Indian Affairs

INDIAN AFFAIRS
(November 1953 to January 1954)

By Prof. K. V. RAO, M.A., M. Litt.
(S. C. College, Puri)

1953 ended on a note of optimism in the speeches of the Finance Minister and other Ministers in Parliament. On the ‘food front’ we seem to have not only turned the corner and actually crossed the wood, but also to be having troubles in the opposite direction–of falling agricultural prices! In the industrial sector also production figures are encouraging; within the last 30 years production here has increased by 150 per cent. India has just concluded an agreement for the erection of a steel plant with a German firm, placed orders for a huge stock of railway engines and wagons, planned to tide off the wave of unemployment by a business-like resolve to spend another Rs. 170 crores in the public sector, and so on and so forth. India marches on!

Colin Clark–a prophet without the curse of Cassandra–has thrown a bombshell by foretelling that a wave of deep depression would pass through America by the middle of 1954–America the hub of world economic activity. This has made the world gloomy, but India seems to be undaunted, like many in America, and we believe, as Americans do, that today we have knowledge enough not only to meet a depression but even to nip it in the bud. Look at the reassuring words of Sri Deshmukh (in an interview with the Editor of the ‘Eastern Economist’):

“In the first place, whether there will be a recession in the United Nations or not, and how serious that recession, will be regarded as matters of speculation. Prognostications have been made in the past and have often proved wrong. Nevertheless, should a serious recession develop actually and should primary prices fall to uneconomic levels, then I concede that corrective measures would undoubtedly be necessary on our side, as they would equally undoubtedly be taken by the country concerned. I should imagine that the fact that we have a Plan and that expenditure in the public sector is being stepped up substantially, should maintain domestic incomes and domestic demands...But if one may venture on a forecast, it is hardly likely that things will be allowed to go that far.”

Government, the Public and the Economists

Apart from the happy trend noticed above, we observe the beginnings of a few others which augur well for our future in what we may call the ‘public life of India’. One such important development may be found in the relations between the Government on the one hand and the public on the other, and even the academic economists, in the counsels of the country. Take, for instance, the patient hearing the Prime Minister gave, along with the Deshmukhs, to the deliberations of the Federation of Indian Chambers at Calcutta; or look at the cordial relations that prevailed during the meetings of the Export Advisory and Import Advisory Councils; or watch the attempt made by the Commerce Minister to meet the economists half-way at Jaipur. Hitherto, the opinion was held strongly in some quarters that Government was trying to woo only Labour and the voters, but, lo, there is a change, and the Government has now the patience to hear the complaints of the merchants and manufacturers, the view-point of the exporters and importers and consumers, and even that of the Economists!

Or, am I mistaken about the latter class of intellectuals of India, I mean the economists? At the recent conference of the economists at Jaipur, for the first time, the spokesmen of the Government and the academic economists of India met on a common platform to understand each other–or, is it to find fault with each other? Hitherto for the last twenty years (for which I can vouchsafe) neither the Government nor the Press in India took any serious interest in the deliberations of the economists in their annual conferences, or of the teachers of Political Science who have been meeting for the last 16 years. This apathy was striking, and unfortunate.

The complaint of the Government is that teachers are too academic and their proceedings are doctrinaire and therefore unrealistic, though Sri Krishnamachari admitted, quoting Prof. Rostov, that the economists should move on the economic plane. But a more pertinent question is; who is more doctrinaire, the Government or the teachers? Are not the Reserve Bank and the Finance Ministry (and the Planning Commission) applying the economics which they learnt from England with its emphasis on Bank-rate, foreign trade, gold reserves, and so on? Even in Planning, we are following in the footsteps of England! plan the base, and the super-structure will take care of itself. Look at the statement of Sri Deshmukh, in answer to a question put by the Editor of the ‘Eastern Economist’. Asked to state the benefits of the Revised Plan in terms of employment and per capita income, Sri Deshmukh said that they “had no ready formula which would enable us to reckon what the effect of this spending in the public sector on the total economy would be. What you have to consider is the aggregate level of investment and of economic activity in general in the system as a whole. The object, of course, is to step up total expenditure. By increasing the investment in the public sector, We would be enlarging the money incomes in the community and then these incomes will create additional demands for consumer goods.” This is certainly planning to build on Adam Smith’s tomb.

I am glad, however, that we now see the necessity to base our plans on theories and our policies on principles. Three distinct schools of thought could be distinguished in the Government agencies as well as among the academicians. A school of thought in the Government believes in the doctrinaire economic policies, and is trained in the traditional British Universities. This is similar to the one that exists among the academic economists from whom the advisers of the former are largely drawn. A second school in the Government believes in pragmatism, while another tries to steer a middle course–is it middle?–believing that the social structure and the politics of a nation are partly determined by its economic life and that, at the same time, the operation of the economy is partially determined by the social and political framework. These three may be said to be represented roughly by the Finance Minister (and the Planning Commission), the Food Minister, and the Commerce Minister respectively.

