Whether the deputy chairman of the Planning Commission dragged him to the New York Stock Exchange or he went of his own volition is beside the point. The fact of the matter is that our prime minister was very much there, addressing the glitterati of American capitalism. The prime minister made one particular pitch: over the next ten years, he badly needs for India 150 billion dollars of foreign direct investment, the good capitalists of the United States of America must help him out. Managing the left inside the country, he assured his audience, was no problem; once the Indian economy proceeds swimmingly given the splurge of FDI, the country would shine for ever, the minor irritations would be forgotten by all quarters.
The prime minister must have done his homework. The amount of FDI he mentioned as crucially necessary to engineer a spurt in growth has to be taken seriously. Who knows, India's modest economic performance even in the post-liberalization phase could perhaps be because of the failure of foreign capital to rush in. Those who preside over foreign capital love an ambience where everything moves on a fast track. India has not till now provided such an ambience. In China, the rate of growth has averaged 9 to 10 per cent annually in the recent period, so that the market for practically all varieties of goods and services is expanding by leaps and bounds. Foreign investors realize the profit-making opportunities such a situation presents; they do not have to be entreated to travel to China; they, on their own, make a beeline for that country.
Conditions are much more daunting in India. During the major part of the past decade, the rate of economic growth has here wobbled around 4 to 5 per cent per annum. The market has, in consequence, been rising at a rate much tardier than in China. FDI in fact stayed stuck at roughly $ 2 billion each year for most of the decade. Some improvement in FDI flow has taken place only in the last two fiscal years reaching $ 4.7 billion in both 2002-03 and 2003-04. Even so, it seems to be a sort of a vicious circle; foreigners would not come in unless economic prospects improve, and economic prospects, according to official assessment, cannot improve unless foreign capital comes in greater quantities.
Taking the prime minister's words at their face value, the country needs in the course of the next decade an extra 8 to 10 billion dollars of FDI every year over what it has been getting of late in order to achieve a spectacular take-off in economic growth. Unless FDI of this order fructifies, things, he hints, would remain gloomy.
This is precisely where doubts arise. Without successful pursuit of American tycoons, the country, the prime minister is sure, will have no salvation; foreigners therefore have to be offered ingratiatingly attractive terms. Obviously, had we our own additional resources for investment, we would not need to be importunate with foreigners. But the country's decision-makers are known to have all facts at their fingertips. It is therefore permissible to assume that they are not unaware of one interesting datum: in the five-year period 1999-2000 to 2003-2004, India has imported a total of $25 billion of gold; the magnitude of such imports in the last fiscal year was as high as $ 6.5 billion. It is a free-for-all economic system we have been operating since 1991. The import of gold, either for conspicuous consumption in the form of jewels or as hoard, is without subject to any constraints. We are supposed to be a poor, underdeveloped nation, short of savings, which necessitates our prime minister to go out with a begging bowl beseeching funds from Western capitalists. But circumstances could change dramatically: provided the leakage of domestic savings in the form of gold imports stopped and these savings were instead directed into investments in areas of national priorities. The prime minister is a-hunting for 8 to 10 billion dollars of additional FDI each year. By promulgating an order suspending gold imports, he would have at his disposal domestic resources covering the bulk of this requirement.
We are once more confronted by an issue crusaders for economic liberalism have placed on a moral pedestal: the government must not interfere with the freedom of choice on the part of the people. If they want gold rather than development, the authorities have no business to meddle in the matter. There can however be other moral problems as well. Those who hanker after gold are generally also those who have already enough of development. Should there be no extra investment in the country, they would not be bothered in the least. At the other end, though, huge masses of the poor, the undernourished and the underprivileged are bound to benefit if, instead of importing gold, we use the nation's savings for adding to our capital stock, particularly in economic and social infra-structures. The problem of working out the strategy for growth is not therefore a mere matter of lobbying or not lobbying for foreign capital, often at terms that reduces the nation's sovereignty. It is equally a class question. The rich, who mostly do the savings, may not be prepared to allow these savings for purposes of national development that will more overtly benefit the poor. In other words, the prime minister has to humiliate himself and the nation in foreign fora because the wealthy sections will not permit their savings to serve the cause of national priorities.
Here, then, is the irony of the situation. The prime minister is the prime minister because the poorer sections have voted for a combination of political groups and parties who have agreed to have him installed in that position. His supplicant role before foreign investors is, on the other hand, causally related to the selfish attitude of the non-poor, who must have their luxuries, never mind what it costs the nation. (The pattern is invariant. The banks lend money at cheap rates so that more and more of cars, refrigerators and music systems are purchased by the affluent; but there will be horror if the banks were asked to advance funds to develop the country's infrastructure at similarly low rates.)
An incident during the early days of the 'economic reforms' comes to mind. One opposition member of parliament wanted to draw the then finance minister's attention to an anomaly in the framework of the government's economic policy: he, the finance minister, wanted to have more savings in the system so that the pace of economic growth got speeded up; at the same time, he was providing huge incentives to the consumer electronic industry which could not but erode savings. The finance minister ' the current prime minister ' rose to reply to the opposition member: whatever his detractors might say, he was determined to encourage consumerism in the country; he had a daughter who was a hard-working professional woman, her only relaxation was to watch the television in the evenings on her return from work; he would be a heartless parent to deprive the daughter of this little enjoyment; he would actually endeavour so that every daughter in the country came to possess a television set. The issue of economics was sidetracked; so what, there was thunderous thumping of desks reverberating across Samsad Bhavan.
This about sums up the Indian development dilemma. We prefer jewels and motor cars and television sets for our children today, the country's poor could fend for themselves. As for the future, as Doris Day sang long ago, that is not ours to see.