Yesterday’s Failures are Today’s Successes

Wasn`t somebody talking about what a wonderful job the Government of India is doing trading in metals, etc.?

I was talking to a guy who now works in the private sector after having worked for Oil & Natural Gas Commission (ONGC). I mentioned the fact that by the mid-80s when oil prices had crashed, offshore drilling rigs were parked off the coast of Louisiana and were going for an annual rent of $1 and asked if ONGC managed to snare any good deals. His response was that India is known for beginning the negotiations when the prices were low and settling on a contract a couple of years later when the prices would be high and this is precisely what had happened.

You can see the whole thing being played out all over again. Air India and Indian Airlines are going through their usual master-baiting process of trying to get the Ministry of Civil Aviation to let them buy planes. These would of course be brand-new ones which they would manage to fkkk up in no time at all. Right now there are about 500 planes sitting on the ground outside Tucson, Arizona which are anywhere from 2 to 20 years old. You could pick up almost new 747`s, 737`s, etc., and the airlines who own them (or have leased them from banks and GE or Pratt&Whitney) would be happy to sub-lease them to anybody. Do we do it? NO.

I remember flying PeoplExpress for #19, $29, $39 and $49 in the US. Their planes were 20-year-old 737s bought on the cheap. I remember on some planes those NO SMOKING and FASTEN SEAT BELT signs weren`t even in English! That is how you run an airline. Our babus are probably fretting that the signs aren`t in Hindi.

When those idiots in the Central Government were trying to impose Hindi on the South, my viewpoint was learning Hindi would be a very good thing; they should start it in Bihar, UP and Madhya Pradesh where of course they couldn`t read or write Hindi with their abysmal literacy levels.

Ref veeresh #133

[Layman #92 . . . you are correct, computerised tickets are not available from all the small hamlets, but the Indian Railways are getting there.

Let me put it this way, just yesterday, at New Delhi, I had the option of buying a platform ticket for 3/- rupees from a human being, for which I got the standard spec card ticket, or from a machine, for which I got a small printout receipt. There is also a soon-to-be introduced platform ticket cum weighing machine weight + fortune deal for all of 5/-.

Likewise, you can log in right now to the IR website from anywhere in the world and buy your train ticket. You can go to increasing numbers of stations, where there are terminals, at last count about 9000 of them, and buy unreserved or reserved journey tickets.]

And in Chennai, you can buy your tickets using your mobile phone. The tickets get delivered to your door and -- get this, this is a major departure for our babudom -- the ticket price is charged to your mobile phone bill! You don`t need a credi card!

Dear Ahmadzai, Urdu`s absorption in Pakistan came at the cost of its integrity.

Just when India was making a quick transition to the market economy, Pakistan chose to spreahead the Jihad against USSR in service of USA. Again at what cost?

As far back as 1980, Pakistan was producing music systems for Audi cars, Micro and Mangoe computers, exporting chips to the Silicon Valley and making telecommunication equipment for giants like Siemens. Unfortunately, those factories today give a desrted look. What happened?

Dost mittar`s article is indeed thought provoking reflected in the number of interacts.

Dost Mittar ji,

I came quite late, and read the interesting discussion going on.
You have chosen perhaps one of the most relevant themes/issues about india`s past and its effect on the present. Nehru and his policies seem to be the butt of all jokes by contemporary indians. Being a product of one of the institutes he envisioned, I have over the years developed high respect for him. Let me give you an example...

The concept behind opening REC`s across india is a prime example of his vision. Every REC in the country has seats reserved for students from all states in india. Number of students from each state in an REC is proportional to its population ( though merit based). The net result is an institution of excellent standards whose secondary objective is to educate indians on the diversity of language, culture and race from across india. While studying in such an institute one feels like he/she is in mini-india and able to appreciate the spectrum of diversity. By putting together such a diverse group of people, who are able to grow and learn together his vision makes everyone realise just one thing. How stupid are the differences that can divide people in any name.
Frankly I have not seen such a vision displayed by any other national leader of his times.
One might argue that IIT`s REC`s are drops in oceans, but nevertheless a beginning. If you look across to china as well, you do not find similar examples. I understand that the world today is obsessed with only jobs, prosperity and national pride, but I believe it has ample scope to imbibe Nehru`s humanism.


