Stifling Economic Enterprise

It is remarkable that in this scientific and rationalistic age, centralized economic planning by the State has been raised to the pedestal of a holy cult. The dominant theme in India for some years past has been the economic uplift of the masses, and centralized all-out planning has been resorted to as the means of promoting that object. And this, in spite of reiterated lip-service to decentralization. The major fault of centralized, comprehensive planning is that it imposes a monolithic burden on a people composed of diverse elements at all levels and in all occupations. The achievements that it might show in a few selected areas are bought at the cost of the freedom and enterprise of the individual. The individual and his creative ability are smothered by a proliferating bureaucracy and innumerable rules and regulations.

     Planning should not be looked upon as an end in itself. It is essential to place it in its proper perspective and to realize its political consequences. In the life of a nation, 12 or 15 years is but an infinitesimally small period. Broader visions should not be obscured by momentary fancies or by the exaggerated importance given to certain things. Everyone knows that it was Soviet Russia which implemented first the concept of centralized, comprehensive State planning. When it was realized in the West that the industrial revolution of the seventeenth and eighteenth centuries had led to concentration of capital in a few hands, the socialist idea of State ownership of the means of production, distribution and exchange was developed in Europe, in order supposedly to ensure equitable distribution of the goods and services produced by large-scale mechanization. This movement took the form of a protest against the operation of laissez faire capitalism and a demand for parliamentary democratic methods to bring about complete State ownership. Communism went further and resorted to every weapon in its armoury, including force and fraud, to bring about the same end. Both sought to overlook the laws of the free market. Through Central State planning, both socialism and communism brought into being and promoted the huge Leviathan of the State, subordinating the individual to the dictates of a small band of people who maintained their own power and covered all their sins of omission and commission with the fog of a paradise to come.

     A 'command economy' thus came into existence. The planners arrogated to themselves the wisdom required for assessing and mobilizing all the resources of the country, determining a comprehensive scheme of priorities, ordering industrial and agrarian growth along certain pre-determined patterns, and fixing prices and patterns of distribution of the goods and services produced. They thus undermined the freedom of mutual services as well as democracy. It is yet to be shown whether this 'command economy' of centralized, comprehensive planning guarantees efficiency in production. The odds are against it. On the distribution front, it has already been proved tragic failure. During his visit to India a couple of years ago, Mr. Anastas Mikoyan acknowledged that the difference between the lowest and highest paid in Russia ranged from 1:59. According to others the difference is 1 : 100 or more. The figures, by themselves, do not give an idea of the distribution picture which was indeed the socialist carrot before the donkey. We have to include what cannot be expressed in terms of money, all the pain inflicted on the souls of people and all the bodily miseries they are made to undergo in the name of comprehensive planning.

     After liquidating millions of people, communism has given birth to a new class and a new feudalism instead of abolishing class distinctions and privileges. Party members, less than 4 percent of the people, enjoy all the privileges of life in the name of over 200 million people who are forced to do hard work. So much for centralized State planning in a regime unencumbered by democratic notions. Though these things are well known, they need reiteration today because we are apt to be carried away into imitating communist policies and methods in our blind admiration for their achievements, overlooking the cost, which is a grim human tragedy. The Prime Minister, in his presidential address at the Lucknow session of the Indian National Congress in 1936, made a statement which looks pathetic today in the light of subsequent disclosures about the actual state of affairs in communist countries. I refer to it because Mr. Nehru is essentially the same man now as he was when he made this statement. His admiration of power and achievement is still misleading him. He said:

“It is interesting to read in that monumental and impressive record, the Webbs's new book on Russia, how the whole Soviet structure is based on a wide and living democratic foundation. Russia is not supposed to be a democratic country after the Western pattern, and yet we find the essentials of democracy present in far greater degree among the masses there than anywhere else. The 600,000 towns and villages there have a vast democratic organization, each with its own soviet, constantly discussing, debating, criticizing, helping in the formulation of policy, electing representatives to higher committees. This organization of citizens covers the entire population over 18 years of age. There is yet another vast organization of the people as producers, and a third, equally vast, as consumers. And thus scores of millions of men and women are constantly taking part in the discussion of public affairs and actually in the administration of the country”.

     There has been no such practical application of the democratic process in history. As I have said above, Mr. Nehru's admiration of Russian success has not come to an end. It is taking different and various forms at national cost. Modern States have all to do some sort of planning to keep the economy on an even keel. But that need not necessarily be comprehensive, centralized planning which inevitably leads to the restriction of democratic liberties. Physical controls, rationing, inflation, forced savings, that is, large cuts in real wages, and a relentless subordination of life to dictatorship are required to achieve anything like near success in that type of planning. The lesson from the history of our contemporaries is that planning should be subject to, and in consonance with, democratic principles. Such planning is practicable as well as desirable.

