Silver Jubilee of “Pricing, Planning & Politics: A Study of Economic Distortions in India”

May 29 2009:

It is a quarter century precisely today since my monograph Pricing, Planning and Politics: A Study of Economic Distortions in India was first published in London by the Institute of Economic Affairs.

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Its text is now available (in slightly rough form) at this site here.

Now in May 1984, Indira Gandhi ruled in Delhi, and the ghost of Brezhnev was still fresh in Moscow.   The era of Margaret Thatcher in Britain and Ronald Reagan in America was at its height.   Pricing, Planning & Politics emerged from my 1976-1982 doctoral thesis at Cambridge though it came to be written in Blacksburg and Ithaca in 1982-1983.   It was the first critique after BR Shenoy of India’s Sovietesque economics since Jawaharlal Nehru’s time.

The Times, London’s most eminent paper at the time, wrote its lead editorial comment about it on the day it was published, May 29 1984.

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It used to take several days for the library at Virginia Tech in Blacksburg to receive its copy of The Times of London and other British newspapers.    I had not been told of the date of publication and did not know of what had happened in London on May 29 until perhaps June 2 — when a friend, Vasant Dave of a children’s charity, who was on campus, phoned me and congratulated me for being featured in The Times which he had just read in the University Library.  “You mean they’ve reviewed it?”  I asked him, “No, it’s the lead editorial.” “What?” I exclaimed.  There was worse.  Vasant was very soft-spoken and said “Yes, it’s titled ‘India’s Bad Example'” — which I misheard on the phone as “India’s Mad Example”  😀

Drat! I thought (or words to that effect), they must have lambasted me, as I rushed down to the Library to take a look.

The Times had said

“When Mr. Dennis Healey in the Commons recently stated that Hongkong, with one per cent of the population of India has twice India’s trade, he was making an important point about Hongkong but an equally important point about India.   If Hongkong with one per cent of its population and less than 0.03 per cert of India’s land area (without even water as a natural resource) can so outpace India, there must be something terribly wrong with the way Indian governments have managed their affairs, and there is.   A paper by an Indian economist published today (Pricing, Planning and Politics: A Study of Economic Distortions in India by Subroto Roy, IEA £1.80) shows how Asia’s largest democracy is gradually being stifled by the imposition of economic policies whose woeful effect and rhetorical unreality find their echo all over the Third World.   As with many of Britain’s former imperial possessions, the rot set in long before independence.  But as with most of the other former dependencies, the instrument of economic regulation and bureaucratic control set up by the British has been used decisively and expansively to consolidate a statist regime which inhibits free enterprise, minimizes economic success and consolidates the power of government in all spheres of the economy.  We hear little of this side of things when India rattles the borrowing bowl or denigrates her creditors for want of further munificence.  How could Indian officials explain their poor performance relative to Hongkong?  Dr Roy has the answers for them.   He lists the causes as a large and heavily subsidized public sector, labyrinthine control over private enterprise, forcibly depressed agricultural prices, massive import substitution, government monopoly of foreign exchange transactions, artificially overvalued currency and the extensive politicization of the labour market, not to mention the corruption which is an inevitable side effect of an economy which depends on the arbitrament of bureaucrats.  The first Indian government under Nehru took its cue from Nehru’s admiration of the Soviet economy, which led him to believe that the only policy for India was socialism in which there would be “no private property except in a restricted sense and the replacement of the private profit system by a higher ideal of cooperative service.”  Consequently, the Indian government has now either a full monopoly or is one of a few oligipolists in banking, insurance, railways, airlines, cement, steel, chemicals, fertilizers, ship-building, breweries, telephones and wrist-watches.   No businessman can expand his operation while there is any surplus capacity anywhere in that sector.  He needs government approval to modernize, alter his price-structure, or change his labour shift.  It is not surprising that a recent study of those developing countries which account for most manufactured exports from the Third World shows that India’s share fell from 65 percent in 1953 to 10 per cent in 1973; nor, with the numerous restrictions on inter-state movement of grains, that India has over the years suffered more from an inability to cope with famine than during the Raj when famine drill was centrally organized and skillfully executed without restriction. Nehru’s attraction for the Soviet model has been inherited by his daughter, Mrs. Gandhi.  Her policies have clearly positioned India more towards the Soviet Union than the West.  The consequences of this, as Dr Roy states, is that a bias can be seen in “the antipathy and pessimism towards market institutions found among the urban public, and sympathy and optimism to be found for collectivist or statist ones.”  All that India has to show for it is the delivery of thousands of tanks in exchange for bartered goods, and the erection of steel mills and other heavy industry which help to perpetuate the unfortunate obsession with industrial performance at the expense of agricultural growth and the relief of rural poverty.”…..

I felt this may have been intended to be laudatory but it was also inaccurate and had to be corrected.  I replied dated June 4 which The Times published in their edition of  June 16 1984:

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I was 29 when Pricing, Planning and Politics was published, I am 54 now. I do not agree with everything I said in it and find the tone a little puffed up as young men tend to be; it was also five years before my main “theoretical” work Philosophy of Economics would be published. My experience of life in the years since has also made me far less sanguine both about human nature and about America than I was then. But I am glad to find I am not embarrassed by what I said then, indeed I am pleased I said what I did in favour of classical liberalism and against statism and totalitarianism well before it became popular to do so after the Berlin Wall fell. (In India as elsewhere, former communist apparatchiks and fellow-travellers became pseudo-liberals overnight.)

The editorial itself may have been due to a conversation between Peter Bauer and William Rees-Mogg, so I later heard. The work sold 700 copies in its first month, a record for the publisher. The wife of one prominent Indian bureaucrat told me in Delhi in December 1988 it had affected her husband’s thinking drastically. A senior public finance economist told me he had been deputed at the Finance Ministry when the editorial appeared, and the Indian High Commission in London had urgently sent a copy of the editorial to the Ministry where it caused a stir. An IMF official told me years later that he saw the editorial on board a flight to India from the USA on the same day, and stopped in London to make a trip to the LSE’s bookshop to purchase a copy. Professor Jagdish Bhagwati of Columbia University had been a critic of aspects of Indian policy; he received a copy  in draft just before it was published and was kind enough to write I had “done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems!”

Siddhartha Shankar Ray told me when  we first met that he had been in London when the editorial appeared and had seen it there; it affected his decision to introduce me to Rajiv Gandhi as warmly as he came to do a half dozen years later.

Within a few months though, by the Fall of 1984, I was under attack by the “gang of inert game theorists”  who had come to  Blacksburg following the departure of James Buchanan.  By mid 1985 I had moved to Provo, Utah, really rather wishing, as I recall,  to have left my India-work behind me.  But by late 1986, I was at the University of Hawaii, Manoa, where the perestroika-for-India and Pakistan projects that I and WE James led, had come to be sponsored by the University and the East West Center.

The unpublished results of the India-project reached Rajiv Gandhi by my hand on September 18 1990 as has been told elsewhere.  A week later, on September 25 1990,  Rajiv appointed a small group that included myself, to advise him.  It was that encounter with Rajiv Gandhi that sparked the origins of the 1991 economic reform.  Yet in 2007 one member of the group, declaring himself close to Sonia Gandhi, brazenly lied in public saying it was Manmohan Singh and not I who had been part of the group — a group of which I had been in fact the first member!  Manmohan Singh himself has never claimed to have been present and in fact was not even in India at the time it was formed.

I have explained elsewhere here why I believe this specific  lie  came to be told by this specific liar who shared membership with me in the group that Rajiv had formed:  because I had also pleaded with  many and especially within this group that Rajiv had seemed, to my layman’s eyes, very vulnerable to assassination, and none of them had lifted a finger to  do anything about it!  Such is how duplicity, envy and greed for power make people mendacious and venal in politics!

As for Pricing, Planning and Politics, Dr Manmohan Singh received a personal copy from my father whom he had long known through the Kaul brothers, Brahma and Madan, both of whom were dear friends of my father since the War and Independence.   From a letter Dr Singh wrote to my father,  he would have received his copy in late 1986 when he was heading the Planning Commission in his penultimate appointment before retirement from the bureaucracy.

Readers of Pricing, Planning and Politics today, 25 years after it was published, may judge for themselves what if any  part of it may be still relevant to the new government that Dr Singh is now prime minister of.   The work was mostly one of applied microeconomics or the theory of value; in recent years I have written much also of applied macroeconomics or the theory of money as it relates to India.  My great professor at Cambridge, Frank Hahn, was kind enough to say in 1985 that he thought my “critique of Development Economics was powerful not only on methodological but also on economic theory grounds”; that to me has been a special source of delight.

Subroto Roy

Revisiting “On Hindus and Muslims”

On the Existence of a Unique and Stable Solution to the Jammu & Kashmir Problem that is Lawful, Just and Economically Efficient

P Chidambaram may recall our brief interaction at the residence of the late Shri Rajiv Gandhi in September-October 1990, and also my visit in July 1995 when he was a member of Narasimha Rao’s Government.

I am delighted to read in today’s paper that he believes a “unique solution” exists to the grave mortal problem of Jammu & Kashmir.   Almost four years ago, I published in The Statesman my discovery of the existence of precisely such a  unique solution in the three-part article “Solving Kashmir”.

This came to be followed by “Law, Justice and J&K”, “History of Jammu & Kashmir”, “Pakistan’s Allies”, “What to tell Musharraf” and a few others.  The purpose of this open letter is to describe that solution which provides, I believe, the only just and lawful  path available to the resolution of what has been known universally as the Kashmir problem.

Very briefly, it involves recognizing that the question of lawful territorial sovereignty in J&K is logically distinct from the question of the choice of nationality by individual inhabitants.   The solution requires

(a) acknowledging that the original legal entity in the world system  of nations known as Jammu & Kashmir arose on March 16 1846 and ceased to exist on or about October 22 1947; that the military contest that commenced on the latter date has in fact resulted, given all particular circumstances of history, in the lawful and just outcome in international law;

(b) offering all who may be Indian nationals or stateless and who presently live under Article 370, a formal choice of nationality between the Republics of India, Iran, Afghanistan and Pakistan: citizen-by-citizen, without fear or favour, under conditions of full information, individual privacy and security; any persons who voluntarily choose to renounce Indian nationality in such private individual decisions would be nevertheless granted lawful permanent residence in the Indian Republic and J&K in particular.

In other words, the dismemberment of the original J&K State and annexation of its territories by the entities known today as the Republic of Pakistan and Republic of India that occurred since October 22 1947, as represented first by the 1949 Ceasefire Line and then by the 1972 Line of Control, is indeed the just and lawful outcome prevailing in respect of the question of territorial sovereignty and jurisdiction. The remaining democratic question has to do with free individual choice of nationality by inhabitants, under conditions of full information and privacy, citizen-by-citizen, with the grant of permanent residency rights by the Indian Republic to persons under its jurisdiction in J&K who might wish to choose, for deeply personal individual reasons, not to remain Indian nationals but become Afghan, Iranian or Pakistani nationals instead (or remain stateless).  Pakistan has said frequently its sole concern has been the freedom of Muslims of J&K under Indian rule, and any such genuine concern shall have been thereby fully met by India. Indeed if Pakistan agreed to act similarly this entire complex mortal problem of decades shall have begun to be resolved most appropriately. Pakistan and India are both wracked by corruption, poverty and bad governance, and would be able to mutually draw down military forces pit against one another everywhere, so as to begin to repair the grave damage to their fiscal health caused over decades by the deleterious draining away of vast public resources.

The full reasoning underlying this, which I believe to be the only lawful, just, efficient and stable solution that exists, is thoroughly explained in the following six articles. The first five, “Solving Kashmir”, “Law, Justice & J&K”, “History of J&K”, and “Pakistan’s Allies”, “What to Tell Musharraf” were published in The Statesman in 2005-2006 and are marked ONE, TWO, THREE, FOUR and FIVE below, and are also available elsewhere here. The sixth “An Indian Reply to President Zardari”, marked SIX, was published for the first time here following the Mumbai massacres.

I believe careful reflection upon this entire body of reasoning may lead all reasonable men and women to a practically unanimous consensus about this as the appropriate course of action; if such a consensus happened to arise, the implementation of the solution shall only be a matter of (relatively) uncomplicated procedural detail.

Subroto Roy
October 15 2009

ONE
SOLVING KASHMIR: ON AN APPLICATION OF REASON by Subroto Roy First published in three parts in The Statesman, Editorial Page Special Article, December 1,2,3 2005, http://www.thestatesman.net

(This article has its origins in a paper “Towards an Economic Solution for Kashmir” which circulated in Washington DC in 1992-1995, including at the Indian and Pakistani embassies and the Carnegie Endowment, and was given as an invited lecture at the Heritage Foundation on June 23 1998. It should be read along with other articles also republished here, especially “History of J&K”, “Law, Justice and J&K” , “Understanding Pakistan”, “Pakistan’s Allies” and “What to Tell Musharraf”. The Washington paper and lecture itself originated from my ideas in the Introduction to Foundations of Pakistan’s Political Economy, edited by WE James and myself in the University of Hawaii project on Pakistan 1986-1992.)

