Reclaim Economic Sovereignty
December 30, 2020
India has not learnt from its past mistakes and allowed China to drain economy through imbalanced policies. — Anil Javalekar
“Those who cannot remember the past, are condemned to repeat it” said George Santayana, an influential 20th century American thinker. India lost economic sovereignty to British who colonized India brutally and drained Indian economy like a wet cow for over two centuries. India did not learn the lesson with British colonization. It repeated its mistake with overwhelming dependence on USSR after independence. And India has continued this mistake and allowed China to drain the economy through imbalanced policies. It is critical to realize that unless economic sovereignty is gained back, Indian economy is vulnerable to foreign manipulation. Aatmnirbharta, particularly economic self-reliance, is the only option and needs to be taken seriously.
Loss of economic sovereignty is Prime
True, the Britishers came in as traders in early 1600s - the Queen gave a royal charter to East India Company to trade with India. As Britishers cornered trade from India, they realized quickly that unless they ruled it politically, their ability to drain the wealth will be limited – so instead of only taking profits, they schemed to own the principal as well – in real terms they were looting the country in the guise of ruling it. India was a rich country and yet failed to protect its borders (Battle of Plassey), could not fight the lop-sided policies and barriers Britishers saddled India with (duties on metals, cloth and shipping). Their process was also quite subtle – first they came as traders and became strong trade partners to the provinces and built relations with powerful people in the courts – then progressed to becoming political influencers within the royal courts and setting up their own military units for protecting the trade routes. Then came the final stage where they simply started calling the shots either through the power of military or by placing puppets in the various regimes which did their bidding. This progression was gradual and consistent over 2 centuries. Our loss of independence was not by one single conquest by the foreigners but years of gradual swallowing up of our territory and sovereignty by the British. The painful lesson here is that the loss of independence started with loss of economic sovereignty.
China now draining Indian economy like British
China is India’s biggest trading partner – it imports USD 65 billion while China imports only USD 16 billion from India– basically India is feeding China all the profits from Indian consumers. China is making Kanchipuram silks, Rajasthani jewellery, Krishna idols, pipes, plastic buckets, electrical lights, even toys for India. The alarming part is that many of our core purchases are from China - about 75% of India’s telecom equipment is Chinese – three of every four power plants in India use Chinese equipment, 70%-80% of all Active Pharmaceutical Ingredients (APIs) come from China. Since India is importing so much from China, Indian local manufacturing has vanished in some industries and Indians are becoming mere traders. The manufacturing and innovation in China is booming at the expense of Indian industry.
China making India dependent
Since India is such a big market for Chinese goods, will China happily let go of the market for Indian entrepreneurs to succeed? It is highly unlikely. China is putting investments in Indian technology and service companies so that it can own the tech, the end customer and make Indian business dependent on its capital – this strengthens their influence with the government to keep China’s trade policies favourable. Once China has cornered this market and owns so many businesses in India, India will find it difficult to deal with it as an equal on strategic issues relating to ts borders, terrorism, its support of Pakistan etc. It is tragic that Indian government and business communities do not realize they are putting the country at risk when they close down factories and markets locally and go shopping for cheap produce from China. Indian consumers are no less guilty – they prefer to have cheap, low quality but shiny purchases rather than sustainable good quality products produced locally.
Need Swadeshi movement
This is the time for concrete action. Indian life always advocated self-sufficiency and living that way. Ancient villages were self-sufficient for all of their needs. This is why swadeshi movement was core to Indian freedom struggle. The movement was led by Aurobindo, Tilak and others against foreign made goods during the Bengal partition. Swadeshi i.e. make local, buy local has been the core argument made by many stalwarts over and over again. Deendayalji, Golwalkar Guruji, Dattopant Thengdi and many others, spoke often that for a nation like India, which enshrined human development in spiritual realms, economic endeavor must embed spiritual values that enables and holds itself accountable to an enlightened society. In Indian thought, the concept of well-being didn’t stop at an individual but extended to the entire community/nation and it is clear that no individual or community can make meaningful progress unless they are self-reliant and self-sufficient (the words “swawalambana” and “atma-poorti” were used by Guruji). They advocated that India must localize and Indianize the economic systems rather than blindly ape the west and transfer our resources or profits abroad.
