The idea of a self-reliant economy has always been received with a mélange of reactions across ideologies, social considerations, political organizations and stakeholders.
Certainly, the concept of self-reliance does invoke a sense of economic nationalism and assurance, constant use of the term by economists and politicians in contradictory circumstances has perverted the concept. On the one hand, it is placed synonymously with Swadeshi; a movement which in broad parlance has been drawing equivalence between Foreign Direct Investment and economic colonization.
On the other hand, self-reliance brings back the horrors of five-year plans, which did even have a roadmap for exports till a decade and more. Nehru’s decision to operate a closed economy is often justified as a step to protect political autonomy, for which the State needed to take up the role of an entrepreneur and deepen its hold in strategic sectors. Ironically, India diluted control over its foreign policy and diplomatic alignments due to dependence for grants and aid. More than seven decades later, India has earned its stripes by the sheer talent and hard work of its citizens despite geo-political headwinds and its innate socio-economic challenges.
On 13th May, 2020, Prime Minister Narendra Modi called for building an Aatma Nirbhar Bharat, once again, purists, technical experts and industrialists began to speculate what did this mean for the country’s economy, industry, commerce and trade relationships. To guesstimate consequences and assess the downside of a policy is only obvious, especially when the call is given by a leader who is known to convert missions to movements. However, it is rather simplistic and misinformed to drub Aatma Nirbhar Bharat as the return of socialism and advent of protectionism 2.0.
I believe Aatma Nirbhar Bharat is a mission to reduce India’s dependency on countries that may resort to predatory tactics to fulfil long-term ulterior motives. In the past few decades, India’s ability to consume became its only identity, sharply overpowering its capacity to innovate, produce, and sell. While Make in India was the first-step in that direction, through self-reliance India seeks to be treated as an equal amongst the traditionally powerful. Also, to access India’s diverse consumer base, socio-economic contributions in the form of setting up business units, local procurement and employment generation needs to be made.
Inclusion Not Isolation
To put India’s increasing participation in globalization in perspective, trade to GDP ratio was 11.3% in 1960. This declined to 7.7% in 1970 and gradually increased to 15.2% in 1989. As India opened up its economic frontiers in 1991, trade to GDP increased to 20.1 by 1994 and almost doubled in the next decade to 37.5%. Irrespective of the political regime in power, buoyant trade volumes and value indicate that India has been enthusiastically forging trade relations and the world has been reciprocating with the same ardor.
To comprehend the clarion call for self-reliance by Prime Minister Modi as isolation would suggest that the leader is contradicting his economic vision. International investors have enjoyed Narendra Modi’s trust and support ever since his days as the CM of Gujarat, in contrary to Nehru’s suspicion and reticence for foreign trade. His flagship scheme Make in India espoused to make India the preferred destination for investors and entrepreneurs alike
Price Discovery, Not Control
From frustrating the role of capitalism, denying free markets to contribute towards economic development and depending on deficit financing to set up industries, Nehru’s idea of self-reliance was heavily dominated through an array of controls i.e. licenses, price, ownership, capital, production, wages etc.
This is in contradiction to the self-reliance PM Modi is trying to invoke. Free from controls, he has opened doors for the vibrant democracy to partake in India’s growth story.
It is a big moment for India’s agriculture sector as it attains freedom to sell its produce at a price driven by the market. Unlike the industry policy propagated by Nehru which limited private participation to the consumer sector, reforms announced in Aatma Nirbhar Bharat, 2020 have opened gates for private investment, research, innovation and employment generation in sectors like atomic energy and defence manufacturing.
If recent reforms including efforts to improve ease of doing business, increase transparency to eliminate corruption and relentless outreach with marquee incorporations are to go by, the underlying vision of building a self-reliant India is far from isolation or control. In fact, even when members of the Swadeshi Jagran Manch wanted Make in India to be renamed to Make by India just to avert the occurrence of another East India Company, the request was not acquiesced.
Self-reliance does not aim to be an impermeable membrane between India and the world. It is directed to broaden the basket of exports, which has otherwise been facing stiff competition, reduce trade imbalance, improve quality and encourage than coerce consumption of indigenous products. Admittedly, there is a lot of apprehension within the industry since achieving absolute self-reliance will be unrealistic. Trade negotiations still work on the cornerstone of barter system and therefore, if India wants the world to be its market, it will have to continue to allow the world to access its markets.