I. Give Indian `Green Cards’ to the Hurriyat et al

India, being a liberal democracy in its constitutional law, cannot do in Jammu & Kashmir what Czechoslovakia did to the “Sudeten Germans” after World War II. On June 18 1945 the new Czechoslovakia announced those Germans and Magyars within their borders who could not prove they had been actively anti-fascist before or during the War would be expelled — the burden of proof was placed on the individual, not the State. Czechoslovakia “transferring” this population was approved by the Heads of the USA, UK and USSR Governments at Potsdam on August 2 1945. By the end of 1946, upto two million Sudeten Germans were forced to flee their homes; thousands may have died by massacre or otherwise; 165,000 remained who were absorbed as Czechoslovak citizens. Among those expelled were doubtless many who had supported Germany and many others who had not — the latter to this day seek justice or even an apology in vain. Czechoslovakia punished none of its nationals for atrocities, saying it had been revenge for Hitler’s evil (”badla” in Bollywood terms) and the post Cold War Czech Government too has declined to render an apology. Revenge is a wild kind of justice (while justice may be a civilised kind of revenge).

India cannot follow this savage precedent in international law. Yet we must recognise there are several hundred and up to several hundred thousand persons on our side of the boundary in the State of Jammu & Kashmir who do not wish to be Indian nationals. These people are presently our nationals ius soli, having been born in territory of the Indian Republic, and/or ius sanguinis, having been born of parents who are Indian nationals; or they may be “stateless” whom we must treat in accordance with the 1954 Convention on Stateless Persons. The fact is they may not wish to carry Indian passports or be Indian nationals.

In this respect their juridical persons resemble the few million “elite” Indians who have in the last few decades freely placed their hands on their hearts and solemnly renounced their Indian nationality, declaring instead their individual fidelity to other nation-states — becoming American, Canadian or Australian citizens, or British subjects or nationals of other countries. Such people include tens of thousands of the adult children of India’s metropolitan “elite”, who are annually visited abroad in the hot summer months by their Indian parents and relatives. They are daughters and sons of New Delhi’s Government and Opposition, of retired generals, air marshals, admirals, ambassadors, cabinet secretaries, public sector bureaucrats, private sector businessmen, university professors, journalists, doctors and many others. India’s most popular film-actress exemplified this “elite” capital-flight when, after a tireless search, she chose a foreign husband and moved to California.

The difference in Jammu & Kashmir would be that those wishing to renounce Indian nationality do not wish to move to any other place but to stay as and where they are, which is in Kashmir Valley or Jammu. Furthermore, they may wish, for whatever reason, to adopt, if they are eligible to do so, the nationality of e.g. the Islamic Republic of Afghanistan or the Islamic Republic of Iran or the Islamic Republic of Pakistan.

They may believe themselves descended from Ahmad Shah Abdali whose Afghans ruled or mis-ruled Kashmir Valley before being defeated by Ranjit Singh’s Sikhs in 1819. Or they may believe themselves of Iranian descent as, for example, are the Kashmiri cousins of the late Ayatollah Khomeini. Or they may simply have wished to be, or are descended from persons who had wished to be on October 26 1947, citizens of the then-new British Dominion of Pakistan — but who came to be prevented from properly expressing such a desire because of the war-like conditions that have prevailed ever since between India and Pakistan. There may be even a few persons in Laddakh who are today Indian nationals but who wish to be considered Tibetans instead; there is, however, no Tibetan Republic and it does not appear there is going to be one.

India, being a free and self-confident country, should allow, in a systematic lawful manner, all such persons to fulfil their desires, and furthermore, should ensure they are not penalised for having expressed such “anti-national” desires or for having acted upon them. Sir Mark Tully, the British journalist, is an example of someone who has been a foreign national who has chosen to reside permanently in the Republic of India — indeed he has been an exemplary permanent resident of our country. There are many others like him. There is no logical reason why all those persons in Jammu & Kashmir who do wish not to be Indians by nationality cannot receive the same legal status from the Indian Republic as has been granted to Sir Mark Tully. There are already thousands of Sri Lankan, Bangladeshi and Nepalese nationals who are lawful permanent residents in the Indian Republic, and who travel back and forth between India and their home countries. There is no logical reason why the same could not be extended to several hundred or numerous thousand people in Jammu & Kashmir who may wish to not accept or to renounce their Indian nationality (for whatever personal reason) and instead become nationals, if they are so eligible, of the Islamic Republics of Afghanistan, Iran or Pakistan, or, for that matter, to remain stateless. On the one hand, their renunciation of Indian nationality is logically equivalent to the renunciation of Indian nationality by the adult children of India’s “elite” settled in North America and Western Europe. On the other hand, their wish to adopt, if they are eligible, a foreign nationality, such as that of Afghanistan, Iran or Pakistan, and yet remain domiciled in Indian territory is logically equivalent to that of many foreign nationals domiciled in India already like Sir Mark Tully.

Now if you are a permanent resident of some country, you may legally have many, perhaps most, but certainly not all the rights and duties of nationals of that country. e.g., though you will have to pay all the same taxes, you may not be allowed to (or be required to) vote in national or provincial elections but you may in local municipal elections. At the same time, permanently residing foreign nationals are supposed to be equal under the law and have equal access to all processes of civil and criminal justice. (As may be expected though from human frailty, even the federal courts of the USA can be notorious in their injustice and racism towards “Green Card” holders relative to “full” American citizens.) Then again, as a permanently resident foreigner, while you will be free to work in any lawful trade or profession, you may not be allowed to work in some or perhaps any Government agencies, certainly not the armed forces or the police. Many Indians in the USA were engineering graduates, and because many engineering jobs or contracts in the USA are related to the US armed forces and require US citizens only, it is commonplace for Indian engineers to renounce their Indian nationality and become Americans because of this. Many Indian-American families have one member who is American, another Indian, a third maybe Canadian, a fourth Fijian or British etc.

The same can happen in the Indian State of Jammu & Kashmir if it evolves peacefully and correctly in the future. It is quite possible to imagine a productive family in a peaceful Kashmir Valley of the future where one brother is an officer in the Indian Armed Forces, another brother a civil servant and a sister a police officer of the J&K State Government, another sister being a Pakistani doctor, while cousins are Afghan or Iranian or “stateless” businessmen. Each family-member would have made his/her choice of nationality as an individual given the circumstances of his/her life, his/her personal comprehension of the facts of history, his/her personal political and/or religious persuasions, and similar deeply private considerations. All would have their children going to Indian schools and being Indian citizens ius soli and/or ius sanguinis. When the children grow up, they would be free to join, if they wished, the existing capital flight of other Indian adult children abroad and there renounce their Indian nationality as many have come to do.

II Revealing Choices Privately with Full Information
For India to implement such a proposal would be to provide an opportunity for all those domiciled in Kashmir Valley, Jammu and Laddakh to express freely and privately as individuals their deepest wishes about their own identities, in a confidential manner, citizen by citizen, case by case. This would thereby solve the fundamental democratic problem that has been faced ever since the Pakistani attack on the original State of Jammu & Kashmir commenced on October 22 1947, which came to be followed by the Rape of Baramulla — causing the formal accession of the State to the then-new Dominion of India on October 26 1947.

A period of, say, 30 months may be announced by the Government of India during which full information would be provided to all citizens affected by this change, i.e. all those presently governed by Article 370 of the Indian Constitution. The condition of full information may include, for example, easy access to Afghan, Iranian and Pakistani newspapers in addition to access to Indian media. Each such person wishing to either remain with Indian nationality (by explicitly requesting an Indian passport if he/she does not have one already — and such passports can be printed in Kashmiri and Urdu too), or to renounce Indian nationality and either remain stateless or adopt, if he/she is so eligible, the nationality of e.g. Afghanistan, Iran, or Pakistan, should be administratively assisted by the Government of India to make that choice.

In particular, he/she should be individually, confidentially, and without fear or favour assured and informed of his/her new rights and responsibilities. For example, a resident of Kashmir Valley who chooses to become a Pakistani citizen, such as Mr Geelani, would now enjoy the same rights and responsibilities in the Indian Republic that Mr Tully enjoys, and at the same time no longer require a visa to visit Pakistan just as Mr Tully needs no visa to enter Britain. In case individual participants in the Hurriyat choose to renounce Indian nationality and adopt some other, they would no longer be able to legally participate in Indian national elections or J&K’s State elections. That is something which they say they do not wish to do in any case. Those members of the Hurriyat who chose e.g. Pakistani nationality while still residing in Jammu & Kashmir, would be free to send postal ballots or cross the border and vote in Pakistan’s elections if and when these occur. There are many Canadians who live permanently in the USA who cross home to Canada in order to cast a ballot.

After the period of 30 months, every person presently under Article 370 of the Indian Constitution would have received a full and fair opportunity to privately and confidentially reveal his/her preference or choice under conditions of full information. “Partition”, “Plebiscite”, and “Military Decision” have been the three alternatives under discussion ever since the National Conference of Sheikh Mohammad Abdullah and his then-loyal Deputy, Bakshi Ghulam Mohammad, helped the Indian Army and Air Force in 1947-1948 fight off the savage attack against Jammu & Kashmir State that had commenced from Pakistan on October 22 1947. When, during the Pakistani attack, the Sheikh and Bakshi agreed to the Muslim Conference’s demand for a plebiscite among the people, the Pakistanis balked — the Sheikh and Bakshi then withdrew their offer and decisively and irrevocably chose to accede to the Indian Union. The people of Jammu & Kashmir, like any other, are now bound by the sovereign political commitments made by their forebears. Even so, given the painful mortal facts of the several decades since, the solution here proposed if properly implemented would be an incomparably more thorough democratic exercise than any conceivable plebiscite could ever have been.

Furthermore, regardless of the outcome, it would not entail any further “Partition” or population “transfer” which inevitably would degenerate into a savage balkanization, and has been ruled out as an unacceptable “deal-breaker” by the Indian Republic. Instead, every individual person would have been required, in a private and confidential decision-making process, to have chosen a nationality or to remain stateless — resulting in a multitude of cosmopolitan families in Jammu & Kashmir. But that is something commonplace in the modern world. Properly understood and properly implemented, we shall have resolved the great mortal problem we have faced for more than half a century, and Jammu & Kashmir can finally settle into a period of peace and prosperity. The boundary between India and Pakistan would have been settled by the third alternative mentioned at the time, namely, “Military Decision”.

III. Of Flags and Consulates in Srinagar and Gilgit
Pakistan has demanded its flag fly in Srinagar. This too can happen though not in the way Pakistan has been wishing to see it happen. A Pakistan flag might fly in the Valley just as might an Afghan and Iranian flag as well. Pakistan has wished its flag to fly as the sovereign over Jammu & Kashmir. That is not possible. The best and most just outcome is for the Pakistani flag to fly over a recognised Pakistani consular or visa office in Srinagar, Jammu and Leh. In diplomatic exchange, the Indian tricolour would have to fly over a recognised Indian consular or visa office in Muzaffarabad, Gilgit and Skardu.

Pakistan also may have to act equivalently with respect to the original inhabitants of the territory of Jammu & Kashmir that it has been controlling — allowing those people to become Indian nationals if they so chose to do in free private decisions under conditions of full information. In other words, the “Military Decision” that defines the present boundary between sovereign states must be recognised by Pakistan sincerely and permanently in a Treaty relationship with India — and all of Pakistan’s official and unofficial protégés like the Hurriyat and the “United Jehad Council” would have to do the same. Without such a sovereign commitment from the Government of Pakistan, as shown by decisive actions of lack of aggressive intent (e.g. as came to be implemented between the USA and USSR), the Government of India has no need to involve the Government of Pakistan in implementing the solution of enhancing free individual choice of nationality with regard to all persons on our side of the boundary.

The “Military Decision” regarding the sovereign boundary in Jammu & Kashmir will be so recognised by all only if it is the universally just outcome in international law. And that in fact is what it is.

The original Jammu & Kashmir State began its existence as an entity in international law long before the present Republics of India and Pakistan ever did. Pakistan commences as an entity on August 14 1947; India commences as an entity of international law with its signing of the Treaty of Versailles on June 20 1918. Jammu & Kashmir began as an entity on March 16 1846 — when the Treaty of Amritsar was signed between Gulab Singh Dogra and the British, one week after the Treaty of Lahore between the British and the defeated Sikh regency of the child Daleep Singh.