Rsridhar #135,

I think you echo the feelings of many indians of our generation. That was an excellent post.

Adios

Faruk:
`` The essence of rshridhar’s post is that we have a lot to thank Nehru for.``
...and I do not deny this at all!

`` Nehru’s focus was not the economy, it was nation building.``
I think that you are being ungenerous to Nehruji. He had his sights set on economic planning long before India became independent. Indeed, one of the reasons that he did not accept Jinnah`s idea of a loose confederation was that it would have interfered with his economic program for an independent India.

re:#143 by dost-mittar

Thanks for your post, dost-mittarji.

As i said, i am only thinking loud. I do not claim to know Nehru anymore than an average chowkie but my admiration for this man is increased when i see what happened to neighbouring Pakistan whose founding father (Jinnah) did not live long enough to consolidate his vision.
You mentioned corruption. You are right about that. Gandhiji himself had advised Congress party to be dismantled after Independence so that it did not become a monolithic vote catching machine. Perhaps Gandhiji knew the masses better than Nehru, who was a dreamer. Still, we need to give the devil its due. Nehru lent the kind of stability that a new nation needs in its formative years. One look at Pakistan convinces me that i am right in saying this.
Sridhar

re:#146 by Faruk
Thanks for your post.
I could not have put it more succinctly.
Sridhar

re:#140 by RationalFaith
Thanks.
Sridhar

Re dost-mittar # 143
The essence of rshridhar’s post is that we have a lot to thank Nehru for. You have eloquently made a case against his economic policies and his penchant for establishing public institutions and his aversion to the private sector.
Nehru’s focus was not the economy, it was nation building. He gave us a large number of institutions and the public sector when we had no industry or institutions. He built institutions of higher learning that are among the best in the world. He built the foundation of our nation and our democracy. We would not be a democracy had it not been for Nehru and the other leaders at that time.
We are reaping the benefits of his investments half a century later. These were long term investments and had to be made at a price.


Regards,

Faruk

Pankaj:
Re. ``The Commanding Heights`` written by Daniel Yergin and Joseph Stanislaw.
Is this the same book which was the basis of a PBS series of documentaries a couple of years ago?

jay#135:
``It is interesting that no one mentioned about the role played by the investment incentives and preferential trade offered by the uS to Korea and taiwan in early years, just to create a siccess model of the capitalism. ``
I, at least, am not aware of these incentives and preferential trade. Were they exclusive to these two countries?
But one could point to those two countries as an example of intelligent protectionism. The two followed different models, Korea of crony capitalism and Taiwan of unbridled small enterprise. But they both used protectionism against foreign competitors: low currency, low duties on capital goods and both tariff/non-tariff barriers against consumer goods, while encouraging competition among producers in the domestic market to create lean and mean businesses.

rsridhar:
I admire your love and admiration for chacha Nehru, we all do in a subliminal way, for after everything is said and done he was a symbol of modern India and started institutions which have surivived for more than a half century.
But I couldn`t help noticing that your post supports my hypothesis more than it negates it. When you say that ``we all need to remember that Nehru was not ``cut out`` to be a good administrator or economic planner``, you have encapsulated the essence of the problems he had. It is therefore a wonder that a nascent country survived despite being ruled for 17 years by someone who was not cut out to be a ``good administrator or economic planner``.

``The great thing about Nehru is: his heart was in the right place. He strove for a democratic and secular India. Today`s India cannot hope to progress if it turns its back on secularism. I see a great threat to secularism today even as India is on its path towards material progress. ``
..you can say that again!