     As against this, planning has proceeded in our country on the assumption that people do not know what is good for them and, therefore, they must be told what to do. It has proceeded on the basis that a few bright persons are omniscient and are capable of directing the destinies of the nation in an infallible manner. We have had many warnings to teach us humility. The Bhakra dam, which was described as the new and real temple for India, can be aptly described as the projection of our folly in thinking that big names are the best things. It must come as a revelation to all of us that, apart from crores of rupees sunk into this mammoth project, the danger of anything going wrong with the dam would be an inundation of indescribable magnitude. The bigger a man builds, the smaller becomes his control over the things he builds. What I deplore is not the building of this particular dam but the megalomania for big projects. These projects have a political corollary-the centralization of all authority, to the detriment of the future of the nation. Until and unless we develop to a stage when the requisite administrative set-up, technical skill and, above all, conscience are all geared to the needs of such projects, it is foolhardy to venture on them. 

     Mechanization saves bodily labour and ensures more leisure. For these reasons, mechanization has to be welcomed. But to force mechanization at a rate inconsistent with the availability of technical skills to deal with breakdowns in the vast rural area is to prescribe remedies worse than the disease. Agriculture is our basic asset for leading to the growth of a viable industrial sector. The machines and their operation should be introduced at a pace consonant with the needs and genius of our people. Changing the structure of ownership and tenures at a time when a food crisis is admitted would be like changing horses in mid-stream.

     The application of misleading statistical standards to our economic performance is wrong. Our economy is still largely a barter economy. In the rural areas a number of transactions are not measured in terms of money. It is a common and good practice in villages to pay farm labour with food grains and a small cash sum rather than entirely in cash. Increases in the issue of salaries to government employees and the expansion of the official set-up falsify calculations of the increase in national income. Apart from this, to emphasize the statistical methods in terms of money is to give a materialistic direction to the general mentality of the people by over-emphasizing the money angle. This is a subtle evil which has already done great harm. Money is important, but unselfishness and moral qualities are more important even for economic progress.

     The Government resorts to policies which depreciate the value of the currency. It pumps money into circulation in paying the bills for the ambitious projects it has undertaken. The fixed-income groups in all sectors suffer greatly as a result of deficit financing and are perplexed as to the means of livelihood for their future. Savings become meaningless, because the value of money depreciates year after year. Without savings, there can be no investment, and no increase in wealth.

     Centralization is the necessary corollary of present policies, whatever lip-service may be rendered to the doctrine of decentralization. Such decentralization as impinges favourably on electoral plans and programmes is favoured, and not that which really leads to efficiency. The policy of a regulated economy in the production and distribution of food has to be carried to its logical conclusion, as Mr. Ajit Prasad Jain confessed when he resigned from the Central Food and Agriculture Ministry. When socialists and communists talk of decentralization, they mean decentralization of minor powers in execution. The decision-making authority is always the elite, the small core, which arrogates to itself all wisdom and infallibility.

     The megalomania that vitiates the present development policies is illustrated by the stupendous folly of the contemplated nuclear power station. What we need is not just big projects, but useful and fruitful projects. There is nothing inherently wrong with bigness, just as there is nothing inherently good in bigness. Big dams are good, but more essential are thousands of small projects which could be and would be executed by the enthusiasm of the local people because they directly and immediately improve their lives. So also in the setting up of industries, there should be encouragement to industries producing consumer goods, which give content and meaning to the phrase 'standard of living' and which can be produced in small and medium scale industries. Private enterprise should be fostered by every means available and not treated as a dangerous enemy. Industrial enterprise would then spread at various levels in the countryside and reduce the tensions that attach to centralized industrialism.

     The federal structure of India is not only not used, but is sought to be sabotaged. For instance, although industries are today listed by the Constitution under the State Schedule (excepting strategic industries), those who wish to start industries must all rush to New Delhi for permits and comply with, or otherwise negotiate, a host of regulations. As a consequence, unemployment stands unchanged. It will be argued that there should be coordination and uniformity. But economic development takes place faster when diversity is permitted and the fullest use is made of local, physical and social conditions by those who know them.

     One of the most neglected aspects of planning in this country is the gearing up of the administrative machinery and the simplification of procedures. It is no use directing appeals of patriotism to clerks whose personal lives cannot permit room for any thought beyond their day-to-day household troubles. Unless conditions are radically changed to provide incentives, to remove inefficiency and to fix responsibility, economic development in this country will be hampered by the very administrative machinery which is supposed to help it.

     The role of the Government should be that of a catalyst in stimulating economic development while individual initiative and enterprise are given the fullest play. The Government can do a great deal by way of providing a network of highways and village roads, in improving waterways and developing small harbours, improving communication and transit facilities, which would all serve to boost the economy. Many important things have been neglected because the Government has forgotten them in its obsession with a 'command economy'. Wise planning means Government help to foster private enterprise and self-help among individuals. Otherwise, there can be no real progress.