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Magazine
INTERVIEW
Their vision for prosperity
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Malay and Arindam Chaudhuri have a prescription for harmonious economic growth in India. SUBASH JEYAN finds out more.
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K. GOPINATHAN
THEY teach management at the Indian Institute of Planning and Management (IIPM) but they also have a vision for the country. Malay and Arindam Chaudhuri believe that India can catch up with the developed countries in a span of 25 years. They also believe that there is no economics, which is ideology-neutral, that we need policies which have a social vision and that economics itself needs to be de-mathematised and de-jargonised enabling the "common man's" participation in economic discourses.
Put that all together and what you get is The Great Indian Dream: Restoring Pride to a Nation Betrayed (Macmillan, 2003, p.248, Rs.295). The tinge of populism in the title, though, is backed by a solid assessment of realities on the ground. Consider this. After five decades of development, India ranks 124 in the Human Development Index in a list of 173. Three hundred and fifty million people live below the poverty line (they call it the destitution line) half of whom don't live beyond the age of 40. Though we pride ourselves on having the world's largest educated/skilled manpower, 30 per cent of the world's illiterates are in India. We have 10 judges for every million people and while we have one doctor for every 2,400 Indians, we have one Indian doctor for every 1,325 Americans in the United States.
Contrast this with the fact that the government is sitting on a cash reserve of 3.5 lakh crores. It has a forex reserve of 84 billion dollars locked in the U.S. earning an interest of 1.5 per cent. It has foodgrain reserves of 50 million tonnes lying unused in warehouses. Numbers may be dreary but they tell unambiguous tales and it's time we listened to them. Why do poverty and growing disparities in income levels persist? The Chaudhuris are justified in feeling that the nation has been betrayed and that we have a state and a class in control more interested in perpetuating their own interests and agendas.
The Chaudhuris also feel that disappointment with decades of Nehruvian socialism does not really justify our current infatuation with liberalisation, what they call the Americanisation of the Indian economy. For, it has done the U.S. people themselves more harm than good, though it has benefited the American corporate sector enormously.
They mark 1973 as the watershed year in American economy, when the U.S. started lowering import tariffs from 40 per cent to the current average of five per cent. Free trade was in, but it also marked the decline of the manufacturing sector and the rise of the service sector. The Chaudhuris believe that one cannot sacrifice a country's manufacturing sector because it is instrumental in increasing standards of living. The effects of an open economy on American society itself is telling: In three decades, the poorest 20 per cent of American families' annual per capita income has remained stagnant; 75 per cent of families in the middle segment have seen an increase of 10 per cent in their annual income while the top five per cent have seen their income increase by a margin of 70 per cent. In 1949, one per cent of the Americans owned 21 per cent of the national wealth. In 1997, one per cent owned 42 per cent. The message is clear. Capitalism and free trade increase the wealth of the powerful few.
Another related statistics, which the Chaudhuris don't mention, but which reinforces their conclusions, is that today the U.S. has the highest prison population in the world (according to a study by the Washington D.C.-based Justice Policy Institute based on the U.S. government Bureau of Justice Statistics figures; see http://www.cjcj.org/pubs/punishing/punishing.html), surprising for a country which markets freedom abroad. And, the number of incarcerations since 1970 has increased 30 times compared to the previous five decades.
Giving a free reign to market capitalism and the philosophy of open markets can only spell disaster in a country already marked by deep divides going back centuries and enhanced by years of colonialism. What India needs, say the Chaudhuris, is a mix of the free market and planned economy. The economies of U.K. and the U.S., after all, thrived behind protectionism for more than 150 years before coming out into the open. Our public sector units can be made thriving profit centres. Instead, the way they are being sold for a song, it looks as if the government is intent on privatising profits and nationalising losses, they say.
They also propose several concrete measures to achieve harmonious economic growth in society. One of our top priorities is to reduce the widening gap in income between the rich and the poor and ensure a more equitable distribution of wealth. Ideally, feels Malay Chaudhuri, the ratio of income between the lowest paid worker in an economy and the highest paid one should be 1:3. To achieve this, he proposes a change in increments according to different income levels so that the rate of increase at the top would be slower, enabling a semblance of equilibrium years down the line. Other concrete measures they suggest involve revenue mobilisation measures which would bring in an additional revenue of Rs. 17, 70,000 crores over the next five years, to be spent on education, health care and in promoting rural entrepreneurship, worked out in carefully detailed plans.
Having a vision, even a workable vision, is one thing and having them implemented and take shape is another. Talking to the Chaudhuris, one gets the feeling that they haven't quite managed to bridge that gap. Also, poverty and inequality does not involve economics alone. Nesting inside that economic divide are a host of other cultural and social divides which haven't been factored into the calculations. Education and reduction of disparities in income, they seem to believe, will eventually take care of the other divides. But, as they say, it is important to foreground these issues and to talk about them, even if they simplify some of the issues in the process, seeing them in black and white. But then extreme situations sometimes require monochromatic vision, especially when seeing things in their complexity becomes, in effect, an excuse for inaction and accepting the status quo.
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