Liaquat Ali Khan and Zafrullah Khan both formally challenged on Pakistan’s behalf the legitimacy of Dogra rule in Jammu & Kashmir since the Treaty of Amritsar. The Pakistani Mission to the UN does so even today. The Pakistanis were following Sheikh Abdullah and Jawaharlal Nehru himself, who too had at one point challenged Dogra legitimacy in the past. But though the form of words of the Pakistan Government and the Nehru-Abdullah position were similar in their attacks on the Treaty of Amritsar, their underlying substantive reasons were as different as chalk from cheese. The Pakistanis attacked the Dogra dynasty for being Dogra — i.e. because they were Hindus and not Muslims governing a Muslim majority. Nehru and Abdullah denounced monarchic autocracy in favour of mass democracy, and so attacked the Dogra dynasty for being a dynasty. All were wrong to think the Treaty of Amritsar anything but a lawful treaty in international law.

Furthermore, in this sombre political game of great mortal consequence, there were also two other parties who were, or appeared to be, in favour of the dynasty: one because the dynasty was non-Muslim, the other, despite it being so. Non-Muslim minorities like many Hindus and Sikhs in the business and governmental classes, saw the Dogra dynasty as their protector against a feared communalist tyranny arising from the Sunni Muslim masses of Srinagar Valley, whom Abdullah’s rhetoric at Friday prayer-meetings had been inciting or at least awakening from slumber. At the same time, the communalists of the Muslim Conference who had broken away from Abdullah’s secular National Conference, sought political advantage over Abdullah by declaring themselves in favour of keeping the dynasty — even elevating it to become an international sovereign, thus flattering the already pretentious potentate that he would be called “His Majesty” instead of merely “His Highness”. The ancestry of today’s Hurriyat’s demands for an independent Jammu & Kashmir may be traced precisely to those May 21-22 1947 declarations of the Muslim Conference leader, Hamidullah Khan.

Into this game stumbled the British with all the mix of cunning, indifference, good will, impatience, arrogance and pomposity that marked their rule in India. At the behest of the so-called “Native Princes”, the 1929 Butler Commission had hinted that the relationship of “Indian India” to the British sovereign was conceptually different from that of “British India” to the British sovereign. This view was adopted in the Cabinet Mission’s 12 May 1946 Memorandum which in turn came to be applied by Attlee and Mountbatten in their unseemly rush to “Divide and Quit” India in the summer of 1947.

It created the pure legal illusion that there was such a thing as “Lapse of Paramountcy” at which Jammu & Kashmir or any other “Native State” of “Indian India” could conceivably, even for a moment, become a sovereign enjoying the comity of nations — contradicting Britain’s own position that only two Dominions, India and Pakistan, could ever be members of the British Commonwealth and hence members of the newly created UN. British pusillanimity towards Jammu & Kashmir’s Ruler had even extended to making him a nominal member of Churchill’s War Cabinet because he had sent troops to fight in Burma. But the legal illusion had come about because of a catastrophic misunderstanding on the part of the British of their own constitutional law.

The only legal scholar who saw this was B R Ambedkar in a lonely and brilliant technical analysis released to the press on June 17 1947. No “Lapse of Paramountcy” over the “Native Princes” of Indian India could occur in constitutional law. Paramountcy over Indian India would be automatically inherited by the successor state of British India at the Transfer of Power. That successor state was the new British Dominion of India as well as (when it came to be finalised by Partition from India) the new British Dominion of Pakistan (Postscript: the deleted words represent a mistake made in the original paper, corrected in “Law, Justice & J&K” in view of the fact the UN in 1947 deemed India alone the successor state of British India and Pakistan a new state in the world system). A former “Native Prince” could only choose to which Dominion he would go. No other alternative existed even for a single logical moment. Because the British had catastrophically failed to comprehend this aspect of their own constitutional law, they created a legal vacuum whereby between August 15 and October 22-26 1947, Jammu & Kashmir became a local and temporary sovereign recognised only by the Dominion of Pakistan (until October 22) and the Dominion of India (until October 26). But it was not a globally recognised sovereign and was never going to be such in international law. This was further proved by Attlee refusing to answer the J&K Prime Minister’s October 18 1947 telegram.

All ambiguity came to end with the Pakistani attack of October 22 1947, the Rape of Baramulla, the secession of an “Azad Kashmir”declared by Sardar Ibrahim, and the Pakistani coup détat in Gilgit on October 31 1947 followed by the massacre of Sikh soldiers of the J&K Army at Bunji. With those Pakistani actions, Gulab Singh’s Jammu & Kashmir State, founded on March 16 1846 by the Treaty of Amritsar, ceased to logically exist as an entity in international law and fell into a state of ownerless anarchy. The conflict between Ibrahim’s Muslim communalists backed by the new Dominion of Pakistan and Abdullah’s secularists backed by the new Dominion of India had become a civil war within a larger intra-Commonwealth war that itself was almost a civil war between forces of the same military.

Jammu & Kashmir territory had become ownerless. The Roman Law which is at the root of all municipal and international law in the world today would declare that in the ownership of such an ownerless entity, a “Military Decision” was indeed the just outcome. Sovereignty over the land, waters, forests and other actual and potential resources of the erstwhile State of Jammu & Kashmir has become divided by “Military Decision” between the modern Republics of India and Pakistan. By the proposal made herein, the people and their descendants shall have chosen their nationality and their domicile freely across the sovereign boundary that has come to result.

TWO
LAW, JUSTICE AND J&K
by Subroto Roy First published in two parts in The Sunday Statesman, July 2 2006 and The Statesman July 3 2006 http://www.thestatesman.net Editorial Page Special Article

I.
For a solution to J&K to be universally acceptable it must be seen by all as being lawful and just. Political opinion in Pakistan and India as well as all people and parties in J&K ~ those loyal to India, those loyal to Pakistan, and any others ~ will have to agree that, all things considered, such is the right course of action for everyone today in the 21st Century, which means too that the solution must be consistent with the facts of history as well as account reasonably for all moral considerations.

On August 14, 1947, the legal entity known as “British India”, as one of its final acts, and based on a sovereign British decision made only two months earlier, created out of some of its territory a new State defined in international law as the “Dominion of Pakistan”. British India extinguished itself the very next day, and the newly independent “Dominion of India” succeeded to all its rights and obligations in international law. As the legal successor of the “India” which had signed the Treaty of Versailles in 1919 and the San Francisco Declaration of 1945, the Dominion of India was already a member of the new UN as well as a signatory to many international treaties. By contrast, the Dominion of Pakistan had to apply afresh to sign treaties and become a member of international organisations. The theory put forward by Argentina that two new States, India and Pakistan, had been created ab initio, came to be rejected and was withdrawn by Argentina. Instead, Pakistan with the wholehearted backing of India was made a member of the UN, with all except Afghanistan voting in favour. (Afghanistan’s exceptional vote signalled presence of conflict over the Durand Line and idea of a Pashtunistan; Dr Khan Sahib and Abdul Ghaffar Khan were imprisoned by the Muslim League regime of NWFP which later supported the tribesmen who attacked J&K starting October 22, 1947; that conflict remains unresolved to this day, even after the American attack on the Taliban, the restart of a constitutional process in Afghanistan, and the purported mediation of US Secretary of State Condoleeza Rice.)

Zafrullah Khan, Pakistan’s distinguished first ambassador to the UN, claimed in September 1947: “Pakistan is not a new member of UNO but a successor to a member State which was one of the founders of the Organisation.” He noted that he himself had led India to the final session of the League of Nations in Geneva in 1939, and he wished to say that Pakistan had been present “as part of India… under the latter name” as a signatory to the Treaty of Versailles. This was, however, logically impossible. The Treaty of Versailles long predated (1) Mohammad Iqbal’s Allahabad Address which conceptualised for the first time in the 20th Century a Muslim State in Northwest India; (2) Rahmat Ali’s invention of the word “PAKSTAN” on the top floor of a London omnibus; (3) M. A. Jinnah and Fazlul Haq’s Lahore Resolution; and (4) the final British decision of June 3, 1947 to create by Partition out of “British India” a Dominion named Pakistan. Pakistan could not have acted in international law prior to having come into being or been created or even conceived itself. Zafrullah Khan would have been more accurate to say that the history of Pakistanis until August 14, 1947 had been one in common with that of their Indian cousins ~ or indeed their Indian brothers, since innumerable North Indian Muslim families came to be literally partitioned, with some brothers remaining Indians while other brothers became Pakistanis.

Pakistan was created at the behest of Jinnah’s Muslim League though with eventual agreement of the Indian National Congress (a distant ancestor of the political party going by the same name today). Pakistan arose not because Jinnah said Hindus and Muslims were “two nations” but because he and his League wished for a State where Muslims would find themselves ruled by fellow-Muslims and feel themselves part of a pan-Islamic culture. Yet Pakistan was intended to be a secular polity with Muslim-majority governance, not an Islamic theocracy. That Pakistan failed to become secular was exemplified most poignantly in the persecution Zafrullah himself later faced in his personal life as an Ahmadiya, even while he was Pakistan’s Foreign Minister. (The same happened later to Pakistan’s Nobel-winning physicist Abdus Salaam.) Pakistan was supposed to allow the genius of Indo-Muslim culture to flourish, transplanted from places like Lucknow and Aligarh which would never be part of it. In fact, the areas that are Pakistan today had in the 1937 provincial elections shown scant popular Muslim support for Jinnah’s League. The NWFP had a Congress Government in the 1946 elections, and its supporters boycotted the pro-Pakistan referendum in 1947. The imposition of Urdu culture as Pakistan’s dominant ethos might have come to be accepted later in West Punjab, Sindh and NWFP but it was not acceptable in East Bengal, and led inevitably to the Pakistani civil war and creation of Bangladesh by Sheikh Mujib in 1971.

In August 1947, the new Dominions of India and Pakistan were each supposed to protect their respective minority populations as their first political duty. Yet both palpably failed in this, and were reduced to making joint declarations pleading for peace and an end to communal killings and the abduction of women. The Karachi Government, lacking the wherewithal and administrative machinery of being a nation-state at all, and with only Liaquat and an ailing Jinnah as noted leaders, may have failed more conspicuously, and West Punjab, the Frontier and Sindh were soon emptied of almost all their many Sikhs and Hindus. Instead, the first act of the new Pakistan Government in the weeks after August 14, 1947 was to arrange for the speedy and safe transfer of the North Indian Muslim elite by air from Delhi using chartered British aeroplanes. The ordinary Muslim masses of UP, Delhi and East Punjab were left in danger from or were subjected to Sikh and Hindu mob attacks, especially as news and rumours spread of similar outrages against Pakistan’s departing minorities.

In this spiral of revenge attacks and counter-attacks, bloodshed inevitably spilled over from West and East Punjab into the northern Punjabi plains of Jammu, though Kashmir Valley remained conspicuously peaceful. Zafrullah and Liaquat would later claim it was this communal civil war which had caused thousands of newly decommissioned Mirpuri soldiers of the British Army, and thousands of Afridi and other Frontier tribesmen, to spontaneously act to “liberate” J&K’s Muslims from alleged tyranny under the Hindu Ruler or an allegedly illegal Indian occupation.

But the main attack on J&K State that began from Pakistan along the Manshera-Muzaffarabad road on October 22, 1947 was admittedly far too well-organised, well-armed, well-planned and well-executed to have been merely a spontaneous uprising of tribesmen and former soldiers. In all but name, it was an act of undeclared war of the new Dominion of Pakistan first upon the State of J&K and then upon the Indian Dominion. This became obvious to Field Marshall Auchinlek, who, as Supreme Commander of the armed forces of both India and Pakistan, promptly resigned and abolished the Supreme Command in face of the fact that two parts of his own forces were now at war with one another.

The invaders failed to take Srinagar solely because they lost their military purpose while indulging in the Rape of Baramula. Thousands of Kashmiri women of all communities ~ Muslim, Sikh and Hindu ~ were violated and transported back to be sold in markets in Peshawar and elsewhere. Such was standard practice in Central Asian tribal wars from long before the advent of Islam, and the invading tribesmen shared that culture. India’s Army and Air Force along with the militias of the secular democratic movement led by Sheikh Abdullah and those remaining loyal units of J&K forces, fought off the invasion, and liberated Baramula, Naushera, Uri, Poonch etc. Gilgit had a British-led coup détat against it bringing it under Pakistan’s control. Kargil was initially taken by the Pakistanis and then lost by them. Leh could have been but was not taken by Pakistani forces. But in seeking to protect Leh and to retake Kargil, the Indian Army lost the siege of Skardu ~ which ended reputedly with the infamous communication from the Pakistani commander to his HQ: “All Sikhs killed; all women raped.”

Legal theory
Now, in this grave mortal conflict, the legal theory to which both the Indian and Pakistani Governments have been wedded for sixty years is one that had been endorsed by the British Cabinet Mission in 1946 and originated with the Butler Commission of 1929. Namely, that “Lapse of Paramountcy” over the “Indian India” of the “Native States” could and did occur with the extinction of British India on August 15, 1947. By this theory, Hyderabad, J&K, Junagadh and the several other States which had not acceded to either Dominion were no longer subject to the Crown’s suzerainty as of that date. Both Dominions drew up “Instruments of Accession” for Rulers to sign upon the supposed “Lapse” of Paramountcy that was to occur with the end of British India.

