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The Rediff Business Special / L K Advani

Globalisation on the solid foundation of swadeshi

Great historical developments set off great debates. The world is today witnessing one such great debate that is sharp and widespread.

Again, as is characteristic of any great debate, it forces the participants to go back to the basics and first principles. What is globalisation? And, should we support it or oppose it?

Unfortunately, the sharpness of the debate has resulted in polemics and polarisation among a section of the participants -- though not, fortunately, all. Two mutually exclusive camps seem to have got formed -- one totally and unreservedly supportive of globalisation and the other equally unreservedly opposed to globalisation. This, in my view, is sad.

Prof Amartya Sen's balanced and humane view: Some three years ago, a friend of mine presented to me a book India: Economic Development and Social Opportunity by Professor Amartya Sen, the winner of this year's Nobel Prize for Economics, and his co-author Jean Dreze. The thesis in the book struck me as a remarkably balanced and humane approach to understanding liberalisation and its challenges.

It was a scathing portrayal of the performance of many developing countries, including India, in human development index parameters -- such as healthcare, nutrition, safe drinking water and primary education.

He also persuasively argued that some of the policies of economic reforms pursued by India and other developing countries had actually resulted in the worsening of the living conditions of those sections of the population which were already poor.

Prof Sen's academic work has cast a sharply critical light on the ill-effects of liberalisation and globalisation, especially on the poor people around the world.

At the same time, he has said that globalisation can greatly help the human race as a whole, if nations put in place strong safeguards in the social sector such as education, health and housing.

Since then, I have been reinforced in my belief that liberalisation and globalisation are neither completely bad. Their potential to do good to humanity is obvious. At the same time, their capacity, when pursued wrongly, to worsen the already wide disparities strong and weak nations, and sections of population within individual nations, is also self-evident.

Prof Sen himself put this issue in a clear perspective in his first press conference after winning the Nobel Prize, and I quote here from a news report:

He stressed that he was not against globalisation and said countries threatened by it were those where human development was very low. ''There are major gains in globalisation. So I am pro-globalisation,'' he said. But he added. If a country has globalisation at the highest possible speed and pays no attention to lack of social opportunity, illiteracy and lack of healthcare, it was creating problems for itself.''

Globalisation: Both a boon and a bane. As a phenomenon that denotes the increasing integration and interdependence of the nations of the world, brought about by new advances in information and communication technology and new global-scale activities in trade and industry, globalisation is a fundamental fact of our times. Neither its reality nor its irreversibility can be questioned.

If anything, it is a development that bids fair to advance rapidly and in ways that cannot even be fully envisioned today.

This being the truth, any position that opposes, and seeks to roll back, globalisation per se is as futile as it is untenable.

This being the truth, any position that opposes, and seeks to roll back, globalisation per se is as futile as it is untenable. But, as Prof Amartya Sen, and many others have pointed out, there is another aspect of globalisation -- its impact on humanity and its various national constituents -- which perforce has to engage our serious attention. For it is this aspect which brings out, in sharp focus, the dichotomy between the rhetoric and realities of globalisation.

If we dispassionately analyse the impact of globalisation on the human race as a whole and on different communities, we see that it has been both a boon and a bane. Generally, it has benefited rich countries more than the poor and developing ones.

Within the rich or developing countries, it has brought its benefits more to the rich sections of society than to the poor ones. It has, so far at least, made the strong stronger and the weak weaker.

I am using the word 'benefit' largely in the economic sense -- which is indeed a rather narrow way of understanding the impact of globalisation.

There are several other important dimensions of its impact -- such as on cultural, social, religious and intellectual spheres of society.

Here too the impact has been mixed, although, on balance, the baneful effects outweigh the benign ones.

What is more, these baneful effects encompass even those nations and classes which have economically benefited from globalisation.

The rhetoric, so far, of those who have benefited most from globalisation is that it is an unqualified boon.

It is only in recent years and months when its promises in the economic sphere began to be belied by the negative developments on the ground, that the rhetoric has come under growing attack.