Outside the Government there is the school roughly represented by the large majority of the academicians, trained in English and American Universities, trying to apply their half-digested theories from foreign text-books, based on foreign experience and foreign conditions. The second school is, what may be called, the Gandhian school, trying to apply the canons of ‘bullock-cart economy’ to the Atomic age. The third school is in an insignificant minority and unable to make its existence felt. It believes in taking the ‘facts’ of a country into consideration and applying to them our previous knowledge in order to achieve a pre-determined end. This may be called the ‘Realistic School’ to which the present writer belongs.

We are thus coming out of the nebula and beginning to base our policies on principles so that the people are now in a position to understand them better. This is in contrast with the old method of putting into practice whatever one’s convictions or even fanaticism tells them; and in this list I put, as examples, the Vanamahotsava of Sri Munshi and the Elementary Education Scheme of Sri Rajaji. Whatever might be their intrinsic merits, such changes and schemes should be the result of collective thinking and clear ideas. Rajaji is reported to have said that he insisted on the scheme because it was his idea since a long time. A social reformer in Madras seems to have suggested recently–and a similar suggestion was given in Bihar a few years before–that nobody should be employed in Government service unless he or she marries into another caste! Any idea, however good, ought not to determine the policy of the Government before it is thoroughly discussed.

Population, Planning and Mixed Economy

The recent Part I-A Report of the Census Commissioner–a very admirable one, otherwise–contains a few illustrations of the grounding in English economics. Asking the question: Can we develop agriculture so as to keep pace with the number specified in Table 10? (indicating a terrible increase in population by 1981), the Report answers that only birth control by our women, ‘a near miracle’, can save us. Obviously, as one Journal has pointed out, the Report has not taken into account the possible increase in agricultural production as well as in our capacity to import food. America is already reported to be having too much surplus stocks, as a result of increase in industrial production. Many people point out, whenever anybody complains about anything, that our independence is only six years old and we must wait; why not these people counsel also the alarmists in the Government and outside that the problem of population as well as that of unemployment are a legacy from the past and, given time to improve our economic condition, both the problems are bound to disappear?

That we can improve our annual income is amply testified by the Plan which has been recently revised to increase expenditure in the public sector. The working of the Plan seems to be all right, though one or two special features require our attention. Firstly, it has been shown that we have so far been unable to use our foreign exchange resources. The second feature is that private industry is not happy with the concept of mixed economy in our Welfare State, the latest to join in the chorus of protests being (Sir) Homi Mody, for some time Governor of U. P. His point of view which requires careful attention, is that the Government have done a great deal to impair private enterprise, and governmental policy is lacking in consistency and leading to a state of uncertainty “in which it has become very difficult for the private sector of industry .to make any substantial contribution”.

New Industrial Policy and Death Duties

Sir Homi’s charge can be illustrated by one or two examples chosen from the period of survey. Recently it was reported that the Commerce Minister was thinking of a new policy for industrialising the country–the State would first start industries, in some cases where private capital was not coming into the field, and then, after they are successful, hand over these industries to private enterprise. This new policy is just the opposite to the current policy whereby it was reported that the State might nationalise industries started by private enterprise after they are proved successful, though of late the members of the Government have been at pains to convince the industrialists that they were not going to nationalise much. Now which of these policies stands? What is our objective–to industrialise the country, or to nationalise, or both? Pandit Nehru is reported to have exhorted the nation to become ‘share-holders in India Ltd’. An excellent idea, indeed, and it must certainly enthuse the people, coming as it does from their idol. But why not devise a practical way of making the people actual share-holders instead of making them merely feel so? This can be done by suitably altering Sri Krishnamachari’s reported plan, whereby the State, after starting and successfully running new industries, will hand them over to a private Finance Corporation in which the people and the State have equal shares. This can also solve one of the headaches of the Planning Commission, as to how to make the people save and invest more. People are willing to save provided they get a reasonable return, and shares in a good industrial concern run by the Government will attract them better than a mere 4 per cent on the Small Savings Scheme. I may also suggest that the State might throw open half the shares of the Railways to public subscription after making the Railways a joint-stock company, or invite public subscription for the proposed steel plant.

The levy of death duties, recently proposed, is another example of that ‘inconsistent’ thinking. No doubt, it is true that the idea of death duties was there for the last twenty and odd years, and also that the purpose of taxation is accepted as socio-political. Yet, there are two points deserving our attention. The Government want private capital to play its part, and yet they tax it right and left–that is Sir Homi’s charge–and also collect all the available capital through small savings and big savings! Again, the Government have recently appointed a Taxation Enquiry Commission to go into the matter very comprehensively; could not the Government wait, it may be asked, till its Report is available? Critics have also pointed out that the new tax might not fulfill our expectations. In the first place, if its object is to reduce inequality, then, not only is the rate suggested too small, but also the experience of countries like England shows that inequality cannot be reduced by either death duties or even by steeply progressive income-tax. Secondly, the yield also may not be much in a country like India where wealth is hidden in gold and cash, and where family ties are strong. We can easily transfer or gift away our property to our sons or grandsons or to wives without any compunction, which no average Westerner could do, for fear of divorce etc.