Ever since, the Pakistan Government has argued that Junagadh’s Ruler acceded to Pakistan and Hyderabad’s had wished to do so but both were forcibly prevented by India. Pakistan has also argued the accession to India by J&K’s Ruler was “fraudulent” and unacceptable, and Sheikh Abdullah was a “Quisling” of India and it was not his National Conference but the Muslim Conference of Ibrahim, Abbas and the Mirwaiz (precursor of the Hurriyat) which represented J&K’s Muslims.

India argued that Junagadh’s accession to Pakistan or Hyderabad’s independence were legal and practical impossibilities contradicting the wills of their peoples, and that their integration into the Indian Dominion was carried out in an entirely legitimate manner in the circumstances prevailing.

On J&K, India has argued that not only had the Ruler requested Indian forces to fight off the Pakistani attack, and he acceded formally before Indian forces were sent, but also that democratic principles were fully adhered to in the unequivocal endorsement of the accession by Sheikh Abdullah and the National Conference and further by a duly called and elected J&K Constituent Assembly, as well as generations of Kashmiris since. In the Indian view, it is Pakistan which has been in illegal occupation of Indian territory from Mirpur, Muzaffarabad and Gilgit to Skardu all the way to the Khunjerab Pass, Siachen Glacier and K2, some of which it illegally ceded to its Communist Chinese ally, and furthermore that it has denied the peoples of these areas any democratic voice.

Roman law
In June 1947, it was uniquely and brilliantly argued by BR Ambedkar in a statement to the Press that the British had made a catastrophic error in comprehending their own constitutional law, that no such thing as “Lapse” of Paramountcy existed, and that suzerainty over the “Native States” of “Indian India” would be automatically transferred in international law to the successor State of British India. It was a legal illusion to think any Native State could be sovereign even for a single logical moment. On this theory, if the Dominion of India was the sole successor State in international law while Pakistan was a new legal entity, then a Native State which acceded to Pakistan after August 15, 1947 would have had to do so with the consent of the suzerain power, namely, India, as may be said to have happened implicitly in case of Chitral and a few others. Equally, India’s behaviour in integrating (or annexing) Junagadh and Hyderabad, would become fully explicable ~ as would the statements of Mountbatten, Nehru and Patel before October 1947 that they would accept J&K going to Pakistan if that was what the Ruler and his people desired. Pakistan unilaterally and by surprise went to war against J&K on October 22, declared the accession to India “fraudulent”, and to this day has claimed the territory of the original State of J&K is “disputed”. Certainly, even if the Ambedkar doctrine is applied that no “Lapse” was possible under British law, Pakistan did not recognise India’s jurisdiction there as the suzerain power as of August 15, 1947. Altogether, Pakistan’s sovereign actions from October 22 onwards amounted to acting to annex J&K to itself by military force ~ acts which came to be militarily resisted (with partial success) by India allied with Sheikh Abdullah’s National Conference and the remaining forces of J&K. By these military actions, Pakistan revealed that it considered J&K territory to have descended into a legal state of anarchy as of October 22, 1947, and hence open to resolution by “Military Decision” ~ as is indeed the just outcome under Roman Law, the root of all municipal and international law today, when there is a contest between claimants over an ownerless entity.

Choice of nationality
Hence, the present author concluded (“Solving Kashmir”, The Statesman December 1-3, 2005) that the dismemberment of the original J&K State and annexation of its territories by India and Pakistan that has occurred since 1947, as represented first by the 1949 Ceasefire Line and then by the 1972 Line of Control, is indeed the just and lawful outcome prevailing in respect of the question of territorial sovereignty and jurisdiction. The remaining “democratic” question described has to do with free individual choice of nationality by the inhabitants, under conditions of full information and privacy, citizen-by-citizen, with the grant of permanent residency rights by the Indian Republic to persons under its jurisdiction in J&K who may choose not to remain Indian nationals but become Afghan, Iranian or Pakistani nationals instead. Pakistan has said frequently its sole concern has been the freedom of the Muslims of J&K under Indian rule, and any such genuine concern shall have been thereby fully met by India. Indeed, if Pakistan agreed to act similarly, this entire complex mortal problem of decades shall have begun to be peacefully resolved. Both countries are wracked by corruption, poverty and bad governance, and would be able to mutually draw down military forces pit against one another everywhere, so as to begin to repair the grave damage to their fiscal health caused by the deleterious draining away of vast public resources.

THREE
HISTORY OF JAMMU & KASHMIR
by Subroto Roy First published in two parts in The Sunday Statesman, Oct 29 2006 and The Statesman Oct 30 2006, Editorial Page Special Article, http://www.thestatesman.net

At the advent of Islam in distant Arabia, India and Kashmir in particular were being visited by Chinese Buddhist pilgrims during Harsha’s reign. The great “Master of Law” Hiuen Tsiang visited between 629-645 and spent 631-633 in Kashmir (”Kia-chi-mi-lo”), describing it to include Punjab, Kabul and Kandahar. Over the next dozen centuries, Buddhist, Hindu, Muslim, Sikh and again Hindu monarchs came to rule the 85 mile long 40 mile wide territory on the River Jhelum’s upper course known as Srinagar Valley, as well as its adjoining Jammu in the upper plains of the Punjab and “Little Tibet” consisting of Laddakh, Baltistan and Gilgit.

In 1344, a Persian adventurer from Swat or Khorasan by name of Amir or Mirza, who had “found his way into the Valley and in time gained great influence at the Raja’s court”, proclaimed himself Sultan Shamsuddin after the death of the last Hindu monarchs of medieval Kashmir. Twelve of his descendants formed the Shamiri dynasty including the notorious Sikander and the just and tolerant Zainulabidin. Sikander who ruled 1386-1410 “submitted himself” to the Uzbek Taimur the Lame when he approached Kashmir in 1398 “and thus saved the country from invasion”. Otherwise, “Sikander was a gloomy ferocious bigot, and his zeal in destroying temples and idols was so intense that he is remembered as the Idol-Breaker. He freely used the sword to propagate Islam and succeeded in forcing the bulk of the population to conform outwardly to the Muslim religion. Most of the Brahmins refused to apostatise, and many of them paid with their lives the penalty for their steadfastness. Many others were exiled, and only a few conformed.”

Zainulabidin who ruled 1417-1467 “was a man of very different type”. “He adopted the policy of universal toleration, recalled the exiled Brahmins, repealed the jizya or poll-tax on Hindus, and even permitted new temples to be built. He abstained from eating flesh, prohibited the slaughter of kine, and was justly venerated as a saint. He encouraged literature, painting and music, and caused many translations to be made of works composed in Sanskrit, Arabic and other languages.” During his “long and prosperous reign”, he “constructed canals and built many mosques; he was just and tolerant”.

The Shamiri dynasty ended in 1541 when “some fugitive chiefs of the two local factions of the Makri and the Chakk invited Mirza Haidar Dughlat, a relation of Babar, to invade Kashmir. The country was conquered and the Mirza held it (nominally in name of Humayan) till 1551, when he was killed in a skirmish. The line… was restored for a few years, until in 1559 a Chakk leader, Ghazi Shah, usurped the throne; and in the possession of his descendants it remained for nearly thirty years.” This dynasty marks the origins of Shia Islam in Srinagar though Shia influence in Gilgit, Baltistan and Laddakh was of longer standing. Constant dissensions weakened the Chakks, and in 1586, Akbar, then at Attock on the Indus, sent an army under Raja Bhagwan Das into Srinagar Valley and easily made it part of his Empire.

Shivaism and Islam both flourished, and Hindu ascetics and Sufi saints were revered by all. Far from Muslims and Hindus forming distinct nations, here they were genetically related kinsmen living in proximity in a small isolated area for centuries. Indeed Zainulabidin may have had a vast unspoken influence on the history of all India insofar as Akbar sought to attempt in his empire what Zainulabidin achieved in the Valley. Like Zainulabidin, Akbar’s governance of India had as its “constant aim” “to conciliate the Hindus and to repress Muslim bigotry” which in modern political parlance may be seen as the principle of secular governance ~ of conciliating the powerless (whether majority or minority) and repressing the bigotry of the powerful (whether minority or majority). Akbar had made the Valley the summer residence of the Mughals, and it was Jahangir, seeing the Valley for the first time, who apparently said the words agar behest baushad, hamee in hast, hamee in hast, hamee in hast: “if Heaven exists, it is here, it is here, it is here”. Yet like other isolated paradises (such as the idyllic islands of the Pacific Ocean) an accursed mental ether can accompany the magnificent beauty of people’s surroundings. As the historian put it: “The Kashmiris remained secure in their inaccessible Valley; but they were given up to internal weakness and discord, their political importance was gone…”

After the Mughals collapsed, Iran’s Turkish ruler Nadir Shah sacked Delhi in 1739 but the Iranian court fell in disarray upon his death. In 1747 a jirga of Pashtun tribes at Kandahar “broke normal tradition” and asked an old Punjabi holy man and shrine-keeper to choose between two leaders; this man placed young wheat in the hand of the 25 year old Ahmed Shah Saddozai of the Abdali tribe, and titled him “Durrani”. Five years later, Durrani took Kashmir and for the next 67 years the Valley was under Pashtun rule, a time of “unmitigated brutality and widespread distress”. Durrani himself “was wise, prudent and simple”, never declared himself king and wore no crown, instead keeping a stick of young wheat in his turban. Leaving India, he famously recited: “The Delhi throne is beautiful indeed, but does it compare with the mountains of Kandahar?”

Kashmir’s modern history begins with Ranjit Singh of the Sikhs who became a soldier at 12, and in 1799 at age 19 was made Lahore’s Governor by Kabul’s Zaman Shah. Three years later “he made himself master of Amritsar”, and in 1806 crossed the River Sutlej and took Ludhiana. He created a fine Sikh infantry and cavalry under former officers of Napoleon, and with 80,000 trained men and 500 guns took Multan and Peshawar, defeated the Pashtuns and overran Kashmir in 1819. The “cruel rule” of the Pashtuns ended “to the great relief of Kashmir’s inhabitants”.

The British Governor-General Minto (ancestor of the later Viceroy), seeing advantage in the Sikhs staying north of the Sutlej, sent Charles Metcalfe, “a clever young civilian”, to persuade the Khalsa; in 1809, Ranjit Singh and the British in the first Treaty of Amritsar agreed to establish “perpetual amity”: the British would “have no concern” north of the Sutlej and Ranjit Singh would keep only minor personnel south of it. In 1834 and 1838 Ranjit Singh was struck by paralysis and died in 1839, leaving no competent heir. The Sikh polity collapsed, “their power exploded, disappearing in fierce but fast flames”. It was “a period of storm and anarchy in which assassination was the rule” and the legitimate line of his son and grandson, Kharak Singh and Nao Nihal Singh was quickly extinguished. In 1845 the Queen Regent, mother of the five-year old Dalip Singh, agreed to the Khalsa ending the 1809 Treaty. After bitter battles that might have gone either way, the Khalsa lost at Sobraon on 10 February 1846, and accepted terms of surrender in the 9 March 1846 Treaty of Lahore. The kingdom had not long survived its founder: “created by the military and administrative genius of one man, it crumbled into powder when the spirit which gave it life was withdrawn; and the inheritance of the Khalsa passed into the hands of the English.”

Ranjit Singh’s influence on modern J&K was even greater through his having mentored the Rajput Gulab Singh Dogra (1792-1857) and his brothers Dhyan Singh and Suchet Singh. Jammu had been ruled by Ranjit Deo until 1780 when the Sikhs made it tributary to the Lahore Court. Gulab Singh, a great grand nephew of Ranjit Deo, had left home at age 17 in search of a soldierly fortune, and ended up in 1809 in Ranjit Singh’s army, just when Ranjit Singh had acquired for himself a free hand to expand his domains north of the River Sutlej.

Gulab Singh, an intrepid soldier, by 1820 had Jammu conferred upon him by Ranjit Singh with the title of Raja, while Bhimber, Chibal, Poonch and Ramnagar went to his brothers. Gulab Singh, “often unscrupulous and cruel, was a man of considerable ability and efficiency”; he “found his small kingdom a troublesome charge but after ten years of constant struggles he and his two brothers became masters of most of the country between Kashmir and the Punjab”, though Srinagar Valley itself remained under a separate Governor appointed by the Lahore Court. Gulab Singh extended Jammu’s rule from Rawalpindi, Bhimber, Rajouri, Bhadarwah and Kishtwar, across Laddakh and into Tibet. His General Zorawar Singh led six expeditions into Laddakh between 1834 and 1841 through Kishtwar, Padar and Zanskar. In May 1841, Zorawar left Leh with an army of 5000 Dogras and Laddakhis and advanced on Tibet. Defeating the Tibetans at Rudok and Tashigong, he reached Minsar near Lake Mansarovar from where he advanced to Taklakot (Purang), 15 miles from the borders of Nepal and Kumaon, and built a fort stopping for the winter. Lhasa sent large re-inforcements to meet him. Zorawar, deciding to take the offensive, was killed in the Battle of Toyu, on 11-12 December 1841 at 16,000 feet.

