We have heard about Prime Minister Narendra Modi’s vision to make India ‘atmanirbhar’ or self-reliant. For many people it’s a jolly good idea but before starting celebrations, we need to take a step back and think what ‘Atmanirbhar Bharat’ would be like?
Here are the five ‘noble lies’ that could be used in the course of time to achieve atmanirbharta
Last year, the government cut short India’s participation and pulled out of RCEP negotiations stating that it did not satisfactorily address its concerns. We had concerns that countries like Australia, New Zealand, China and other ASEAN nations could flood our markets with comparatively cheaper goods and it would be detrimental for people working in MSMEs and the unorganised sector. So to protect these sectors from foreign competition, the government decided not to go with RCEP.
The RCEP dialogue started in 2011 and we can safely assume that in these nine years the government hasn’t done enough to prepare our domestic markets to compete with foreign players. This decision might be good for producers and that too in the short run but for consumers this will lead to fewer choices, compromise on quality and higher price.
In 1923, John Keyes wrote that “in the long run we’re all dead” and the same thing could be said for domestic markets. If we peddle against the Principal of Creative Destruction and not expose our local markets to the chilly winds of competition this will lead to an increase in inefficient firms and production units and will be a big setback for research and innovation in India.
To make India atmanirbhar, it’s not wise to stop competition altogether, the government can provide some safety net to vulnerable sectors but we must remember that competition brings out the best.
Over-emphasis on import substitution
The Prime Minister has emphasised on import substitution, which surely is a great idea. This will help to cut current account deficit but it does not mean that India can start manufacturing all those goods and services where it lacks any comparative advantage over other countries.
For instance, production of semiconductors where both the US and China take lead. Even if we invest billions in the production of semiconductors we cannot take over these two giants.
Shove patriotism down people’s throats to buy domestic products
People who have studied economics would know that in almost every economic theory it is assumed that a consumer is a rational being and they are aware of their self-interest.
It simply means the buyer will purchase the consumption bundle that gives him the most satisfaction (Utility Maximisation).The factors that could influence the satisfaction level are quality of goods purchased, price and quantity.
Nationalism can be used for winning elections but it must not play any role in determining these primary factors. Buying products just because they are made in India is anything but ‘rational’.
India became a democracy in 1947. From north to south and east to west, we are such a diverse country. We must celebrate and be proud of this pluralistic nature. Democracy is the only form of government which gives us the space to have discussion, debate and dissent (3 Ds of Democracy) between communities and with the government. In its absence there’ll be no cooperation, understanding and unity among us, which will have a direct impact on economic growth of this nation.
Some people may argue that what about China? It’s almost five times bigger than us (both in terms of nominal GDP and on per capita basis) without being a democracy.
The answer is that yes, China is now a ‘shadow superpower’ and a giant economy, but we should remember that almost 92-93 per cent of the Chinese population belong to one ethnic group, the Han Chinese.
Furthermore, China is not a happy homogeneous family as one can infer from what they are doing to Uyghurs and other minority groups. China may be an economic success but at what cost? No protest against the Chinese Communist Party is allowed and the presence of robust state-controlled machinery stops free flow of information and allows no privacy to citizens — they’re always under radar and state surveillance.
Too much interference of government in markets
Since Independence, India had a socialist mindset that led to nationalisation of banks, airlines, automobile companies etc. This overregulation meant the government was in the business of making bread to butter. After 1991, the economic reforms condition improved the situation a little but it was far from satisfactory and even now the government is the Big Daddy.
India is still desperately waiting for major reforms in land acquisition, labour laws, farm laws and regressive laws related to taxation.
I personally believe in the laissez faire (free market) economy and low taxes but I’m not an anti-socialist.
As we know taxes are an important source of revenue for governments and if the government earnings plummet, it means less capital for investment in education, healthcare, basic infrastructure like roads and sanitation. So it’s essential for the government to collect taxes but the idea of wealth tax, inheritance tax, super-rich tax , DDT, capital gains tax is ludicrous and this will lead to destruction of national wealth .
People who support democratic socialism argue that Nordic countries have all these taxes but no destruction of wealth is taking place there, but they miss one important point — that is percentage of people paying taxes in those countries.
In India, almost 0.8 per cent of our entire population pay taxes while in Sweden this figure is close to 70 per cent. It’ll not be wise for India to impose these taxes, instead we should focus on increasing the tax base. We cannot neglect the fact that for many years growth has been powered principally by top 100 million population of our country and it is the need of the hour to broaden the demand-consumption base.
As far as the market is concerned, government should act as a referee and have an eye over markets to check for unfair competitive advantage and to act against private monopolies. It must refrain itself from becoming a player that’s not in the interest of ‘Atmanirbhar Bharat’.
Any kind of atmanirbharta should bring a change in the quality of life of every individual, be it education, medicare, proper sanitation, housing, decent jobs and overall dignity in life.
We must stop believing that just because India is a 5,000-year-old civilisation and a “proud democracy” it is our inherent right to become a great power. All this time Indian policy-makers were busy designing programmes based on unachievable targets. It’s high time the government starts focusing more on substance and less on optics.
Ajit Singh is a student of St. Aloysius College, Jabalpur