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Mainstream, VOL LIII No 14, March 28, 2015

Fly High or Crash Land

Monday 30 March 2015, by N V K Murthy

The new BJP Government has placed its first complete Budget before Parliament. It shows great hope. The Finance Minister has anticipated a growth rate of 8.5 per cent. The Economist of February 21-27 has an editorial on the subject with the title “India’s chance to Fly”. The editorial has suggested reforms in three areas: Land, Labour and Power. These areas are crucial but one may not agree entirely with the direction of changes suggested.

The editorial recommends that the acquisition of land for industrial purposes should be made easy and quick. It has also suggested that labour laws should be made friendly to those wanting to start new industries—which implies that hiring and firing workers should be made easy. It also suggests that adequate electrical power should be made available without any breakdowns on a 24/7 basis. This is one side of the story. Let us examine the other side.

In this context it is relevant to refer to what the President of the International Monetary Fund (IMF), Christine Lagarde, said on a recent visit to India when she met PM Modi. In a press interview, when she was asked what her advice would be to the Governor of the Reserve Bank of India (RBI) regarding the interest rate, she said “the IMF respects the autonomy of states in this regard”. She added that she had great respect for the capability of the Governor of the RBI and she was sure that he would do the best thing in the interest of the country. She went on to say that it would be wise to keep in mind some of the experiences of the developed countries of the West in recent decades when determining India’s future economic policies. For instance, the West learned that unless progress is inclusive, it is not good for any country. Also, growth without employment is not the best way to achieve economic progress. In many Western countries while the GDP has grown, so has the gulf between the rich and poor. This gulf is good neither for stability nor for economic development. That is why many economies do not accept GDP as a good yardstick to measure progress.

Keeping all this in the background let us look systematically at the three areas of Land, Labour and Power, as suggested by the editorial in the Economist.

Land reform is a problem plaguing India ever since it became free. Naxalism, a terrorist movement fighting for land reform, had its beginnings in the country going back to pre-independence days. It started as a farmer’s movement in the Telangana districts of the erstwhile princely state of Hyderabad. The landless labourers were fighting for their rightful share in the harvest. They were being treated almost like slaves by the feudal landlords, who were living luxuriously in the capital city of Hyderabad off the back-breaking labours of the impoverished peasants. Much was talked of land reforms during the early years after freedom, but little was done. Only in two States of Kerala and West Bengal were land reforms successfully implemented. But in the rest of the country much has to be done in the realm of land reforms and tenancy rights. Successive Prime Ministers have stated that the Naxalite terrorist movement is one of the biggest enemies the country has been facing.

A new land acquisition bill is before the House. This is the opportune moment to look at the whole problem instead of restricting it to acquiring land for industrial purposes. At present the Naxal movement in India seems to be concentrated in the forest areas of central and eastern India. The forest dwellers have been living off the produce of the diminishing forests. We call these people Adivasis (original dwellers—natives of the land). Yet, we seem to be denying them even the meagre produce of the dwindling forests. We seem to be treating them no better than how the Western colonialists treated the natives of Africa and the Americas. It is high time that justice is done.

Let us undo the injustice that has been perpetrated against tribal and forest dwellers. Their rights should be enshrined in the Constitution and adequate means should be formulated to give them the necessary compensation not as a one-time payment but in perpetuity by giving the entire community a share whenever mining or other rights are considered. This will provide them some security and could persuade them to give up their violent agitation. It is relevant to recall here that the Supreme Court had given a ruling in the Alcoa case in Orissa that no mining rights should be given to any corporation without the consent of the inhabitants of the area. So there is a precedent.

As far as Labour is concerned, in trying to make hiring and firing easy, we should take care to see that the industrialists do not ride rough-shod over the basic rights of the workers such as collective bargaining for better contracts, wages and conditions of work and living. The new government should also make sure that we do not develop a system of growth without employment. The aim should be full employment or close to it. Emphasis must be on labour-intensive industries especially in the rural areas. This involves not only economic planning but careful fiscal planning. We should measure growth not only by the GDP but also by measuring the gap between the rich and poor. In the Western countries the gap between the rich and poor is growing. In India this gap is already a huge one. We cannot afford to make it worse or it will create tremendous problems of law and order, which may become unmanageable. So the country should pay as much attention to bridging this gap as to ensuring growth.

In the electrical power sector, the lure of increasing power through fossil oil and coal based power units may be great. But we should remember the dreadful price that India and the world have paid in the name of industrial progress. The terrible havoc created by the tsunami which ravaged a large part of the Eastern world, including India, is still green in our memory. Right now the country is facing heavy floods in the northern and central parts of the country. The damage to crops is yet to be assessed, but it is expected to be extensive. World organisations have a dire prediction for us. They say that many countries, including China, India and the USA, may face a huge shortage of drinking water within even a few decades because of global warming.

The USA and China have already committed themselves to significantly reduce carbon emissions by 2025. If India tried to blindly emulate the progress in Western countries without considering the effect on climate change—that would be like cutting the nose to spite the face. The answer for India therefore is to concentrate on creating new “clean” sources of renewable energy like solar, wind, and water. With the present solar energy technology available in the world it should not be difficult to set up power units in the public, private and joint sectors, to meet most of the demands of power all over India. Not only should power units be set up for industrialisation but also to electrify public transport in cities and all the way into villages.

Today we have an opportunity not only for leaders on the government benches, but for leaders in the Opposition too, to rise above parochial interests and show the necessary statesmanship to tackle these problems. But if they put Hindu nationalism or other sectarian and class interests above national interests, they will put the entire future of the country in peril. Indeed, the country has a chance to fly and fly high. Only one must guard against and overcome parochial interests which may lead them to crash land.

The author, now retired, was the First Registrar of the Jawaharlal Nehru University, New Delhi. Subsequently he functioned for sometime as the Director of the Film and TV Institute of India, Pune. Later he was appointed the Director of the Nehru Centre, Mumbai.