The Constitution

Bengal is the last of the States-A to undertake land reforms. It had to delay it because of the troubles it had to face after Partition. But the Government suddenly decided to compensate for the delay by making the reform more comprehensive and abolish all kinds of intermediaries, including the middle-class non-cultivating landlords, though they are not in any sense zamindars. It was found out that Art. 31 of the Constitution would not allow it and so the Legislature passed a resolution, supported by the Government, that the Centre might amend the Constitution.

This raises-apart from the merits of the legislation itself–a point of fundamental constitutional importance. Should the Legislature conduct itself according to the written Constitution, or should the Constitution be changed to suit the purpose of a State Legislature? All theories of the Constitution support the former view–that the Legislature should not go against the Constitution and that the Constitution is written and made rigid exactly to prevent this contingency. Originally Art. 31 was the result of a long discussion inside and outside the Constituent Assembly, and the compromise formula was moved by Pandit Nehru himself. It is interesting to note that during the discussion Pandit Nehru made it clear that the object was zamindari abolition and it should be fulfilled, Constitution or no Constitution, courts or no courts. “The Constitution is the creature of Parliament,” he declared to the bewilderment of constitutional Pandits, and it would be changed if necessary, and change they did to abolish zamindari. But should it be changed as often as it comes in the way of an enthusiastic Legislature?

Unseated Ministers and Money Bills

My old complaint thus stands vindicated, that either we have not understood the Constitution or we are forgetting it. I may cite two more examples. The question was recently asked in the M.P. Assembly as to when an unseated Minister–unseated by the action of the Tribunal–ceases to be a Minister in the light of A. 164 (4), and I may add, in the light of A. 193, because if he ceases to be a Member and a Minister, he is liable to be punished for attending the Assembly. The decision of the Speaker of the M.P. Assembly seems to be that the Minister could remain for six months after the Gazette notification unseating him. Without meaning any disrespect to the Speaker, it may very respectfully be argued, (1) that an election that is declared null and void unseats the Member from the date of his election as he was never elected at all, and because he was a Minister he could continue so for six months from the date of his first appointment; and (2) that if the Minister should attend the Assembly again (i.e. after the expiry of the six-month period) he automatically comes under Art. 193. It may also be added, (1) that he simply ‘ceases’ to be a Minister–the courts can refuse to enforce his orders under A. 164 (4), and there is no need for resignation or dismissal; and (2) that the Governor could again appoint him a Minister by a notification. There was a similar case in Bihar but there the Minister resigned in time, and another case is pending now in Orissa; and as such cases -may increase, it is time some definite conclusion is reached on this. The Best course seems to be for the President to get the opinion of the Supreme Court under Art. 143.

A question was recently raised in the Andhra Assembly ‘whether the Governor could recommit a ‘Money Bill’. The Article dealing with the matter, A. 200, says that the Governor may “return the Bill, if it is not a Money Bill...”. In the face of such a clear injunction, could the Governor recommit the Bill, and what is the remedy in such cases? A better course for the Government would have been to drop or veto the original Bill and bring in a fresh one.

‘The Battle of the Houses’

The recent exhibition of temper twice during the life time of the present Parliament, both the times during the absence of the Prime Minister, indicates the way the two Houses are likely to work in future. The Houses calmed down–it required the intervention of a Nehru to do it! But a question of greater importance is left out. Is it proper to set up a joint Select Committee of both the Houses? The idea seems to be to gain time, and if so, is it not circumventing the Constitution? The only justification for giving. India a Second Chamber was to delay and revise hasty legislation coming from a youthful and rash Lower House, and this Joint Committee reduces to ashes the Council which is already dead because its majority obeys the same whip as in the Lower one. In this case we can as well abolish this Chamber which I elsewhere characterised as ‘a House of party-Pocket-Boroughs’.

The Commission on States Reorganisation

No other pronouncement of the Government could create such mixed feelings of joy and disappointment at the same time. The public has as much confidence in the personnel of the Commission as it has misgivings on the nature of their work. What exactly are its ‘terms of reference’? On the negative side we know that nothing should be done which would impair the unity and solidarity of the Indian nation. On that question there are no differences of opinion. Does it mean that each language should claim a State, or that States should be divided among the major languages of India, thus reducing them, as Dr. Pattabhi Sitaramayya suggested, to eight or nine? And does it mean that considerations like ‘viability’ etc. would come in, even though other conditions might be satisfied? Of course, the Commission would gather all the relevant data, but it would be better, some argue, if we accept the simple basis that India wants linguistic States. Two more points may be noted: (i) even if the people speak the same language, there can be two States, as Mysore and Karnataka; and (ii) there are very small States, both independent and autonomous, as in Europe and in the U.S.A., respectively and so we need not fight shy of the so-called small States. A constant reference to world history and the world map would be a great asset to the Commission.