Don’t Misunderstand “Swadeshi Model”?
The new government led by National Democratic Alliance NDA will be presenting the union budget by July and there is a buzz in the market about the economic policies. Much is being discussed about the role of Rashtriya Swayamsevak Sangh RSS and its influence on policy making and there are unwanted concerns about the “Swadeshi model” of the economy.
Without any offence to the mainstream media, I would like to reiterate that the word “Swadeshi” has been grossly misunderstood and misquoted by certain sections of the media and it has been projected as anti development. First of all there is a misconception that advocating for the “Swadeshi” means opposing each and everything which comes from outside India and that it is against globalisation. Swadeshi is meant to be becoming self reliant but it doesn”t prohibit us from making concessions wherever it is needed in the national interest and, Foreign Direct Investment (FDI) in defence is the best example. In the defence sector we are largely dependent on the developed nations and more than 70% of our arms and ammunitions are being imported with no technology transfer agreements. So while in such kind of situation we continue to develop indigenous technology but considering the security threats in this area, FDI in defence is the need of the hour.
The Swadeshi concept believes that raising GDP can”t be the only priority and rising sensex can”t be the only barometer of the economic development but the model should be such that every individual gets his fundamental requirements of “Roti, Kapda & Makan” (i.e. a minimum standard of living should be assured to every individual). The state should work towards reducing the economic disparity which is growing day by day and must admit that the multinationals coming to our country are not interested in developing our country but are here to tap our large market. The state has to ensure the equitable distribution of the gains of the economic development as adopting such an ideology will help to solve the problem of the growing economic disparity between rich and poor and can help curb various social ailments like naxalism etc. Apart from ensuring the distributive justice, our culture and tradition also believes in reaping the natural resources rather than milking them. The world is facing severe ecological problems and these could have been avoided had we followed a balanced path and molded the economic development in harmony with the nature.
India and China started their journey towards economic development almost at the same time but China is ahead of us because they first strengthened their domestic sector to face the competition and then opened up the economy. High cost of production is making India a weak player in the global market. Since there is a stable government at the centre, we can expect stability as far as economic policies are concerned and hope the government take some steps towards the achievement of economic independence-
i. Formulate policies which align business interest with national interest to sustain entrepreneurial enthusiasm.
ii. Provide incentives ( particularly Indirect Taxes) to small and medium scale industries which are labour intensive. If government provides certain relief to this sector it will not only reduc cost of production, it will help them face the competition and willgenerate employment opportunities.
Those who say that WTO convention requires us to refrain from framing protectionist policies must remember that USA and Europe are using domestic environmental or consumer safety regulation as a way to disguise protectionist policy and, ban on Alafanso mango by the European Union is one such example. We must not succumb to the pressure of the developed countries and we should remember that WTO convention talks about free flow of labour also and that the Visa restrictions imposed by the west defeats this spirit. If the developed nations are doing this to protect their economy then it would be legitimate for us also to take certain measures too.
iii. Help in the brand building of our own products. There is general tendency among Indians to buy foreign goods at exorbitant price while the better alternatives are available within the country at a lower rate. It is this mindset that needs to be changed that imported goods are always superior. We are inferior to none in terms of quality but we lack branding.
iv. Try to shape economy in such a way that India becomes a manufacturing hub. A lopsided development based on the rise of service sector will be more vulnerable to financial turmoil.
v. Encourage innovation: The government should consider setting aside separate funds for this purpose.
vi. Develop infrastructure sector, particularly the Power and Road transport. We have immense potential in the field of power sector and we can meet our energy needs to a large extent if we utilise our natural resources properly. Needless to add that the capital and technology required for this sector is available with us.
Our economy is expected to be world”s largest middle class consumer market by 2030 and the foreign companies are interested in marketing their products to more than one billion population. If considering this we focus on genuine globalisation and opening up of each and every sector will it not be justified by any means.
Our economy is a labour surplus economy and we must emphasise to develop our self indigenously to provide jobs to more hands. If India can reach the mars and make nukes then this country can develop technologies also. Success of Yogaguru Ramdev is an example that if we market our products properly then we can also do well. There are other big names also like Amul, Mother Dairy, Khadi Village Industries Commission (KVIC) etc. who have performed better than the Multinational Companies (MNCs) operating in their sector. As per the details for FY 2011-12 KVIC surpassed the Hindustan Lever Limited (HLL) turnover of Rs. 25,810 Crores and posted turnover of Rs. 26,797 Crores which is an example of excellence. A dollar received by way of FDI is always equivalent to a dollar only and nothing more than this. As per the reports total outflow of foreign exchange in interest, profits, royalties and salaries is USD 31.7 billion, while total FDI inflow in FY 2012-13 is USD 26 billion. We should keep in mind that the money which we are receiving today would be repatriated some day in future and then it will pinch us.
It is admitted that we need the foreign currency inflow to meet our “Balance of Payment” (BOP) gap but we need to admit also that dependence on FDI is not the solution to this problem. If we want our exchange rate to remain stable then we have to look for some permanent solution like increasing the exports (by reducing the cost of production and making our products more competitive) and discouraging the import (by manufacturing & branding indigenous goods). FDIs/FIIs can provide temporary relief to the economy but they can never provide sustainable growth. We have experience from the past that at the time of global financial crisis in 2008, the foreign investors started pulling out their money which further worsened the situation and at this time it was the strength of our domestic market only which helped us to survive that crisis. There is no harm in working in collaboration with the foreign companies in the areas where we lack but, we must not act in a hasty manner.
Swadeshi is the synonym of the “Economic Nationalism” and nationalism can never be wrong or outdated. It is high time to stop thinking that “Swadeshi” is an old fashioned and outdated concept. The baseless criticism that going indigenous means becoming anti-reformist and anti market needs to be changed.
Over dependence on FDI will create economic imperialism as the growth on the wave of FDI is not a sustainable one. Even those who oppose the Swadeshi ideology of Sangh Parivar but are associated with the ideology of Mahatama Gandhi must remember Gandhi”s words that there is no sharp distinction between “Economy & Ethics” and should also remember his swadeshi movement. n
If the importance of swadeshi is realised, in times to come, it will provide us more economical power which will eventually lead to political power. -Shashank Saurav?