A Laddakhi rebellion resulted against Jammu, aided now by the advancing Tibetans. A new army was sent under Hari Chand suppressing the rebellion and throwing back the Tibetans, leading to a peace treaty between Lhasa and Jammu signed on 17 September 1842: “We have agreed that we have no ill-feelings because of the past war. The two kings will henceforth remain friends forever. The relationship between Maharajah Gulab Singh of Kashmir and the Lama Guru of Lhasa (Dalai Lama) is now established. The Maharajah Sahib, with God (Kunchok) as his witness, promises to recognise ancient boundaries, which should be looked after by each side without resorting to warfare. When the descendants of the early kings, who fled from Laddakh to Tibet, now return they will not be stopped by Shri Maharajah. Trade between Laddakh and Tibet will continue as usual. Tibetan government traders coming into Laddakh will receive free transport and accommodations as before, and the Laddakhi envoy will, in turn, receive the same facilities in Lhasa. The Laddakhis take an oath before God (Kunchok) that they will not intrigue or create new troubles in Tibetan territory. We have agreed, with God as witness, that Shri Maharajah Sahib and the Lama Guru of Lhasa will live together as members of the same household.” The traditional boundary between Laddakh and Tibet “as recognised by both sides since olden times” was accepted by the envoys of Gulab Singh and the Dalai Lama.

An earlier 1684 treaty between Laddakh and Lhasa had said that while Laddakh would send tribute to Lhasa every three years, “the king of Laddakh reserves to himself the village of Minsar in Ngarees-khor-sum, that he may be independent there; and he sets aside its revenue for the purpose of meeting the expense involved in keeping up the sacrificial lights at Kangree (Kailas), and the Holy Lakes of Mansarovar and Rakas Tal”. The area around Minsar village near Lake Mansarovar, held by the rulers of Laddakh since 1583, was retained by Jammu in the 1842 peace-treaty, and its revenue was received by J&K State until 1948.

After Ranjit Singh’s death in 1839, Gulab Singh was alienated from the Lahore Court where the rise of his brothers and a nephew aroused enough Khalsa jealousy to see them assassinated in palace intrigues. While the Sikhs imploded, Gulab Singh had expanded his own dominion from Rawalpindi to Minsar ~ everywhere except Srinagar Valley itself. He had apparently advised the Sikhs not to attack the British in breach of the 1809 Treaty, and when they did so he had not joined them, though had he done so British power in North India might have been broken. The British were grateful for his neutrality and also his help in their first misbegotten adventure in Afghanistan. It was Gulab Singh who was now encouraged by both the British and the Sikhs to mediate between them, indeed “to take a leading part in arranging conditions of peace”, and he formally represented the Sikh regency in the negotiations. The 9 March 1846 Treaty of Lahore “set forth that the British Government having demanded in addition to a certain assignment of territory, a payment of a crore and a half of rupees, and the Sikh Government being unable to pay the whole”, Dalip Singh “should cede as equivalent to one crore the hill country belonging to the Punjab between the Beas and the Indus including Kashmir and the Hazara”.

For the British to occupy the whole of this mountainous territory was judged unwise on economic and military grounds; it was not feasible to occupy from a military standpoint and the area “with the exception of the small Valley of Kashmir” was “for the most part unproductive”. “On the other hand, the ceded tracts comprised the whole of the hereditary possessions of Gulab Singh, who, being eager to obtain an indefeasible title to them, came forward and offered to pay the war indemnity on condition that he was made the independent ruler of Jammu & Kashmir.

A separate treaty embodying this arrangement was thus concluded between the British and Gulab Singh at Amritsar on 16 March 1846.” Gulab Singh acknowledged the British Government’s supremacy, and in token of it agreed to present annually to the British Government “one horse, twelve shawl goats of approved breed and three pairs of Kashmir shawls. This arrangement was later altered; the annual presentation made by the Kashmir State was confined to two Kashmir shawls and three romals (handkerchiefs).” The Treaty of Amritsar “put Gulab Singh, as Maharaja, in possession of all the hill country between the Indus and the Ravi, including Kashmir, Jammu, Laddakh and Gilgit; but excluding Lahoul, Kulu and some areas including Chamba which for strategic purposes, it was considered advisable (by the British) to retain and for which a remission of Rs 25 lakhs was made from the crore demanded, leaving Rs 75 lakhs as the final amount to be paid by Gulab Singh.” The British retained Hazara which in 1918 was included into NWFP. Through an intrigue emanating from Prime Minister Lal Singh in Lahore, Imamuddin, the last Sikh-appointed Governor of Kashmir, sought to prevent Gulab Singh taking possession of the Valley in accordance with the Treaty’s terms. By December 1846 Gulab Singh had done so, though only with help of a British force which included 17,000 Sikh troops “who had been fighting in the campaign just concluded”. (Contemporary British opinion even predicted Sikhism like Buddhism “would become extinct in a short time if it were not kept alive by the esprit de corps of the Sikh regiments”.)

The British in 1846 may have been glad enough to allow Gulab Singh take independent charge of the new entity that came to be now known as the “State of Jammu & Kashmir”. Later, however. they and their American allies would grow keen to control or influence the region vis-à-vis their new interests against the Russian and Soviet Empires.

FOUR
PAKISTAN’S ALLIES
by Subroto Roy First published in two parts in The Sunday Statesman, June 4 2006, The Statesman June 5 2006, Editorial Page Special Article, http://www.thestatesman.net

From the 1846 Treaty of Amritsar creating the State of Jammu & Kashmir until the collapse of the USSR in 1991, Britain and later the USA became increasingly interested in the subcontinent’s Northwest. The British came to India by sea to trade. Barren, splendid, landlocked Afghanistan held no interest except as a home of fierce tribes; but it was the source of invasions into the Indian plains and prompted a British misadventure to install Shah Shuja in place of Dost Mohammad Khan leading to ignominious defeat. Later, Afghanistan was seen as the underbelly of the Russian and Soviet empires, and hence a location of interest to British and American strategic causes.

In November 1954, US President Dwight Eisenhower authorized 30 U-2 spy aircraft to be produced for deployment against America’s perceived enemies, especially to investigate Soviet nuclear missiles which could reach the USA. Reconnaissance balloons had been unsuccessful, and numerous Western pilots had been shot down taking photographs from ordinary military aircraft. By June 1956, U-2 were making clandestine flights over the USSR and China. But on May 1 1960, one was shot or forced down over Sverdlovsk, 1,000 miles within Soviet territory. The Americans prevaricated that it had taken off from Turkey on a weather-mission, and been lost due to oxygen problems. Nikita Kruschev then produced the pilot, Francis Gary Powers, who was convicted of spying, though was exchanged later for a Soviet spy. Powers had been headed towards Norway, his task to photograph Soviet missiles from 70,000 ft, his point of origin had been an American base 20 miles from Peshawar.

America needed clandestine “forward bases” from which to fly U-2 aircraft, and Pakistan’s ingratiating military and diplomatic establishment was more than willing to offer such cooperation, fervently wishing to be seen as a “frontline state” against the USSR. “We will help you defeat the USSR and we are hopeful you will help us defeat India” became their constant refrain. By 1986, the Americans had been permitted to build air-bases in Balochistan and also use Mauripur air-base near Karachi.

Jammu & Kashmir and especially Gilgit-Baltistan adjoins the Pashtun regions whose capital has been Peshawar. In August-November 1947, a British coup d’etat against J&K State secured Gilgit-Baltistan for the new British Dominion of Pakistan.

The Treaty of Amritsar had nowhere required Gulab Singh’s dynasty to accept British political control in J&K as came to be exercised by British “Residents” in all other Indian “Native States”. Despite this, Delhi throughout the late 19th Century relentlessly pressed Gulab Singh’s successors Ranbir Singh and Partab Singh to accept political control. The Dogras acquiesced eventually. Delhi’s desire for control had less to do with the welfare of J&K’s people than with protection of increasing British interests in the area, like European migration to Srinagar Valley and guarding against Russian or German moves in Afghanistan. “Sargin” or “Sargin Gilit”, later corrupted by the Sikhs and Dogras into “Gilgit”, had an ancient people who spoke an archaic Dardic language “intermediate between the Iranian and the Sanskritic”. “The Dards were located by Ptolemy with surprising accuracy on the West of the Upper Indus, beyond the headwaters of the Swat River (Greek: Soastus) and north of the Gandarae (i.e. Kandahar), who occupied Peshawar and the country north of it. This region was traversed by two Chinese pilgrims, Fa-Hsien, coming from the north about AD 400 and Hsuan Tsiang, ascending from Swat in AD 629, and both left records of their journeys.”

Gilgit had been historically ruled by a Hindu dynasty called Trakane; when they became extinct, Gilgit Valley “was desolated by successive invasions of neighbouring rulers, and in the 20 or 30 years ending with 1842 there had been five dynastic revolutions. The Sikhs entered Gilgit about 1842 and kept a garrison there.” When J&K came under Gulab Singh, “the Gilgit claims were transferred with it, and a boundary commission was sent” by the British. In 1852 the Dogras were driven out with 2,000 dead. In 1860 under Ranbir Singh, the Dogras “returned to Gilgit and took Yasin twice, but did not hold it. They also in 1866 invaded Darel, one of the most secluded Dard states, to the south of the Gilgit basin but withdrew again.”

The British appointed a Political Agent in Gilgit in 1877 but he was withdrawn in 1881. “In 1889, in order to guard against the advance of Russia, the British Government, acting as the suzerain power of Kashmir, established the Gilgit Agency”. The Agency was re-established under control of the British Resident in Jammu & Kashmir. “It comprised the Gilgit Wazarat; the State of Hunza and Nagar; the Punial Jagir; the Governorships of Yasin, Kuh-Ghizr and Ishkoman, and Chilas”. In 1935, the British demanded J&K lease to them for 60 years Gilgit town plus most of the Gilgit Agency and the hill-states Hunza, Nagar, Yasin and Ishkuman. Hari Singh had no choice but to acquiesce. The leased region was then treated as part of British India, administered by a Political Agent at Gilgit responsible to Delhi, first through the Resident in J& K and later a British Agent in Peshawar. J& K State no longer kept troops in Gilgit and a mercenary force, the Gilgit Scouts, was recruited with British officers and paid for by Delhi. In April 1947, Delhi decided to formally retrocede the leased areas to Hari Singh’s J& K State as of 15 August 1947. The transfer was to formally take place on 1 August.

On 31 July, Hari Singh’s Governor arrived to find “all the officers of the British Government had opted for service in Pakistan”. The Gilgit Scouts’ commander, a Major William Brown aged 25, and his adjutant, a Captain Mathieson, planned openly to engineer a coup détat against Hari Singh’s Government. Between August and October, Gilgit was in uneasy calm. At midnight on 31 October 1947, the Governor was surrounded by the Scouts and the next day he was “arrested” and a provisional government declared.

Hari Singh’s nearest forces were at Bunji, 34 miles from Gilgit, a few miles downstream from where the Indus is joined by Gilgit River. The 6th J& K Infantry Battalion there was a mixed Sikh-Muslim unit, typical of the State’s Army, commanded by a Lt Col. Majid Khan. Bunji controlled the road to Srinagar. Further upstream was Skardu, capital of Baltistan, part of Laddakh District where there was a small garrison. Following Brown’s coup in Gilgit, Muslim soldiers of the 6th Infantry massacred their Sikh brothers-at-arms at Bunji. The few Sikhs who survived escaped to the hills and from there found their way to the garrison at Skardu.

On 4 November 1947, Brown raised the new Pakistani flag in the Scouts’ lines, and by the third week of November a Political Agent from Pakistan had established himself at Gilgit. Brown had engineered Gilgit and its adjoining states to first secede from J&K, and, after some talk of being independent, had promptly acceded to Pakistan. His commander in Peshawar, a Col. Bacon, as well as Col. Iskander Mirza, Defence Secretary in the new Pakistan and later to lead the first military coup détat and become President of Pakistan, were pleased enough. In July 1948, Brown was awarded an MBE (Military) and the British Governor of the NWFP got him a civilian job with ICI~ which however sent him to Calcutta, where he came to be attacked and left for dead on the streets by Sikhs avenging the Bunji massacre. Brown survived, returned to England, started a riding school, and died in 1984. In March 1994, Pakistan awarded his widow the Sitara-I-Pakistan in recognition of his coup détat.

Gilgit’s ordinary people had not participated in Brown’s coup which carried their fortunes into the new Pakistan, and to this day appear to remain without legislative representation. It was merely assumed that since they were mostly Muslim in number they would wish to be part of Pakistan ~ which also became Liaquat Ali Khan’s assumption about J&K State as a whole in his 1950 statements in North America. What the Gilgit case demonstrates is that J&K State’s descent into a legal condition of ownerless anarchy open to “Military Decision” had begun even before the Pakistani invasion of 22 October 1947 (viz. “Solving Kashmir”, The Statesman, 1-3 December 2005). Also, whatever else the British said or did with respect to J & K, they were closely allied to the new Pakistan on the matter of Gilgit.

