In his thought-provoking response to my reply to his previous piece, Pankaj Mishra hopes I agree that economic growth does not negate historical context in our debate on India, China and modernity.

I have not implied a causative relationship between growth and history. I am also pleased that he is not an admirer of the bureaucratic-socialist state that prevailed in the India and China immediately after Independence. He wants me to understand why those choices were made. My point remains that India, at least on economic grounds alone, could have made better choices.

Here's my point. I do not, for even a moment, question Jawaharlal Nehru's greatness in building a secular India. Indeed, there could have been no other way to govern a complex, multi-everything country like India, except as a secular, liberal democracy.

My problem with the Nehru era is with the statist economic model that was added to that combination. In other words, if we are to admire the "good" done by the Mao years for the Chinese (more about that in a moment), then we should be far more generous to Nehru, for firmly establishing a liberal, secular political order in India, and I have always been. Let me be quite clear: in terms of sheer humanity as a leader, Nehru outruns Mao by miles.

But that admiration should not cloud us into thinking that Nehru's economic policies were necessarily wise. He did not impose regulations to curb a chaotic free market: colonial India's economy was highly regulated - by the British, and he extended controls.

Mishra approvingly cites Deepak Nayyar, suggesting that in the immediate aftermath of Independence, India had no choice but to invest in the public sector to establish its base: the Hindu growth rate of growth of 3.5% should be compared with the anemic growth rate of 1% during the British rule. Nayyar says the capital goods sector, represented by steel and power plants established the launch pad and entrepreneurship was fostered during that period.

That analysis appears nostalgic in its classic sense, remembering the past without the pain. It also does not - cannot - take into account what could have happened, had the state not intervened in the economy, (a point Mishra acknowledges), and allowed the private sector to continue its activities.

India was desperately poor at Independence, but it had always had its entrepreneurs: the Birlas, after all, funded many campaigns of the Congress Party. Jamsetji Tata attended the first meeting of the Indian National Congress in 1885, and was among the entrepreneurs who established the country's early industries in those years.

The Tatas had begun producing steel by 1911; two years earlier they set up the Indian Institute of Science (http://www.iisc.ernet.in) in Bangalore, much before the IT industry discovered that city, and certainly before Nehru set up important public sector companies there. Indian capital worth millions of rupees was invested by Indian entrepreneurs in Southeast Asia and parts of Africa in the century between 1830 and 1930.

Granted that not all that capital was used for benevolent purposes, as Sugata Bose points out in his history of the Indian Ocean - some of it underwrote opium trade and some of it required indentured labourers; also granted that Indian industry did get a boost because of Britain's colonial wars, stepping in to support the war effort. But we should not assume that the Indian private sector was non-existent, that entrepreneurship was a gift of Nehru-era policies to the nation.

Could these businesses - Tata and Birla being the most prominent - not have led India's economic growth, had they not been restrained by crippling regulations requiring industrial licensing, import permits, penalties if they expanded too quickly, fines if they produced more than they were allowed to, and denied permission to close businesses if they were losing money? Would we not, then, know Indian companies with the easy familiarity with which we know of Sony, Honda, Samsung or Toyota?

Instead, there was deep distrust of the private sector throughout the 1950s, and after Nehru's passing in 1964, it faced outright hostility once her daughter, Indira Gandhi came to power in 1966. State controls increased far more, draining incentives from the economy, compelling many to become dishonest: individuals concealed income, companies hid profits, businesses shifted capital abroad, and a flourishing parallel economy took root, which at one time was estimated to be as large as the official one, and continues to thrive. A more liberal environment for businesses to operate, where the state ceded the powers it did not deserve, has finally brought about some transparency, and economic growth.

That growth, I agree with Mishra, is not, and cannot be an end itself. But it generates resources, for the state, and for individuals, to pursue the very worthy goals of development on which too Mishra and I agree.

The second area where I continue to disagree with Mishra is on China. And no, my view of China is not informed only by one individual's pathology, which is how he describes Jung Chang's view of China. I'm informed about China not only by Amartya Sen's work on the famine, but also by Jasper Becker's excellent book, Hungry Ghosts, which painfully reminded us that China's poorly-thought agricultural policies starved people.

Nien Cheng harrowingly reminded me of life under the Cultural Revolution in Shanghai. Ian Buruma told us about what happens to the dissident Chinese who want to stand up and be counted. Gao Xinjiang and Zhang Xiangliang ensured that the word gulag won't make us think only of Solzhenitsyn and the Soviet Union. Ross Terrill dissected the pathology of another woman, Madam Mao. And Nicholas Kristoff and Sheryll WuDunn eloquently pointed out the hubristic nature of China's rise.

And besides reading these books, when I lived and reported out of Southeast Asia, Singapore and Hong Kong, I observed at close quarters and later continued to write about the danger inherent in a society that pursues economic growth to keep those iron rice bowls filled, lest the masses rise and force China to descend into another century of anarchy.

The trajectories of India and China are distinct and separate; how the two reconcile their obvious social problems with their desire to grow rapidly is going to be not only fascinating, but one of the fundamental developmental challenges of our time. It is my hope and belief that its democratic structure will provide India with the space to absorb and reconcile differences, and emerge as a benign power. I wish I could say the same about China, but as yet, I cannot.

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