Locked in free market's embrace

India Unbound
June 14, 2002

This fervid account by Gurcharan Das of the liberalisation of the Indian economy in the 1990s first appeared in India in 2000, at the height of the dotcom boom, in which Indian-led companies played a leading part. In 2001 it was published in the US to considerable acclaim. Now it appears in this country, with the main text unaltered but with a brief, more measured afterword dated January 2002.

Since the text was completed, the dotcom bubble has collapsed, as the afterword cannot avoid confessing; Enron, which invested in a huge and controversial project in India, has imploded spectacularly; there have been catastrophic communal riots in Gujarat, one of India's most prosperous states; the events of September 11 have thrown South Asia into turmoil; and India and Pakistan, with poor leadership at the top, are once again at loggerheads. Inevitably some of the hype in the book about the capacity of economic reforms, and especially the internet, to transform India, has become distinctly tarnished.

"During the summer of 1995," the author, a former CEO of Procter and Gamble in India and now a management consultant based in Delhi, enthuses, "the entire country was mesmerised by the American energy company Enron's power plant in Maharashtra. In Parliament, in the newspapers, on glamorous TV chat shows, Indians discussed the intricacies of Enron's power purchase agreement with the same avidness as they discussed the cricket genius Tendulkar's batting average. Students in Maharashtrian colleges mentioned Enron's plant load factor with casual sophistication, as though they were talking about the latest affair of their favourite hero on the Bombay screen."

Today, of course, no one in India is talking about Enron, if they can avoid it, except environmentalists worried about the mess left behind by the company's unbridled greed and the local people who were misled by it.

OK, I have the wisdom of hindsight. But many Indians at the time could see that Enron's project was likely to be of dubious benefit to India, and many of us then were sceptical about the alleged wonders of the internet as a means of doing business and changing society. The above quote does not misrepresent the tone of India Unbound , which is frankly boosterism for the virtues of the free market.

I agree with Das that economic liberalisation was sorely needed. The swiftness with which it was embraced took the reluctant Congress government of Narasimha Rao by surprise, as Das reveals through interviews with the leading participants (including Rao). The legacy of 1950s Nehruvian socialism, compounded by years of stagnation and corruption under Indira Gandhi and her successors, was killing India through the so-called Licence Raj, in which government bureaucrats with control over industrial licences had the power to strangle business decisions. Good riddance to ignorant and arrogant Delhi civil servants and the tribe of clever but misguided leftwing economists who benefited by telling them what they wanted to hear. As Das reminds us in one of his many interesting and relevant detours into his own experience, when he was a trainee salesman in the 1960s: "Every time I ate in a roadside café or dhaba, my rice plate would arrive in three minutes flat. If I wanted an extra roti, it would arrive in 30 seconds. In a saree shop, the shopkeeper showed me a hundred sarees even if I did not buy a single one... In contrast, when I went to buy a railway ticket, pay my telephone bill, or withdraw money from my nationalised bank, I was mistreated or regarded as a nuisance, and made to wait in a long queue."

But how will the free market improve the parlous state of Indian primary education, which is so crucial to lifting India out of poverty? Here Das admits there has been little change since 1991, because politicians think only of the short term. And how will the hellish state of India's big cities, particularly rapidly commercialising Delhi, be made habitable, if money is king? The environment rates barely a mention in this book.

Das seems convinced that in the "commercialisation of Indian society" the advantages of the free market will far outweigh the disadvantages, and there will be far more winners than losers - as in the American system, which he much admires. Yet his conscience is plainly uneasy. He grew up with Nehru and the idealism of the 1950s as a role model and cannot altogether shake off the influence. "The old middle class complains constantly of the decline in our national character," he writes. "In the abstract, it sounds like a cliche, but when you discover that your friend in the civil service is corrupt or that your roommate in boarding school, who joined the police, is now under suspicion for murder... or that your clerk's wife committed 'suicide' because of a dispute on dowry with her in-laws, then the pain in the gut returns to stay."

There is much in the book about threatened cultural values, and some sensitive and intelligent appraisal of what was good in the "old" India, including praise for Rabindranath Tagore, India's leading thinker on cultural "globalisation". But regrettably there is no reference to Satyajit Ray, widely regarded as India's greatest post-independence artist, to whom Rao's government awarded the highest civilian honour, the Bharat Ratna (Jewel of India), just before his death in 1992 - hot on the heels, ironically enough, of an Oscar for lifetime achievement from Hollywood.

Ray's final three films were all impassioned salvoes against middle-class corruption. In one of his last interviews he stated bleakly: "Looking around me I feel that the old values of personal integrity, loyalty, liberalism, rationalism and fair play are all completely gone. People accept corruption as a way of life, as a method of getting along, as a necessary evil... Maybe you resist in the beginning. But the internal and external pressures crowd to a point where you learn to overlook the moral decline they spell." This is a warning that thoughtful Indians - of whom Das is certainly one - cannot afford to ignore.

Andrew Robinson is literary editor, The THES .

India Unbound: From Independence to the Global Information Age

Author - Gurcharan Das
ISBN - 1 86197 445 0
Publisher - Profile
Price - £9.99
Pages - 412

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