INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Business Commentary/Ashok Mitra

Vajpayee government's Economic Advisory Council: Not a conclave of economists

It is not yet a full decade, since the Soviet apocalypse, but the Russian people have already had their fill of capitalism. Their economy is in ruins; whether the polity imposed upon them in 1991 will survive the current holocaust is a matter of speculation. There can hardly be a greater irony than the no-longer-to-be-ridiculed assertion that were 'free' elections as per the books of Western democracies to take place in today's Russia here and now, the Communist Party will sweep the board.

The problems, however, are not just in Russia. The collapse of the rouble as well as of the stock exchanges in Moscow and Leningrad, together with the indefinite closure of Russian banks, is having its reverberations across the entire capitalist world.

Both primary and secondary markets in South-East Asia, disjointed for the first time towards the middle of last year, continue to be listless. The stock exchanges in Japan, Hong Kong, Australia, New Zealand are aquiver. The bourses in Paris, Frankfurt and London are doing no better. Even the almighty Wall Street presents an altogether wobbly picture. Nikita Krushchev's boast, who knows, may well redeem itself, howsoever perversely: the Russian wolf will devour twentieth century capitalism in the fading years of the millennium.

Never mind we in India are ensconsed in our conservatism. We opted for globalisation seven years ago, at about the time the Russians did. Despite recent developments elsewhere, we apparently cannot be bounced off from the new religion we got ourselves converted to. We have, in fact, the zeal of archetypal fresh converts.

Downhill slide

In the rest of Asia, the conclusion might have been reached to everybody's satisfaction that the genesis of the current crisis is the carte blanche invitation to foreign investors to assume responsibility for infrastructural development; they failed in the assignment and the economies began to slide downward, Indian politicians and mandarins do not believe such canards.

Faith supposedly moves mountains, and in this instance, the faith is touching: free market forces will bestow growth and prosperity on this country, period; Indians themselves have only to consume more and more, the business of capital formation the foreigners will look after. True, something has temporarily gone wrong with the script. These species, the foreign investors, are yet to develop an appropriate respect for our five thousand years old ancient civilisation; we have got rid of all regulation; we have got rid of all regulations whether in the domestic sector or in foreign trade, public undertakings are being ruthlessly dismantled, direct taxes have been reduced. Monopoly houses can now rule the roost here, there, everywhere in the country.

International conspiracy

In the circumstances, foreign investment ought jolly well to have increased. In case it has not, an international conspiracy must be afoot, and its inspiration is without question being provided by our immediate neighbours, China and Pakistan.

It is a morose story; we have to run the full course of this morbidity before the latest international events, including the rising crescendo of popular demand in Russia for a return to State intervention, catches up with us. In any case, because of Pokhran II, we are now a full-fledged American vassal -- or desperately trying to be one: We have surrendered over prerogative of independent decision-making, especially concerning the formulation of policies and measures that impinge on the economic process. The authorities who did all this have a legitimate claim to Nirvana.

Instead, they are still flustered by the glaring evidence of zero or negative growth in practically all directions -- industry, agriculture as well as exports. This is not fair, economic development, they are plaintive, must somehow resume, but of course in conformity with the boundary conditions laid down by the United States administration and the three international agencies -- the International Monetary Fund, the World Bank and the World Trade Organisation -- lorded over by it.

The rulers in New Delhi have decided to set up an Economic Advisory Council, attached to the office of the Prime Minister, in order to devise a stratagem for squaring this particular occurrence, for during the past few years it did not seem, the government was in need of any supernumerary advice on economic matters; whatever the bosses in Washington, DC, and their plants in North Block, ordered were accepted as commandments to be blindly followed.

A couple of comments on the newly constituted Economic Advisory Council will perhaps not be taken amiss -- or cannot be helped even if taken amiss. First, to call this body a conclave of economists will be some sort of a misnomer. Quite a few amongst the eminences adorning the council had a past as economist. But it is a very ancient past, and almost all of them have spent more time in the bureaucracy than in the academic profession.

This is sharply in contrast with, for example, the Panel of Economists which was prominently in position in the Fifties and the early Sixties when the country was much concerned with problems and issues involving independent economic development. Each of the 21 members of the Panel was engaged in teaching or research in a major academic institution; they were by no stretch economists whose careers depended on government benediction.

Blind conformism

A second comment. Economists in our country have a reputation of blind conformism. Forty-odd years ago, the Panel of Economists too was overwhelmingly supportive of the then current economic ethos, namely, centralised economic planning with emphasis on extensive public investment in heavy industries for accelerating the pace of self-reliant growth. But there was also a voice of dissent, and there was no attempt to smother it.

Not many in the country remember Professor B R Shenoy's name these days. At the time the Second Five Year Plan was being drafted and the Mahalanabis model was the centrepiece of discussion in learned and not-so-learned circles, Professor Shenoy, a member of the distinguished Panel of Economists, was the great dissenter. He did not believe in planning; he did not believe in the heavy industry prescription; what was even more crucial, he did not even believe in self-reliant growth. The climate was alien. That did not bother him, he remained a vociferous free marketwallah.

But he was not derided for that reason. He was listened to respectfully; the note of dissent he prepared to the laudatory report of the Panel of Economists on the Professor Mahalanabis-inspired Second Five Year Plan was prominently printed and given the widest possible circulation by the authorities.

Solid phalanx

Such liberalism had died with liberalisation. The Economic Advisory Council the Prime Minister's Office has constituted is a solid phalanx of the establishment-minded. You can take a wager, it will defend the Fund-Bank-WTO line till the nation's last breath. All this is a great pity.

Things are not going exactly right with the economy; the on-going crises in national and international political developments are contributing further to the confusion. In this ambience, the authorities, it would be thought, need to listen to different points of view before reaching their own judgement.

Globalisation, however, has no space for dissent. Four decades ago, Professor Shenoy was respectfully listened to both within the profession of economists and outside. The contrast with the contemporary scene would not have been more glaring.

Those who do not agree with the free market doctrine are by no means a negligible number in the country as of this moment. But they have been bumped off from all official committees and commissions, from the financial newspapers as well as from the electronic media; the government considers it as sacrilege proposals to occasionally listen to them.

All cheers therefore to the Economic Advisory Council. It is the latest manifestation of an apparatchik where only the deaf talk to the deaf.

Ashok Mitra