The peak of Pakistan’s Anglo-American alliance came with the enormous support in the 1980s to guerrilla forces created and headquartered in Peshawar, to battle the USSR and Afghan communists directly across the Durand Line. It was this guerrilla war which became a proximate cause of the collapse of the USSR as a political entity in 1991. President Ronald Reagan’s CIA chief William J. Casey sent vast sums in 1985-1988 to supply and train these guerrillas. The Washington Post and New Yorker reported the CIA training guerrillas “in the use of mortars, rocket grenades, ground-to-air missiles”. 200 hand-held Stinger missiles were supplied for the first time in 1986 and the New Yorker reported Gulbudin Hikmatyar’s “Hizbe Islami” guerrillas being trained to bring down Soviet aircraft. “Mujahideen had been promised two Stingers for every Soviet aircraft brought down. Operators who failed to aim correctly were given additional training… By 1986, the United States was so deeply involved in the Afghan war that Soviet aircraft were being brought down under the supervision of American experts”. (Raja Anwar, The Tragedy of Afghanistan, 1988, p. 234).

The budding US-China détente brokered by Pakistan came into full bloom here. NBC News on 7 January 1980 said “for the first time in history (a senior State Department official) publicly admitted the possibility of concluding a military alliance between the United States and China”. London’s Daily Telegraph reported on 5 January 1980 “China is flying large supplies of arms and ammunition to the insurgents in Afghanistan. According to diplomatic reports, supplies have arrived in Pakistan from China via the Karakoram Highway…. A major build-up of Chinese involvement is underway ~ in the past few days. Scores of Chinese instructors have arrived at the Shola-e-Javed camps.”

Afghan reports in 1983-1985 said “there were eight training camps near the Afghan border operated by the Chinese in Sinkiang province” and that China had supplied the guerrillas “with a variety of weapons including 40,000 RPG-7 and 20,000 RPG-II anti tank rocket launchers.” Like Pakistan, “China did not publicly admit its involvement in the Afghan conflict: in 1985 the Chinese Mission at the UN distributed a letter denying that China was extending any kind of help to the Afghan rebels” (Anwar, ibid. p. 234). Support extended deep and wide across the Arab world. “The Saudi and Gulf rulers … became the financial patrons of the Afghan rebels from the very start of the conflict”. Anwar Sadat, having won the Nobel Peace Prize, was “keen to claim credit for his role in Afghanistan…. by joining the Afghanistan jihad, Sadat could re-establish his Islamic credentials, or so he believed. He could thus not only please the Muslim nations but also place the USA and Israel in his debt.” Sadat’s Defence Minister said in January 1980: “Army camps have been opened for the training of Afghan rebels; they are being supplied with weapons from Egypt” and Sadat told NBC News on 22 September 1981 “that for the last twenty-one months, the USA had been buying arms from Egypt for the Afghan rebels. He said he had been approached by the USA in December 1979 and he had decided to `open my stores’. He further disclosed that these arms were being flown to Pakistan from Egypt by American aircraft. Egypt had vast supplies of SAM-7 and RPG-7 anti-aircraft and anti-tank weapons which Sadat agreed to supply to Afghanistan in exchange for new American arms. The Soviet weapons, being light, were ideally suited to guerrilla warfare. … the Mujahideen could easily claim to have captured them from Soviet and Afghan troops in battle.… Khomeini’s Iran got embroiled in war (against Iraq) otherwise Kabul would also have had to contend with the full might of the Islamic revolutionaries.” (Anwar ibid. p. 235).

Afghanistan had been occupied on 26-27 December 1979 by Soviet forces sent by the decrepit Leonid Brezhnev and Yuri Andropov to carry out a putsch replacing one communist, Hafizullah Amin, with a rival communist and Soviet protégé, Babrak Karmal. By 1985 Brezhnev and Andropov were dead and Mikhail Sergeyevich Gorbachev had begun his attempts to reform the Soviet system, usher in openness, end the Cold War and in particular withdraw from Afghanistan, which by 1986 he had termed “a bleeding wound”. Gorbachev replaced Karmal with a new protégé Najibullah Khan, who was assigned the impossible task of bringing about national reconciliation with the Pakistan-based guerrillas and form a national government. Soviet forces withdrew from Afghanistan in February 1989 having lost 14,500 dead, while more than a million Afghans had been killed since the invasion a decade earlier.

Not long after Russia’s Bolshevik Revolution, Gregory Zinoviev had said that international communism “turns today to the peoples of the East and says to them, `Brothers, we summon you to a Holy War first of all against British imperialism!’ At this there were cries of Jehad! Jehad! And much brandishing of picturesque Oriental weapons.” (Treadgold, Twentieth Century Russia, 1990, p. 213). Now instead, the Afghan misadventure had contributed to the collapse of the Soviet Empire itself, the USSR ceasing to be a political entity by 1991, and even Gorbachev being displaced by Boris Yeltsin and later Vladimir Putin in a new Russia.

What resulted for the people of the USA and Britain and the West in general was that they no longer had to live under threat of hostile Soviet tanks and missiles, while the people of Russia, Ukraine and the other erstwhile Soviet republics as well as Eastern Europe were able to throw off the yoke of communism that had oppressed them since the Bolshevik Revolution and instead to breathe the air of freedom.

What happened to the people of Afghanistan, however, was that they were plunged into further ghastly civil war for more than ten years. And what happened to the people of Pakistan was that their country was left resembling a gigantic Islamist military camp, awash with airfields, arms, ammunition and trained guerrillas, as well as a military establishment enlivened as always by perpetual hope that these supplies, provisions and personnel of war might find alternative use in attacks against India over J& K. “We helped you when you wished to see the Soviet Union defeated and withdrawing in Afghanistan”, Pakistan’s generals and diplomats pleaded with the Americans and British, “now you must help us in our wish to see India defeated and withdrawing in Kashmir”. Pakistan’s leaders even believed that just as the Soviet Union had disintegrated afterwards, the Indian Union perhaps might be made to do the same. Not only were the two cases as different as chalk from cheese, Palmerstone’s dictum there are no permanent allies in the politics of nations could not have found more apt use than in what actually came to take place next.

Pakistan’s generals and diplomats felt betrayed by the loss of Anglo-American paternalism towards them after 1989.

Modern Pakistanis had never felt they subscribed to the Indian nationalist movement culminating in independence in August 1947. The Pakistani state now finally declared its independence in the world by exploding bombs in a nuclear arsenal secretly created with help purchased from China and North Korea. Pakistan’s leaders thus came to feel in some control of Pakistan’s destiny as a nation-state for the first time, more than fifty years after Pakistan’s formal creation in 1947. If nothing else, at least they had the Bomb.

Secondly, America and its allies would not be safe for long since the civil war they had left behind in Afghanistan while trying to defeat the USSR now became a brew from which arose a new threat of violent Islamism. Osama bin Laden and the Taliban, whom Pakistan’s military and the USA had promoted, now encouraged unprecedented attacks on the American mainland on September 11 2001 ~ causing physical and psychological damage which no Soviet, Chinese or Cuban missiles ever had been allowed to do. In response, America attacked and removed the Taliban regime in Afghanistan, once again receiving the cooperative use of Pakistani manpower and real estate ~ except now there was no longer any truck with the Pakistani establishment’s wish for a quid pro quo of Anglo-American support against India on J&K. Pakistan’s generals and diplomats soon realised their Anglo-American alliance of more than a half-century ended on September 11 2001. Their new cooperation was in killing or arresting and handing over fellow-Muslims and necessarily lacked their earlier feelings of subservience and ingratiation towards the Americans and British, and came to be done instead under at least some duress. No benefit could be reaped any more in the fight against India over Jammu & Kashmir. An era had ended in the subcontinent.

FIVE

WHAT TO TELL MUSHARRAF: PEACE IS IMPOSSIBLE WITHOUT NON-AGGRESSIVE PAKISTANI INTENTIONS by Subroto Roy, First published in The Statesman December 15 2006 Editorial Page Special Article, www.thestatesman.net

In June 1989 a project at an American university involving Pakistani and other scholars, including one Indian, led to the book Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s published in Karachi, New Delhi and elsewhere. The book reached Nawaz Sharif and the Islamabad elite, and General Musharraf’s current proposal on J&K, endorsed warmly by the US State Department last week, derives from the last paragraph of its editorial introduction: “Kashmir… must be demilitarised and unified by both countries sooner or later, and it must be done without force. There has been enough needless bloodshed on the subcontinent… Modern Pakistanis and Indians are free peoples who can voluntarily agree in their own interests to alter the terms set hurriedly by Attlee or Mountbatten in the Indian Independence Act 1947. Nobody but we ourselves keeps us prisoners of superficial definitions of who we are or might be. The subcontinent could evolve its political identity over a period of time on the pattern of Western Europe, with open borders and (common) tariffs to the outside world, with the free movement of people, capital, ideas and culture. Large armed forces could be reduced and transformed in a manner that would enhance the security of each nation. The real and peaceful economic revolution of the masses of the subcontinent would then be able to begin.”

The editors as economists decried the waste of resources involved in the Pakistan-India confrontation, saying it had “greatly impoverished the general budgets of both Pakistan and India. If it has benefited important sections of the political and military elites of  both countries, it has done so only at the expense of the general welfare of the masses.”

International law

Such words may have been bold in the early 1990s but today, a decade and a half later, they seem incomplete and rather naïve even to their author, who was myself, the only Indian in that project. Most significantly, the position in international law in the context of historical facts had been wholly neglected. So had been the manifest nature of the contemporary Pakistani state.

Jammu & Kashmir became an entity in international law when the Treaty of Amritsar was signed between Gulab Singh and the British on March 16 1846. British India itself became an entity in international law much later, possibly as late as June 1919 when it signed the Treaty of Versailles. As for Pakistan, it had no existence in world history or international law until August 14 1947, when the British created it as a new entity out of certain demarcated areas of British India and gave it the status of a Dominion. British India dissolved itself on August 15 1947 and the Dominion of India became its successor-state in international law on that date. As BR Ambedkar pointed out at the time, the new India automatically inherited British India’s suzerainty over any and all remaining “princely” states of so-called “Indian India”. In case of J&K in particular, there never was any question of it being recognised as an independent entity in global international law.

The new Pakistan, by entering a Standstill Agreement with J&K as of August 15 1947, did locally recognise J&K’s sovereignty over its decision whether to join Pakistan or India. But this Pakistani recognition lasted only until the attack on J&K that commenced from Pakistani territory as of October 22 1947, an attack in which Pakistani forces were complicit (something which, in different and mutating senses, has continued ever since). The Dominion of India had indicated it might have consented if J&K’s Ruler had decided to accede to Pakistan in the weeks following the dissolution of British India. But no such thing happened: what did happen was the descent of J&K into a condition of legal anarchy.

Beginning with the Pakistani attack on J&K as of October 22 upto and including the Rape of Baramulla and the British-led Pakistani coup détat in Gilgit on one side, and the arrival of Indian forces as well as mobilization by Sheikh Abdullah and Bakshi Ghulam Mohammad of J&K’s civilians to repel the Pakistani invaders on the other side, the State of Jammu & Kashmir became an ownerless entity in international law. In Roman Law, from which all modern international and municipal law ultimately derives, the ownership of an ownerless entity is open to be determined by “military decision”. The January 1949 Ceasefire Line that came to be renamed the Line of Control after the 1971 Bangladesh War, demarcates the respective territories that the then-Dominions and later Republics of India and Pakistan acquired by “military decision” of the erstwhile State of J&K which had come to cease to exist.

What the Republic of India means by saying today that boundaries cannot be redrawn nor any populations forcibly transferred is quite simply that the division of erstwhile J&K territory is permanent, and that sovereignty over it is indivisible. It is only sheer ignorance on the part of General Musharraf’s Indian interviewer the other day which caused it to be said that Pakistan was willing to “give up” its claim on erstwhile J&K State territory which India has held: Pakistan has never had nor even made such a  claim in international law. What Pakistan has claimed is that India has been an occupier and that there are many people inhabiting the Indian area who may not wish to be Indian nationals and who are being compelled against their will to remain so ~  forgetting to add that precisely the same could be said likewise of the Pakistani-held area.

Accordingly, the lawful solution proposed in these pages a year ago to resolve that matter, serious as it is, has been that the Republic of India invite every person covered under Article 370, citizen-by- citizen, under a condition of full information, to privately and without fear decide, if he/she has not done so already, between possible Indian, Iranian, Afghan or Pakistani nationalities ~ granting rights and obligations of permanent residents to any of those persons who may choose for whatever private reason not to remain Indian nationals. If Pakistan acted likewise, the problem of J&K would indeed come to be resolved. The Americans, as self- appointed mediators, have said they wish “the people of the region to have a voice” in a solution: there can be no better expression of such voice than allowing individuals to privately choose their own nationalities and their rights and responsibilities accordingly. The issue of territorial sovereignty is logically distinct from that of the choice of nationality by individual inhabitants.