Global financial crisis and the contagion effect: The negative economic developments I am referring to are well-known. The world economy, which was advertised to move on steady path, has become the victim of a major slowdown. In some countries, there has even been an economic meltdown -- with common people finding a sudden erosion in the value of their hard-earned incomes and assets. In several parts of the world, industries have shut down, jobs have vanished and the prospect for the future never seemed as bleak as today.

What is especially new in this phenomenon, is that the effect of an economic downside in one country has rapidly spread to other countries near and far. What thus began as a financial crisis in South-East Asia has thus travelled to many economies in the world, bringing about a recession in the global economy itself.

No country has been fully immune to this ''contagion effect'' -- although we can say with some satisfaction that our government has managed its financial system fairly well to protect the Indian economy from extreme volatility. Even in India, as well all know, many sectors of industry and business are going through a very difficult phase.

It is interesting to note that the rhetoric of globalisation being an unalloyed boon has slowed down only after the rich nations themselves began to feel the heat of the global economic slowdown.

There is, however, a possibility that, globalisation might increasingly come to be viewed in some political quarters as an unqualified disaster because of the spreading crisis in the world economy. We are all quite familiar, for example, with this kind of rejectionist propaganda of our communist parties. India must eschew both extremes. Neither is globalisation an unalloyed boon nor an unqualified disaster.

What, then, should be India's strategic response, which takes into account not only the hurtful impact of globalisation in today's unequal world order, but also its undeniable benefits for humanity?

I present here two thoughts as being of critical importance to meet the daunting challenge of globalisation at the present and in the future, and also seize the huge opportunities hidden in the process.

Swadeshi is a positive thought rooted in national self-confidence: The first thought is about the imperative need to adopt a swadeshi outlook. By swadeshi I mean the belief that there can be no uniform solution to the problems of economic and social development in a world which is both inherently diverse and also unequally structured today because of historical factors.

Nature abhors uniformity. That is why, in the social sphere too we see an immense degree of diversity, all of which tied together by an underlying unity. Many of the economic and other problems, in the 20th century have been created by the attempts to impose a uniform solution -- be it the capitalist model or the socialist/communist model -- on the whole world. This has not worked and will not work.

Each country in the world is bestowed with its own unique culture and ethos. It is also saddled with problems which are not the same across the world. These problems do not lend themselves to uniform solutions. Much less will such uniform solutions work, if they come from countries and ruling establishments in the rich part of the world which have historically prospered by creating these very problems in the poor and developing countries of the world.

This suggests that each country should be free to find and adopt a solution to the problems of economic and social development which squares with its own specific needs and priorities and resources. This is all the more true in the case of a continent-sized country like India which is sustained by the world's oldest living civilisation.

India simply cannot ape models and solutions worked out elsewhere. We must design our own path of economic development, confident in our ability to do so and proud of our many national achievements not only after we have become independent but also in our millennia-long history.

Our achievements in culture, specially, are of great relevance to the world community facing an uncertain and worrying future.

This is what I mean by swadeshi. It has a positive content and thrust. It connotes national pride and self-confidence. It connotes swavalamban or self-reliance. For no nation can solve its problems, much less attain heights of glory by becoming dependent on others.

Even in today's era of massive flow of capital across the world, that alone is a sound and sustained strategy for development which is based on harnessing, in the main internal resources, with external investment playing a secondary and supportive role.

Swadeshi, however, is not a negative belief which advocates isolationism. In an increasingly interdependent and interconnected world, no nation is given the luxury of isolation. What is more, despite the diversity of problems in different countries, many of these problems have common some features and common causes. This further makes it apparent that global cooperation is a critical instrument for problem-solving.

India has never practised isolationism. Even at the height of our Freedom Struggle, when swadeshi was a central slogan of the Swaraj Agenda, Gandhiji summed up the positive thrust of swadeshi in his famous and profound words: ''We keep our doors and windows open to welcome good ideas from all around the world, but we refuse to let our house itself be blown off by the wind from outside.'' This should be our approach even today. Globalisation yes, but on the solid foundations of swadeshi.

Good governance in both politics and business: The second component of India's strategic response to globalisation has to be good governance. By this I mean, good governance by the political executive, but also good governance within business and industrial establishment.

