Poverty is cruel, but it is curable. The only known cure is economic rationalism instead of economic theology. In the field of economics the tree of ideology has never borne any fruit. All “isms” are lethal.
In a poor country like India, there can never be social justice without economic growth. We have count-less chances for development. Opportunities multiply when they are seized; they die when neglected.
We have barely tapped our immeasurable potential for growth. Immense man-power, superb skills and enter-prise are to India what oil is to the Middle East. At least 250 million of our citizens are contributors to the national product. There is one way, and only one way, in which India can banish poverty, and that is by putting to the maximum productive use the 2,000 million man-hours which fleet over India every day, never to come again. To every economic policy and legislation we must apply the acid test—how far will it bend the talent, energy and time of our people to fruitful ends and how far will it dissipate them in coping with legal inanities and a bumbling bureaucracy.
“Much to cast down, much to build, much to restore; Let the work not delay, time and the arm not waste; Let the clay be dug from the pit, let the saw cut the stone; Let the fire not be quenched in the forge.”
Irrigation has been sadly neglected during the last thirty years. On an average, India receives 3,000 million acrefeet rainfall in a year—sufficient to submerge the entire country in a 45 feet deep layer of water. The total area under cultivation was about 422 million acres in 1975-76. Of this area, only about 111 million acres (or 26.3 percent) was provided with irrigational facilities. At the rate of extension of irrigational facilities achieved in the last fifteen years, we shall not be able to bring even half the arable area under irrigation till 2007 A.D.
Three-fourths of the total flow of our rivers is waste-fully emptied into the seas. Out of our groundwater resources of an estimated potential of 86 million acres, barely half is being utilized. How much greater would be our agricultural output, with a reduction in prices on account of economies of scale, if irrigation plans were vigorously pursued.
In the Fifth Plan only 0.83 percent of the total public sector outlay is earmarked for roads, and even out of this paltry percentage three-fourths is intended to cover those road projects which have spilled over from the Fourth Plan. Few countries of the world are so poor in market roads. Road construction is one of the best ways to generate employment and to stimulate agricultural output by opening up enormous new markets.
As regards industry, those laws should be scrapped which obstruct progress and constrict growth without any countervailing public benefit.
While direct taxation on individuals has been brought to a reasonable level, the burden of indirect taxes is ridiculously high on many commodities. Out of the price paid for a truck by a consumer as much as 57 percent represents the burden of various indirect taxes levied at different stages. The excise on air conditioners is at the unconscionable level of 100 percent ad valorem on the wholesale price. The excise on cement is as much as 50 percent of the retention price allowed to the manufacturer. The Finance Minister has a great nation-building task ahead of him.
An honest and efficient Government should be able to contain inflation and stop anti-social activities like smuggling, without suspending the rule of law. Now that the rule of law has been restored, prompt measures will have to be taken to deal with inflation which is raging at 15 percent per annum.
An index to the revival of smuggling is provided by the fact that whereas during the last twelve months there was no depreciated rate for the rupee against foreign currencies in the free market, within a week of the election results a black market sprang into existence. For instance, whereas at the beginning of March the Singapore dollar fetched Rs. 3.45 (the official rate) in the free market, now the Singapore dollar quotes at Rs. 4.50.
The remittances from Singapore and Malaysia to India through the official banking channels have now dwindled to just a trickle. The country can never prosper or be saved through the efforts of only ministers and civil servants. The people must be associated at all stages with the formulation and implementation of policies. We can have a truly participating democracy for the first time in India. Under the last regime, the Government and the people virtually became two hostile armed camps. Now we can have an exciting joint venture between the Government and the people.
There should be no obsession with either the public sector or the private sector. The concept would be that of only one sector- the national sector. Pragmatism is all. The first major economic measure of the Government will be the budget. Millions of man-hours, crammed with intelligence and knowledge, of tax gatherers, tax payers and tax advisers-are utterly wasted every year in grappling with the unmanageable spate of amendments. A stable fiscal policy is to a nation what a stable family life is to an individual. The rates of direct taxes should be fixed in advance for three to five years, as they are in other countries like the U.S.A. and Canada. There is no need for the outdated and ridiculous shroud of secrecy which envelops every budget-except as regards changes in customs and excise rates.
Many progressive nations have a free and open public debate on budgetary proposals before the Bill is introduced in the legislature. It would be a historic event if under the present Government the Union Budget ceases to be an annual 11 scourge and partakes of the nature of the presentation of annual accounts of a partnership between the Government and the people.
Every budget contains a cartload of figures in black and white- but the stark figures represent the myriad lights and shades of India’s life, the contrasting tones of poverty and wealth, and of bread so dear, and flesh and blood so cheap, the deep tints of adventure and enterprise and man’s ageless struggle for a brighter morn. The very enormity and variety of the challenges facing the country are such as to touch the least tender to tears and the most incredulous to prayer. Shall we maintain discipline-or shall we witness revival of the barbarous Bandhs when government ceased to govern, mobocracy displaced democracy, and cities were paralyzed by groups of men who regarded themselves as above the law? Shall we increase production, create national wealth and settle industrial disputes in the forums provided by the law-or shall we abuse our regained freedom by nine morchas a day?
This essay is part of a series from the Indian Liberals archive, a project of the Centre for Civil Society. This essay is excerpted from the journal “Forum of Free Enterprise,” published on 20 May 1977. The original version can be accessed here.