Military de-escalation

Equally significant though in assessing whether General Musharraf’s proposal is an  anachronism, is Pakistan’s history since 1947: through Ayub’s 1965 attack, the civil war and secession of Bangladesh, the Afghan war and growth of the ISI, the Kargil incursion, the 1999 coup détat, and, once or twice removed, the 9/11 attacks against America. It is not a history that allows any confidence to arise in Indians that we are not dealing with a country misgoverned by a tiny arrogant exploitative military elite who remain hell-bent on aggression against us. Like the USA and USSR twenty years ago, what we need to negotiate about, and negotiate hard about, is an overall mutual military drawdown and de-escalation appropriate to lack of aggressive intent on both sides. Is General Musharraf willing to discuss that? It would involve reciprocal verifiable assessment of one another’s reasonable military requirements on the assumption that each was not a threatening enemy of the other. That was how the USA-USSR drawdown and de-escalation occurred successfully. If General Musharraf is unwilling to enter such a discussion, there is hardly anything to talk about with him. We should wait for democracy to return.

SIX

“AN INDIAN REPLY TO PRESIDENT ZARDARI: REWARDING PAKISTAN FOR BAD BEHAVIOUR LEADS TO SCHIZOPHRENIC RELATIONSHIPS”

by Subroto Roy, December 17 2008

Pakistan President Asif Ali Zardari’s recent argument in the New York Times resembles closely the well-known publications of his ambassador to the United States, Mr Husain Haqqani. Unfortunately, this Zardari-Haqqani thesis about Pakistan’s current predicament in the world and the world’s predicament with Pakistan is shot through with clear factual and logical errors. These need to be aired because true or useful conclusions cannot be reached from mistaken premises or faulty reasoning.

1. Origins of Pakistan, India, J&K, and their mutual problems

Mr Zardari makes the following seemingly innocuous statement:

“…. the two great nations of Pakistan and India, born together from the same revolution and mandate in 1947, must continue to move forward with the peace process.”

Now as a matter of simple historical fact, the current entities in the world system known as India and Pakistan were not “born together from the same revolution and mandate in 1947”. It is palpably false to suppose they were and Pakistanis indulge in wishful thinking and self-deception about their own political history if they suppose this.

India’s Republic arose out of the British Dominion known as “India” which was the legal successor of the entity known previously in international law as “British India”. British India had had secular governance and so has had the Indian Republic.

By contrast, the Islamic Republic of Pakistan arose out of a newly created state in international law known as the British Dominion of Pakistan, consisting of designated territory carved out of British India by a British decision and coming into existence one day before British India extinguished itself. (Another new state, Bangladesh, later seceded from Pakistan.)

The British decision to create territory designated “Pakistan” had nothing to do with any anti-British “revolution” or “mandate” supported by any Pakistani nationalism because there was none. (Rahmat Ali’s anti-Hindu pamphleteering in London could be hardly considered Pakistani nationalism against British rule. Khan Abdul Ghaffar Khan’s Pashtun patriots saw themselves as Indian, not Pakistani.)

To the contrary, the British decision had to do with a small number of elite Pakistanis — MA Jinnah foremost among them — demanding not to be part of the general Indian nationalist movement that had been demanding a British departure from power in the subcontinent. Jinnah’s separatist party, the Muslim League, was trounced in the 1937 provincial elections in all the Muslim-majority areas of British India that would eventually become Pakistan. Despite this, in September 1939, Britain, at war with Nazi Germany, chose to elevate the political power of Jinnah and his League to parity with the general Indian nationalist movement led by MK Gandhi. (See, Francis Robinson, in William James and Subroto Roy (eds), Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s.) Britain needed India’s mostly Muslim infantry-divisions — the progenitors of the present-day Pakistan Army — and if that meant tilting towards a risky political idea of “Pakistan” in due course, so it would be. The thesis that Pakistan arose from any kind of “revolution” or “mandate” in 1947 is fantasy — the Muslim super-elite that invented and endorsed the Pakistan idea flew from Delhi to Karachi in chartered BOAC Dakotas, caring not a hoot about the vulnerability of ordinary Muslim masses to Sikh and Hindu majority wrath and retaliation on the ground.

Modern India succeeded to the rights and obligations of British India in international law, and has had a recognized existence as a state since at least the signing of the Armistice and Treaty of Versailles in 1918-1919. India was a founding member of the United Nations, being a signatory of the 1945 San Francisco Declaration, and an original member of the Bretton Woods institutions. An idea put forward by Argentina that as of 1947 India and Pakistan were both successor states of British India was rejected by the UN (Argentina withdrew its own suggestion), and it was universally acknowledged India was already a member of the UN while Pakistan would have to (and did) apply afresh for membership as a newly created state in the UN. Pakistan’s entry into the UN had the enthusiastic backing of India and was opposed by only one existing UN member, Afghanistan, due to a conflict that continues to this day over the legitimacy of the Durand Line that bifurcated the Pashtun areas.

Such a review of elementary historical facts and the position in law of Pakistan and India is far from being of merely pedantic interest today. Rather, it goes directly to the logical roots of the conflict over the erstwhile State of Jammu and Kashmir (J&K) — a state that itself originated as an entity in the world system a full century before Pakistan was to do so and more than half a century before British India did, but which would collapse into anarchy and civil war in 1947-1949.

Britain (or England) had been a major nation-state in the world system recognized since Grotius first outlined modern international law. On March 16 1846, Britain entered into a treaty, the Treaty of Amritsar, with one Gulab Singh, and the “State of Jammu & Kashmir” came to arise as a recognizable entity in international law for the first time. (See my “History of Jammu and Kashmir” published in The Statesman, Oct 29-30 2006, available elsewhere here.)

Jammu & Kashmir continued in orderly existence as a state until it crashed into legal and political anarchy and civil war a century later. The new Pakistan had entered into a “Standstill Agreement” with the State of Jammu & Kashmir as of August 15 1947. On or about October 22 1947, Pakistan unilaterally ended that Standstill Agreement and instead caused military forces from its territory to attack the State of Jammu & Kashmir along the Mansehra Road towards Baramula and Srinagar, coinciding too with an Anglo-Pakistani coup d’etat in Gilgit and Baltistan (see my “Solving Kashmir”; “Law, Justice & J&K”; “Pakistan’s Allies”, all published in The Statesman in 2005-2006 and available elsewhere here).

The new Pakistan had chosen, in all deliberation, to forswear law, politics and diplomacy and to resort to force of arms instead in trying to acquire J&K for itself via a military decision. It succeeded only partially. Its forces took and then lost both Baramula and Kargil; they may have threatened Leh but did not attempt to take it; they did take and retain Muzaffarabad and Skardu; they were never near taking the summer capital, Srinagar, though might have threatened the winter capital, Jammu.

All in all, a Ceasefire Line came to be demarcated on the military positions as of February 1 1949. After a war in 1971 that accompanied the secession of Bangladesh from Pakistan, that Ceasefire Line came to be renamed the “Line of Control” between Pakistan and India. An ownerless entity may be acquired by force of arms — the erstwhile State of Jammu & Kashmir in 1947-1949 had become an ownerless entity that had been dismembered and divided according to military decision following an armed conflict between Pakistan and India. The entity in the world system known as the “State of Jammu & Kashmir” created on March 16 1846 by Gulab Singh’s treaty with the British ceased to exist as of October 22 1947. Pakistan had started the fight over J&K but there is a general rule of conflicts that he who starts a fight does not get to finish it.

Such is the simplest and most practical statement of the history of the current problem. The British, through their own compulsions and imperial pretensions, raised all the talk about a “Lapse of Paramountcy” of the British Crown over the “Native Princes” of “Indian India”, and of how, the “Native Princes” were required to “accede” to either India or Pakistan. This ignored Britain’s own constitutional law. BR Ambedkar pointed out with unsurpassed clarity that no “Lapse of Paramountcy” was possible even for a single logical moment since “Paramountcy” over any “Native Princes” who had not joined India or Pakistan as of August 15 1947, automatically passed from British India to its legal successor, namely, the Dominion of India. It followed that India’s acquiescence was required for any subsequent accession to Pakistan – an acquiescence granted in case of Chitral and denied in case of Junagadh.

What the Republic of India means by saying today that boundaries cannot be redrawn nor any populations forcibly transferred is quite simply that the division of erstwhile J&K territory is permanent, and that sovereignty over it is indivisible. What Pakistan has claimed is that India has been an occupier and that there are many people inhabiting the Indian area who may not wish to be Indian nationals and who are being compelled against their will to remain so ~ forgetting to add that precisely the same could be said likewise of the Pakistani-held area. The lawful solution I proposed in “Solving Kashmir, “Law, Justice and J&K” and other works has been that the Republic of India invite every person covered under its Article 370, citizen-by-citizen, under a condition of full information, to privately and without fear decide, if he/she has not done so already, between possible Indian, Iranian, Afghan or Pakistani nationalities ~ granting rights and obligations of permanent residents to any of those persons who may choose for whatever private reason not to remain Indian nationals. If Pakistan acted likewise, the problem of J&K would indeed come to be resolved. The Americans, as self-appointed mediators, have said they wish “the people of the region to have a voice” in a solution: there can be no better expression of such voice than allowing individuals to privately choose their own nationalities and their rights and responsibilities accordingly. The issue of territorial sovereignty is logically distinct from that of the choice of nationality by individual inhabitants.

2. Benazir’s assassination falsely compared to the Mumbai massacres
Secondly, President Zardari draws a mistaken comparison between the assassination last year of his wife, Benazir Bhutto, and the Mumbai massacres a few weeks ago. Ms Bhutto’s assassination may resemble more closely the assassinations in India of Indira Gandhi in 1984 and Rajiv Gandhi in 1991.

Indira Gandhi died in “blowback” from the unrest she and her younger son and others in their party had opportunistically fomented among Sikh fundamentalists and sectarians since the late 1970s. Rajiv Gandhi died in “blowback” from an erroneous imperialistic foreign policy that he, as Prime Minister, had been induced to make by jingoistic Indian diplomats, a move that got India’s military needlessly involved in the then-nascent Sri Lankan civil war. Benazir Bhutto similarly may be seen to have died in “blowback” from her own political activity as prime minister and opposition leader since the late 1980s, including her own encouragement of Muslim fundamentalist forces. Certainly in all three cases, as in all assassinations, there were lapses of security too and imprudent political judgments made that contributed to the tragic outcomes.

Ms Bhutto’s assassination has next to nothing to do with the Mumbai massacres, besides the fact the perpetrators in both cases were Pakistani terrorists. President Zardari saying he himself has lost his wife to terrorism is true but not relevant to the proper diagnosis of the Mumbai massacres or to Pakistan-India relations in general. Rather, it serves to deflect criticism and condemnation of the Pakistani state’s pampered handing of Pakistan’s terrorist masterminds, as well as the gross irresponsibility of Pakistan’s military scientists (not AQ Khan) who have been recently advocating a nuclear first strike against India in the event of war.

3. Can any religious nation-state be viable in the modern world?

President Zardari’s article says:

“The world worked to exploit religion against the Soviet Union in Afghanistan by empowering the most fanatic extremists as an instrument of destruction of a superpower. The strategy worked, but its legacy was the creation of an extremist militia with its own dynamic.”

This may be overly simplistic. As pointed out in my article “Pakistan’s Allies”, Gregory Zinoviev himself after the Bolshevik Revolution had declared that international communism “turns today to the peoples of the East and says to them, ‘Brothers, we summon you to a Holy War first of all against British imperialism!’ At this there were cries of Jehad! Jehad! And much brandishing of picturesque Oriental weapons.” (Treadgold, Twentieth Century Russia, 1990, p. 213). For more than half of the 20th century, orthodox Muslims had been used by Soviet communists against British imperialism, then by the British and Americans (through Pakistan) against Soviet communism. Touché! Blowback and counter-blowback! The real question that arises from this today may be why orthodox Muslims have allowed themselves to be used either way by outside forces and have failed in developing a modern nation-state and political culture of their own. Europe and America only settled down politically after their religious wars were over. Perhaps no religious nation-state is viable in the modern world.

4. Pakistan’s behaviour leads to schizophrenia in international relations

President Zardari pleads for, or perhaps demands, resources from the world:

“the best response to the Mumbai carnage is to coordinate in counteracting the scourge of terrorism. The world must act to strengthen Pakistan’s economy and democracy, help us build civil society and provide us with the law enforcement and counterterrorism capacities that will enable us to fight the terrorists effectively.”

Six million pounds from Mr Gordon Brown, so much from here or there etc – President Zardari has apparently demanded 100 billion dollars from America and that is the price being talked about for Pakistan to dismantle its nuclear weapons and be brought under an American “nuclear umbrella” instead.

