the single purpose set out by the Plan, whatever that might be?

“A PEOPLE ON THE MARCH”

All this should not drive the reader to conclude that ours is a house divided against itself, that we are all pulling in opposite directions and heading towards something akin to disaster. Far from it; we are right on the correct way of recovery. We have definitely turned the corner and are almost out of the wood. Our industrial production has increased by a third, taking 1946 as the base. Our agricultural production has not lagged behind: the index of production stands today at 119, taking 1936–39 as the base. Everything promises to be all right this year, and every State reports a good crop and even surplus; and the Central Ministry of Food and Agriculture, it seems, is now worried about the fall in the price of wheat. With our industrial achievements in Chittaranjan and Sindri, with our multi-purpose projects (the latest is the opening of the Nangal Canal in the Punjab), with our net-work of National Laboratories, it is indeed a creditable record. Let us not forget that it is a people on the march, as Nehru described the other day.

The full meaning of the oft-made remark that India is an agricultural country has been revealed to us, and it should give a lesson to the Planning Commission. With an increase of agricultural production, it means that the people of India have an increased purchasing power to the extent of 20% of what it was in 1947-48 (when also the index stood at about 100). And what a change it produces in our economy! The first effect is on our foreign trade and the balance of payments. A favourable balance of trade with reduced imports of foodgrains, and a favourable balance of payments especially with the Dollar area which even the professional optimists have not been expecting, and an increase in our sterling resources–this is the picture of our foreign trade. Inside the country, it has slightly upset the worst fears of the Cassandras that food production in India could never cope with the rise in population. It amounts to a rise of about 10 per cent, an article in “The Eastern Economist” tells us, and this is without taking account of the major irrigation projects yet to come. And so, the article concludes, “it seems unlikely that over a period of the next ten years Indian food production will not rise at a rate of 1.25 per Cent per year which is the average rate of population growth.” This is something new to think about, especially for those who are unduly alarmed about India’s population problem.

This increase in the production of food is not confined to India alone. There are huge surpluses in the U. S. A., Australia and Canada, and already a fall in prices is being reported. And America thought of even sending a Trade Mission to India to find out if we want its wheat. We can take it and feed our millions and thus make more people to work on new projects requiring labour-intensive methods, especially minor irrigation and road projects.

But that is not the question now. How are we going to meet the demand for more consumer goods that this growth in the purchasing power of rural India entails? One way is to import more, and that is what the Government seem to think about. The other way is to keep the imports constant and allow the local manufactures to expand. And there are several Indian factories, as in the Cycle industry, where maximum producing capacity is yet to be reached; and that is the view-point of the manufacturers. In a pamphlet issued recently by the Federation of Indian Chambers of Commerce and Industry, called ‘Imports and Industrial Development’, it has been pointed out how it is possible that about 60 per cent or Rs. 650 crores worth of goods can be produced in India; and the Report pleads for an investigation into the causes for the gap between installed capacity and actual production. Will import control help it? But here is the view-point of the consumer. With our experience with sugar, the importer does not want to pin his faith in the industrialist at home, though ‘Swadeshi’ might move him, and he might even approve of an act similar to the Buy American Act.

THE NATIONAL LOAN

There is another way to mop up this surplus purchasing power. We can induce the rural population and lower middle class as well as the urban worker to save for the Nation; and the appeal made by the Nation’s hero has had its effect and more than 150 crores have been subscribed. If this money is really coming from the ‘small man’ or ‘the common man’, it means there is scope neither for more imports of consumer goods nor internal industrial expansion. And here is the question that has to be answered: whether such a saving at the expense of further consumption and higher standard of life is desirable for a nation where consumption levels are low and demand is starving. Of course, there is a school in India which says that there cannot be planning without tears, and to them starving the consumer for a few days is both desirable and inevitable. But there is another way of looking at it. If we allow the rural demand to increase, it will give a fillip to internal industrial expansion and thus will result a cumulative effect on industrial cum agricultural expansion of India.

THE LESSON

That is the lesson I want to draw; increase the purchasing power of the masses, and everything will be all right provided we prevent undue imports of consumer goods and undue rise in the price of internally produced goods. In other words, improve agriculture and village industries, and allow industry to expand itself; and we come back to our old story. There is a section in India that thinks that the problem of agriculture is one of tenure only, and they talk of abolition of middlemen as well as putting a ceiling on land-holdings. They forget that agriculture is also an industry and that it requires good management and capital investment and that, in the present circumstances, the village peasant, whom they want to make a sovereign, has neither the equipment nor the money nor the business ability to tackle this aspect of the land problem. Is it difficult for us to devise a scheme whereby the middle-class leadership and money could be wedded to the actual sense of ownership by the cultivator? None of the schemes so far suggested take this aspect of the problem of putting agriculture on the footing of an industry.

In one of my suggestions to the Planning Commission, I put forward a plea for justice to all concerned including land itself, which, passed into inefficient hands, would become sub-marginal and economically unsuitable for cultivation. The experience of France shows that such land will be deserted rather than cultivated¹; and unless population unduly expands, much of the land that is forcibly brought under cultivation would be abandoned unless the Government take steps.

My suggestion was from the realistic view-point. The middle-class owner has invested money in purchasing land, and what he wants is a fair return for it; and what the cultivator wants is that he should be given some permanent interest in the land he cultivates. The remedy now is to combine them and start a Joint-Stock Agricultural Company which will comprise (compulsorily) two or three villages, all coming under one irrigation project. The capital of this company is comprised of shares owned by the middle-class owners whose present interest is converted in terms of such shares. The cultivators will now be settled permanently on the land ‘during good behaviour’ with the right of the sons to inherit the same rights. The company can borrow money, and it can start other industries, and so on. The middle-class owner is not deprived of his ownership and he still gets a share; agriculture becomes a business managed by the local Board of Directors consisting of actual agriculturists and middle-class leadership; actual and existing cultivators are not disturbed from their holdings and they get a sense of ownership therein without paying anything; the State need not find money to pay compensation, as ownership is converted into shares; and, above all, the Government can abolish their land records and land revenue departments, because the company now owns the land and pays agricultural income-tax to the Government.

¹ Vide “European Agriculture–A Statement of Problems”– Published by E.C.E. and F.A.O. Secretaries.

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