Commentary/Ashok Mitra

The country carries the burden of a $ 100 billion foreign debt, and no relief is forthcoming

Europe is moving away from starry-eyed worship of globalisation. What about India, the world's largest democracy?

Liberal economic reforms have till now been an unmitigated disaster over here: the rate of growth in both agriculture and industry is down, employment has shrunk in all sectors, exports have shrivelled, even the reduction of fiscal deficit, for which loads of credit were taken earlier, has turned out to be a hoax. Poverty and income inequalities, the latest World Development Report suggests, have aggravated in the country as a spin off of the reforms.

While foreign exchange reserves have soared to around $ 25 billion, imports have surged. There is a frightening gap in the balance of trade which can ensure any day a run in foreign holdings, nearly half of which consists of easy come easy go 'hot money'. Nor is it possible to wish away the other ground reality. The country carries the burden of a $ 100 billion foreign debt, and no relief is forthcoming.

Caste, communal and ethnic conflicts are a cloak. These, and the comings and goings in New Delhi, monopolise the headlines. None can lay a wager that all this is not a purely temporary phase, or that people's resentment with economic non-preference will not soon assume more violent forms.

Liberalisation has been reduced to a cliche -- ministers mechanically chant the mantra. The victims of the economic anarchy since 1991-92 are unimpressed. Public investment is slashed because liberalisation theory so ordains. Private investment, supposed to supplant public investment, has failed to pick up. Every day there is a new explanation why this has been so. Most of the residential hope is now pinned on direct foreign investment. The minimum requirement estimated by the ministry of finance is $10 billion annually over the next 10 years.

Not even a fifth of the capital funds the ministers want are coming in. Consequent to the single minded application of the liberalisation theory, established industrial undertakings, particularly those in the public sector, are being denied working capital and rehabilitation funds by financial institutions. It is a sin, theory says, to invest resources in units with moribund technology.

But other points of view cannot be easily brushed aside. Going by book value, close to two trillion rupees of public money represent the aggregate capital stock of the country's public industrial undertakings. The market value could work out to six to eight times as much -- that is, to more than Rs 20 trillion or $2,500 billion. It passes understanding why, while waiting for the arrival of the great Godot of direct foreign investment, a modest sum cannot be set aside every year to meet the working capital needs of the existing public enterprises.

The experiment with globalisation has not taken us anywhere. But, in this free climate, you are not supposed to express home truths. History will, for the present, be forced to pass India by.

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