On May 12, Prime Minister Narendra Modi addressed the nation and stressed the need for ‘Atmanirbharta’ (self-reliance) in the Indian economy. Mr. Modi even urged people to “go local” in order to improve quality and domestic supply chains going forward.
Mr. Modi’s idea of self-reliance should not be misread as him embracing swadeshi, being anti-globalisation or adhering to Pandit Nehru’s vision of “commanding heights” of the heavy industry in the public sector. Instead, it is being used to serve the interests of domestic, and especially, global capital.
The key problem in Modi’s notion of self reliance, in the face of the US-China trade war, is aimed at taking global supply chains away from China to assist MNC-backed American global capital. It neither has solutions to strengthen domestic public sector manufacturing and strengthening the economic base, nor for the creation of millions of jobs for the unemployed in the country.
After two hundred years of colonial rule, the United Kingdom completely crushed Indian industry – jute, cotton and railways were the only established industries worthy enough to name. India’s industrial sector contributed about 11.8% to the national GDP; output and productivity were very low. We were also technologically backward. It was understood that mere political freedom would not be of much use without economic independence. The Nehruvian model of self-reliance was more or less followed over the course of seven five year plans after independence.
The Mahalnobis model came into effect in the second five-year plan. The focus was on heavy industries, especially those that produce capital goods (equipment or goods used in the production of other goods). Major plants for steel, oil, energy, pharmaceutical, hydel power, irrigation and fertilisers were built in the public sector with the erstwhile USSR’s assistance. Several national research institutions were established around the country to provide technological support for the heavy industry.
At the dawn of independence, most private entrepreneurs had neither vision nor the capability to undertake heavy investments in core sector industries with long gestation periods. The Bombay Plan of 1945 – where eight major industrialists sought huge government investment in establishing heavy industries in the public sector – actively supported the Nehruvian model of self-reliance. The industrial policy was formulated to help Indian capitalists create a potential national bourgeoisie, robust enough in later times to get into the heavy and capital goods industry.
In the decades following independence, the established self-reliant heavy industry in strategic public sectors had put India ahead of most developing countries. By the 1970’s and the 1980’s, however, we failed to modernise these industries technologically; with no clear agenda to conduct research to meet the technological needs of the domestic heavy industry and address local health and other pressing societal issues. Most of our famed national institutes and IITs ended up conducting research catering to the requirements of major western MNCs. Universities became centers for manufacturing thousands of highly qualified engineers and scientists whose final destination was immigration to the US.
The private sector too paid little attention to domestic research, development and technology. Due to low productivity and monopoly control in production, even in consumer goods, we lagged behind the world in productivity. Despite the existence of large steel producing facilities, like the ones in Bhilai or Bokaro or Coal India, there was a serious shortage of steel, energy, fertiliser, of electrical, electronic and other goods.
As a result, we missed the bus to the third technological revolution – electronics, microprocessors, personal computers, thus becoming detached from global supply chains. The public sector industry became known for low productivity, too much bureaucracy, financial mismanagement and corruption.
The Indian private sector bled the public sector heavy industry in sectors like steel and energy. By the mid-80’s, it grew from strength to strength and became emboldened. It started collaborating with major MNCs for the latest technology to manufacture goods, by paying huge royalties. In the mid-70’s, western MNCs started investing heavily on R&D in basic sciences and succeeded in developing state-of-the-art modern technologies in manufacturing.
In the early 90’s, India joined the neoliberal bandwagon under intensive pressure from the IMF and the World Bank, actively embarking on liberalisation, privatisation and globalisation. As a result of following the diktats of these global financial institutions, the very concept of self-reliance was rubbished in the belief that it was unprofitable to reinvent the wheel indigenously, when advanced technologies could simply be bought from anywhere at lower costs. By the early 80’s, major MNCs had dominant modern technology, and started controlling the production of goods worldwide.
Gradual Weakening of Public Sector Enterprises:
In 1991, the chosen path of disinvestment and privatisation, as part of the neo liberal economic agenda, resulted in a paradigm shift in the Centre’s policy towards the public sector enterprises. The enterprises lost monopolies they were assured of. The regime of commanding heights for the public sector gave way to the environment of a market economy. At the start of the 21st century, with dwindling state protection and budget support, public enterprises now had to face competition and the domination of market forces.
Based on the profit-making capabilities (an average annual turnover of more than Rs 25,000 crore, and Rs 5,000 crore of profit in the last three years), the Government identified nine central public enterprises (BHEL, BPCL, GAIL, HPCL, IOC, MTNL, NTPC, ONGC, and SAIL) ‘Navratnas’, and 45 ‘Miniratnas’, giving them autonomy, and allowing them to enter joint ventures and raise capital from the international and domestic markets. The Board for Industrial and Financial Reconstruction (BIFR) was created to identify sick industries, and as part of the chosen neo-liberal economic agenda, to dis-invest, sell or shut them down.
Privatisation or the disinvestment process was on a fast-track under the National Democratic Alliance (NDA) government of former PM A.B. Vajpayee – it even set up a separate Ministry of Disinvestment headed by Mr. Arun Shourie. The Disinvestment Ministry – between 1994 and 2005 – zealously privatised Videsh Sanchar Nigam Limited, Hindustan Zinc, Balco, IPCL, several ITDC hotels and initiated the sale of Maruti Automobiles. Strategic sales during that period merely fetched the government Rs 6,344 crore.
Western MNCs guard their technology zealously and extract huge amounts from developing nations in the form of royalties and patents. For example, Vodafone-Idea and Airtel had to pay about Rs 51,400 crore and Rs 25,980 crore worth of balance annual growth revenues respectively, to the Department of Telecommunications, for using satellite 3G services. Despite the Supreme court’s ruling, the firms refuse to pay this hefty sum, thus bankrupting Hindustan Telecommunications and BSNL.
Over the last 14 to 15 years, under present and prior regimes, we got FDI of around $345 billion (about Rs 23 lakh crore). The amount of foreign exchange that went out from the country to the MNCs’ mother companies during the same period was around $287 billion (about Rs 19 lakh crore). This was revealed by none other than Dr. Ashwani Mahajan, convenor of Swadeshi Jagran Manch, an RSS affiliate.
Financial Performance of Maharatna and Navratna Companies:
As per the available data, the ratio for Maharatna Companies operating performance and productivity was respectable, and indicates their high efficiency – COAL INDIA is the highest value at (0.51), followed by ONGC (0.23), GAIL (0.13), BHEL (0.12) and NTPC (0.11).
Despite the better financial performance of PSUs, the present NDA government is actively pursuing its neoliberal reforms by privatising even profit -making PSUs, as can be seen from the above data. It appears the present government (as were previous regimes), is hell bent on privatising all public assets and handing them over to private corporate houses.
Instead of addressing a pandemic that it is struggling to deal with, the NDA government chose this as the best time to dis-invest all public assets at break neck speed. Even while chanting ‘Atmanirbharta’, Narendra Modi is breaking the back of an indigenous policy of self-reliance and actively serving the interests of Indian capitalists and global imperialism. The current neoliberal reform march does not stop with the disinvestment of public sector units like Railways, Coal and Oil, but extends to the Railways, Health, Education and other sectors of the economy.
Mr. Modi’s politics are in-fact meant to distract people, creating new issues from time to time – communal flareups, citizenship controversies and Ram Mandir construction. It is how imperialist loot continues under a so-called nationalistic BJP regime led by PM Modi – by destroying the nation’s self reliant economy.