``Few could have foreseen the unintended consequences of such a rigid control system viz corruption and lack of enterprise.``
I think you are on shaky grounds when you say that. India had a strong culture of bakhshish (poor man`s bribe), nazrana (rich man`s bribe) and ``oopar ki aamdani`` going all the way back to the Mughal period. It would not have taken a rocket genius to see what giving power to the bureaucrats would do; anyone familiar with the terror struck by the lowly paid village patwari could have told Nehru what license, quota, permit raj would lead to...and he was warned by people like Rajgopalachari, C.D.Deshmukh (RBI governor/Finance Minister) and others but dissenters were sidelined and replaced by fellow travellers like P.C. Mahalnobis and Krishna Menon. Do you know that at the time of independence Gokhale Insititute of Politics and Economics (the publisher of Arth Vijnan) was the most prominent statistical-economic institute in India and a natural place for starting the National Sample Survey. And yet, Indian Statistical Institute was preferred and the newly founded Delhi School of Economics and Institute of Economic Growth made the bride and bride`s maid because they were led by fellow travellers. The message went loud and clear that if you want to get anywhere, fall in line. There were still voices like that of P.S. Lokanathan who started his National Coucil of Applied Economic Research but it soon attained a pariah status in the establishment because it was funded entirely by the private sector. Nehru believed in his ideology as strongly as a follower of any blind faith.

``Once it was clear that his economic policies were a failure, leaders like Indira Gandhi and the rest should have dismantled those policies.``
...and they did, brick by brick, but it was not easy given the strong Nehruvian legacy. Lal Bahadur Shastri switched his priorities right away to agriculture with the slogan ``Jai jawan, jai kissan``. Indira Gandhi spent the first decade of her job as pm fighting divisions in her own party and then the legal battles. But following the Emergency and in her second innings she had started to have second thoughts about the policies followed. And Rajiv Gandhi really brought about a change in thinking. He brought in economists from world bank like Montek Singh Ahluwalia and Shankar Acharya who changed the mindset at Finance and Sam Pitroda who initiated the thinking in telecomminications.
Everyone calls Manmohan Singh the father of economic reforms in India, but if I were to choose one person, it would be the ``socialist`` V.P.Singh. As Rajiv Gandhi`s Finance Minister, it was he who brought in a radical change in tax structure and reduced marginal income tax from 96% to 50% (and saw the revenues increase instead of falling). Rajiv Gandhi also relished his initial reputation as `Mr. Clean` and supported Singh`s campaign of going after the `big fish` tax defaulters. However, when his operations got too close for comfort, a rift developed between the two and their parting of ways arrested the reform process.
...and lest we should forget, the Nehru legacy was so strong that even when Manmohan Singh introduced his majboori-induced reforms, he claimed that he was, in fact, not deviating from Nehru`s socialism.

Pankaj:
I think I see eye-to-eye with you on the issue of capitalism, as clarified by your #141.
(though i think that the US govt. intereferes too much in the wrong sectors and too little where it should-- even the Medicare Bill passed today-- just another payout to big Pharma companies!!)
But we know who runs the govt. there, don`t we!

PM

I also have a little knowledge of Hegel`s philosophy and I am aware of the fact that the very causes that lead to the success of a society in one age conceal the seeds of failure by ``morbid intensification`` of the very same principles. When I talk of ``laissez faire``, I do not mean the end of governence per se, but ``minimal`` interference of govt as far as possible. For once govt starts interfering with the economic activities there is no end to it. My own interpretation of ``minimal`` interference is probably at the same level as it is in USA.
Unfortunately, I am hard pressed for time till weekend:-), so we will discuss Hegel another day. Incidentally, I also believe that the greatest threat to capitalism in long term will come from super-capitalists who monopolize the markets through mergers and try to kill competition, the ``mozo`` of capitalism. There is a fantastic book on this topic.


Dost-Mittar
A very well written account of Nehruvian economics spearheaded by the ``hyper-rationalist`` P.C. Mahalonibus and the international evolution of school of economic thought can be found in the Pulitzer prize winning book ``The Commanding Heights`` written by Daniel Yergin and Joseph Stanislaw. This book places your article in proper perspective. I recommend reading it and looking at your interests, I am sure you will enjoy it.

sridhar, nasah # various

When its become fashionable to criticize Nehru, it`s good to see some people being fair to him.

Urstruly#129:
A little elaboration would be helpful. Your comment seems to be a bit tongue-in-cheek from the master of `khari-khari`!