Swadeshi is not against global trade
The idea of swadeshi is not to reject global trade or globalization – rather, the world is interconnected and highly globalized. India must definitely participate and shape the global economy. However, it is important that India must differentiate between trade “which is on equal footing” vis-a-vis trade that places India under the leverage of another country. Indians must have pride and appreciation of buying goods or services originating in and produced by the genius of our nation – Indian production has to be of such standards and quality that the consumer can feel proud to buy – and this means India should not only innovate but also leverage global research by Indianizing it for local production. Sri Dattopant Thengdiji often lamented the craze of buying “foreign” goods and the blind copying of the west. Swadeshi doesn’t mean just local – it means localizing the global and globalizing the local. In addition to correcting trade mindsets, strong local economy ensures a purity of intent in political systems, media and regulatory processes – once self-reliance is the stated objective for a nation, the role of all institutions automatically gets reshaped to focus on national interest rather than getting hijacked for ulterior agendas.
Understand and Learn from China’s development
It is a matter of introspection how China was able to achieve and maintain its steep growth. China’s spending on health and education of its people (advanced skills as well as vocational training) has propelled them from being the cheapest manufacturers of the world to the hub of innovation and technological prowess they now command. Unlike general perception, the foreign investment in Chinese businesses is not because of cheap labor but increasingly it is for their high skills and high productivity. Rural China transformed in the mid 1990s as the rural entreprenurial revolution – through its township and village enterprises, millions of rural entrepreneurs became adept at running businesses and they were perfectly placed with skills when China opened up for global trade. China had built a strong infrastructure of ports, roads, highways, power which enabled these entrepreneurs to start fast and grow fast.
Act fast towards grassroot growth
While social mindset overall will take some time, India can act decisively in some areas to start preparing ourselves for the new direction –
1. Food Security management through agricultural maturity – enhance farm productivity with sustainable practises for soil preservation and nourishment, crop management, funding for adopting mechanization or innovation or technology.
2. Key Industrial Sector self-sufficiency and technological maturity - metals, minerals, forests, water, coal and other assets must be assessed to ensure self-sufficiency and encourage proper utilization.
3. Preserve foreign exchange for core needs – review Balance of Trade deficits and eliminate the non-critical imports – this will encourage local industry.
4. Ensure Venture capital, debt capital and quasi-risk capital availability for entrepreneurs particularly in small and medium size companies and organizing the unorganized sectors for higher productivity, innovation in tech and high-end skilling of labor force.
5. Infrastructure - for businesses to flourish in rural markets and keeping overall cost of production/distribution low, infrastructure in form of roads, power, water, ports etc. are crucial. This area needs serious revamp of our approach on timing, cost and assessment of needs.
6. Local administration and governance – de-bottleneck local businesses and farmers from doing business, the local administrations should be incentivised to support business and farm prospertiy rather than operate as political parties or cite a rule book and slow down the progress.
7. Invest in high standards of quality for production and services – India must Indianize the production and distribution processes to reduce the cost of the value chain while increasing the quality standards. Once locally produced goods are as good as or better than imported ones at the same price, consumption will inevitably shift to local enterprises.
8. Invest in education – amend curriculum to keep pace with current developments, evolve high skill environment and impart vocational skilling in keeping with our environment, resource availability and develop entrepreneurship rather than job-seeking education. As a new generation takes shape in the next decade, we will be able to reap rich dividends.
Time is Now
China unveiled its 14th five year plan end of Oct 2020 that clearly articulated its aspirations to dominate the world in finance, technology, innovation – China has been flexing the military muscle already and supporting our adversaries actively. It is high time now for India to be self-reliant - unless there is a comprehensive strategy to transform Indian approach to truly depend on its own economic strength, It will simply see smart headlines and eloquent speeches with little changing on the ground. At this point in Indian history, India will have no one to blame but itself for squandering this massive opportunity to stand on its own feet.
Anil Javalekar: NABARD retiree, Co-Editor of books: ‘India’s Perspective Policy on Agriculture’ and ‘Droughts and way Forward’. Regular contributor to Swadeshi Patrika (English and Hindi).