It is revealing that the concept of good corporate governance which is gaining increasing currency these days, incorporates many thoughts and principles which are central to su-raj or good governance in the context of running a government. Transparency, accountability, integrity of the leadership and the organisations, trust, cooperation, democratic and participative functioning all these are central to good governance both in the political and business contexts.

Unless we adopt good governance as a motto both in government and in business, India will not be able to effectively face the threats of globalisation and to realise its many opportunities.

Good governance is judged by two criteria -- shuchita (probity) and suraksha (security). We are all fully aware of how corruption has greatly debilitated our economy. If all the money that was meant for developmental projects actually went to their timely and proper implementation, there would be faster and wider spread of prosperity benefiting more and more poor and disadvantaged people. This would expand the market for goods and services in turn helping Indian industry and business itself.

I am sorry to say, however, that many Indian businessmen, big or small, have got habituated to non-transparent ways of doing business. I know, of course, that the political class and the ruling establishment are primarily responsible for the atmosphere of corruption which pervades the country today. Our government has got this as a legacy from the past and we are fully committed to fighting it.

But the point I wish to make here is that corruption always takes place where there are two parties to the dirty deal. And in the end, it harms both politics and business.

Take, for example, the problems in the telecom sector. Are they not a joint creation of politicians and businessmen, both throwing the norms of transparency to the winds? Have these problems not greatly slowed down the development of telecom infrastructure and services in India, thus hurting the very same companies which expected to prosper in this business? Is it also not a fact that the slow growth of telecom has had an adverse effect on the economy as a whole?

If the economy thus gets weakened because of corrupt political and business practices, will India be able to face the threats of globalisation? Will Indian goods and services not become uncompetitive in the global markets? On the flip side, will India be able to reap the opportunities of globalisation? For example, can India become a software superpower -- which it is fully capable of becoming if we lack a good telecom infrastructure mainly because of a scandal in implementing in the telecom sector?

If we see the present financial crisis in many countries of the world, we once again confront the same issue of lack of transparency and accountability in politics and business. This illustrates that political corruption and unethical business practices can greatly worsen crises in the era of globalisation. Good governance, thus, has become a global imperative today both in politics and business.

Business must create a culture which gives no scope for corruption and criminalisation. The second yardstick of good governance is security. There is a direct co-relationship between rapid economic development and a good security environment.

Today there is a considerable degree of national consensus on the need to promote investments, even foreign investments in the critical infrastructure areas. However, if efforts at attracting investments during the past few years have received an unsatisfactory response, even though everyone knows that India offers a big market, it is because successive governments allowed the security environment to deteriorate in many parts of the country.

Our government is fully committed to changing this damaging reality and the attendant perception. We will create a security environment that is conducive to promotion of domestic and foreign investments, and achievement of the goal set in the national agenda for governance to attain an accelerated rate of seven-eight per cent annual GDP growth.

Security is primarily the responsibility of the government. At the same time business and industry can play a significant supportive role in achieving this objective. It must be clearly understood that economic offences and corrupt business practices are a direct threat to security, even national security. Because, such offences necessitate protection, which is sought either by corrupting the law and order machinery or by aiding criminal elements.

As is now well-known, the network of these criminal elements either marauding as businessmen or having links with the business community is now growing. They even have ominous international connections with anti-national elements. One such case successfully pursued and busted by the government is presently making the headlines.

It is also well known that the ISI makes use of such elements and of a weakened security system to carry out its destabilisation designs. All this must change -- and will change.

Friends from business and industry, I appeal to you to create a business culture and ethos that gives no scope for law-breaking, corruption and criminalisation. It is in your own collective and enlightened self-interest -- not to speak of the long-term interest of the nation that you do this. My ministry is prepared to have a sustained interaction with business and trade associations to achieve this purpose.

I believe that by adopting swadeshi and good governance as the overarching principles in economy and the politics, India will become a major beneficiary of globalisation in the next century. But the gain will be not only India's, given our sheer size, and Indian politics and economy reformed on the line of our unversally valid cultural and ethical values, will become one of the principle contributors to refocussing and reforming the globalisation process itself for the good of the world community.

(Extracted from L K Advani's lecture delivered at the 71st annual session of the Federation of Indian Chambers of Commerce and Industry on October 25, in New Delhi)

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