I have pointed out elsewhere that what Pakistan seems to have been doing in international relations for decades is send out “mixed messages” – i.e. contradictory signals, whether in thought, word or deed. Clinical psychologists following the work of Gregory Bateson would say this leads to confusion among Pakistan’s interlocutors (a “double bind”) and the symptoms arise of what may be found in schizophrenic relationships. (See my article “Do President-elect Obama’s Pakistan specialists believe…”; on the “double bind” theory, an article I chanced to publish in the Journal of Genetic Psychology, 1986, may be of interest).

Here are a typical set of “mixed messages” emanating from Pakistan’s government and opinion-makers:

“We have nuclear weapons
“We keep our nuclear weapons safe from any misuse or unauthorized use
“We are willing to use nuclear weapons in a first strike against India
“We do not comprehend the lessons of Hiroshima-Nagasaki
“We do not comprehend the destruction India will visit upon us if we strike them
“We are dangerous so we must not be threatened in any way
“We are peace-loving and want to live in peace with India and Afghanistan
“We love to play cricket with India and watch Bollywood movies
“We love our Pakistan Army as it is one public institution that works
“We know the Pakistan Army has backed armed militias against India in the past
“We know these militias have caused terrorist attacks
“We are not responsible for any terrorist attacks
“We do not harbour any terrorists
“We believe the world should pay us to not use or sell our nuclear weapons
“We believe the world should pay us to not encourage the terrorists in our country
“We believe the world should pay us to prevent terrorists from using our nuclear weapons
“We hate India and do not want to become like India
“We love India and want to become like India
“We are India and we are not India…”

Etc.

A mature rational responsible and self-confident Pakistan would have said instead:

“We apologise to India and other countries for the outrageous murders our nationals have committed in Mumbai and elsewhere
“We ask the world to watch how our professional army is deployed to disarm civilian and all “non-state” actors of unauthorized firearms and explosives
“We do not need and will not demand or accept a dollar in any sort of foreign aid, military or civilian, to solve our problems
“We realize our economic and political institutions are a mess and we must clean them up
“We will strive to build a society imbued with what Iqbal described as the spirit of modern times..”

As someone who created at great personal cost at an American university twenty years ago the book Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s, I have a special interest in hoping that Pakistan shall find the path of wisdom.”

Seventy Years Today Since the British Government Politically Empowered MA Jinnah (2009)

Seventy Years Today Since the British Government Politically Empowered MA Jinnah

by

Subroto Roy

The bloated armies of Indian and Pakistani historians and pseudo-historians have failed to recognize the significance of the precise start of the Second World War upon the fortunes of the subcontinent.  Yet, twenty years ago, in the book I and WE James created at an American university, Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s (now in pdf), one of our authors, Professor Francis Robinson of the University of London, had set out the principal facts most clearly as to what flowed from the September 4 1939 empowerment of MA Jinnah by the British Government.

Germany invaded Poland on September 1 1939 and Britain declared war on Germany on September 3. The next day, Linlithgow, the British Viceroy in India, started to treat MA Jinnah’s Muslim League on par with the Congress’s nationalist movement led by MK Gandhi. Until September 4 1939, the British “had had little time for Jinnah and his League. The Government’s declaration of war on Germany on 3 September, however, transformed the situation. A large part of the army was Muslim, much of the war effort was likely to rest on the two Muslim majority provinces of Punjab and Bengal. The following day, the Viceroy invited Jinnah for talks on an equal footing with Gandhi” (Robinson, in James & Roy (eds) Foundations of Pakistan’s Political Economy 1989, 1992).

Jinnah himself was amazed by the new British attitude towards him: “suddenly there was a change in the attitude towards me. I was treated on the same basis as Mr Gandhi. I was wonderstruck why all of a sudden I was promoted and given a place side by side with Mr Gandhi.”

Jinnah’s political weakness had been made obvious by the electoral defeats the Muslim League had suffered in the 1937 elections in the very provinces which more or less came to constitute West Pakistan and today constitute modern Pakistan. Britain, at war with Germany and soon Japan, was faced with the intransigence of the Congress leadership.  It was unsurprising this would contribute to the British tilt empowering Congress’s declared adversary, Jinnah and the Muslim League, and hence make credible the possibility of the Pakistan that they had demanded:

“As the Congress began to demand immediate independence, the Viceroy took to reassuring Jinnah that Muslim interests would be safeguarded in any constitutional change. Within a few months, he was urging the League to declare a constructive policy for the future, which was of course presented in the Lahore Resolution. In their August 1940 offer, the British confirmed for the benefit of Muslims that power would not be transferred against the will of any significant element in Indian life. And much the same confirmation was given in the Cripps offer nearly two years later…. Throughout the years 1940 to 1945, the British made no attempt to tease out the contradictions between the League’s two-nation theory, which asserted that Hindus and Muslims came from two different civilisations and therefore were two different nations, and the Lahore Resolution, which demanded that ‘Independent States’ should be constituted from the Muslim majority provinces of the NE and NW, thereby suggesting that Indian Muslims formed not just one nation but two. When in 1944 the governors of Punjab and Bengal urged such a move on the Viceroy, Wavell ignored them, pressing ahead instead with his own plan for an all-India conference at Simla. The result was to confirm, as never before in the eyes of leading Muslims in the majority provinces, the standing of Jinnah and the League. Thus, because the British found it convenient to take the League seriously, everyone had to as well—Congressmen, Unionists, Bengalis, and so on….”(Robinson in James & Roy (eds) Foundations of Pakistan’s Political Economy,  pp. 43-44).

Even British socialists who were sympathetic to Indian aspirations, would grow cold when the Congress seemed to abjectly fail to appreciate Britain’s predicament during war with Germany and Japan (Gandhi, for example, dismissing the 1942 Cripps offer as a “post-dated cheque on a failing bank”).

By the 1946 elections, Muslim mass opinion had changed drastically to seem to be strongly in favour of the creation of a Pakistan. The intervening years were the ones when urban mobs all over India could be found shouting the League’s slogans: “Larke lenge Pakistan; Marke lenge Pakistan, Khun se lenge Pakistan; Dena hoga Pakistan; Leke rahenge Pakistan” (We will spill blood to take Pakistan, you will have to yield a Pakistan.)

Events remote from India’s history and geography, namely, the rise of Hitler and the Second World War, had contributed between 1937 and 1947 to the change of fortunes of the Muslim League and hence of all the people of the subcontinent.

The British had long discovered that the mutual antipathy between Muslims and Hindus could be utilised in fashioning their rule; specifically that the organisation and mobilisation of Muslim communal opinion in the subcontinent was a useful counterweight to any pan-Indian nationalism which might emerge to compete with British authority. As early as 1874, well before Allan Octavian Hume, ICS, had conceived the Indian National Congress, John Strachey, ICS, was to observe “The existence side by side of these (Hindu and Muslim) hostile creeds is one of the strong points in our political position in India. The better classes of Mohammedans are a source of strength to us and not of weakness. They constitute a comparatively small but an energetic minority of the population whose political interests are identical with ours.” By 1906, when a deputation of Muslims headed by the Aga Khan first approached the British pleading for communal representation, Minto the Viceroy replied: “I am as firmly convinced as I believe you to be that any electoral representation in India would be doomed to mischievous failure which aimed at granting a personal enfranchisement, regardless of the beliefs and traditions of the communities composing the population of this Continent.” Minto’s wife wrote in her diary that the effect was “nothing less than the pulling back of sixty two millions of (Muslims) from joining the ranks of the seditious opposition.” (The true significance of MAK Azad may have been that he, precisely at the same time, did indeed feel within himself the nationalist’s desire for freedom strongly enough to want to join the ranks of that seditious opposition.)

If a pattern emerges as to the nature of the behaviour of the British political state with respect to the peoples of this or similar regions, it is precisely the economic one of rewarding those loyal to them who had protected or advanced their interests, and penalising those perceived to be acting against their will. It is wishful to think  of members of the British political state as benevolent paternalists, who met with matching deeds their often philanthropic words about promoting the general welfare of their colonial wards or subordinate allies. The slogan “If you are not with us you are against us” that has come to be used by many from the Shining Path Maoists of Peru to President George W. Bush, had been widely applied already by the British in India, especially in the form “If you dare not to be with us, we will be certainly with your adversaries”. It came to be used with greatest impact on the subcontinent’s fortunes in 1939 when Britain found itself reluctantly at war with Hitler’s Germany.

British loyalties lay with those who had been loyal to them.

Hence in the “Indian India” of the puppet princes, Hari Singh and other “Native Princes” who had sent troops to fight as part of the British armies would be treated with a pusillanimity and grandeur so as to flatter their vanities, Sheikh Abdullah’s rebellion representing the Muslim masses of the Kashmir Valley would be ignored. And in British India, Jinnah the conservative Anglophile and his elitist Muslim League would be backed, while the radicalised masses of the Gandhi-Bose-Nehru Congress would have to be suppressed as a nuisance.

(Similarly, much later, Pakistan’s bemedalled army generals would be backed by the United States against Mujibur Rehman’s impoverished student-rebels, and India’s support frowned upon regardless of how just the Bangladeshi cause.)

Altruism is a limited quality in all human affairs, never more scarce than in relations between nations. In “Pakistan’s Allies”, I showed how the strategic interests of Britain, and later Britain’s American ally, came to evolve in the Northwest of the subcontinent ever since the 1846 Treaty of Amritsar as long as a Russian and later a Soviet empire had existed. A similar evolution of British domestic interests in India is distinctly observable in British support for the Pakistan Movement itself, leading on August 14 1947 to the creation of the new Dominion of Pakistan.

Sheikh Abdullah’s democratic urges or  Nehru’s Indian nationalism or the general welfare of the subcontinent’s people had no appeal as such to the small and brittle administrative machinery in charge of Britain’s Indian Empire — even though individual Britons had come to love, understand and explain India for the permanent benefit of her people. This may help to explain how Britain’s own long democratic traditions at home could often be found so wonderful by Indians yet the actions of the British state abroad so incongruent with them.

 

Finally, a dozen years late, the Sonia-Manmohan Congress takes a small Rajivist step: Yes Prime Minister, our Judiciary is indeed a premier public good (or example of “infrastructure” to use that dreadful bureaucratic term)

I was very harsh and did not beat about the bush in my Sep 23-24 2007 article  in The Statesman “Against Quackery” when I said in its subtitle

“Manmohan and Sonia have violated Rajiv Gandhi’s intended reforms”.

I said inter alia

“WASTE, fraud and abuse are inevitable in the use and allocation of public property and resources in India as elsewhere, but Government is supposed to fight and resist such tendencies. The Sonia-Manmohan Government have done the opposite, aiding and abetting a wasteful anti-economics ~ i.e., an economic quackery. Vajpayee-Advani and other Governments, including Narasimha-Manmohan in 1991-1996, were just as complicit in the perverse policy-making. So have been State Governments of all regional parties like the CPI-M in West Bengal, DMK/ AIADMK in Tamil Nadu, Congress/NCP/ BJP/Sena in Maharashtra, TDP /Congress in Andhra Pradesh, SP/BJP/BSP in Uttar Pradesh etc. Our dismal politics merely has the pot calling the kettle black while national self-delusion and superstition reign in the absence of reason. The general pattern is one of well-informed, moneyed, mostly city-based special interest groups (especially including organised capital and organised labour) dominating government agendas at the cost of ill-informed, diffused anonymous individual citizens ~ peasants, small businessmen, non-unionized workers, old people, housewives, medical students etc….Rajiv Gandhi had a sense of noblesse oblige out of remembrance of his father and maternal grandfather. After his assassination, the comprador business press credited Narasimha Rao and Manmohan Singh with having originated the 1991 economic reform. In May 2002, however, the Congress Party itself passed a resolution proposed by Digvijay Singh explicitly stating Rajiv and not either of them was to be so credited. The resolution was intended to flatter Sonia Gandhi but there was truth in it too. Rajiv, a pilot who knew no political economy, was a quick learner with intelligence to know a good idea when he saw one and enough grace to acknowledge it. …Rajiv was entirely convinced when the suggestion was made to him in September 1990 that an enormous infusion of public resources was needed into the judicial system for promotion and improvement of the Rule of Law in the country, a pre-requisite almost for a new market orientation. Capitalism without the Rule of Law can quickly degenerate into an illiberal hell of cronyism and anarchy which is what has tended to happen since 1991. The resources put since Independence to the proper working of our judiciary from the Supreme Court and High Courts downwards have been abysmal, while the state of prisons, borstals, mental asylums and other institutions of involuntary detention is nothing short of pathetic. Only police forces, like the military, paramilitary and bureaucracies, have bloated in size….Neither Sonia-Manmohan nor the BJP or Communists have thought promotion of the Rule of Law in India to be worth much serious thought ~ certainly less important than attending bogus international conclaves and summits to sign expensive deals for arms, aircraft, reactors etc. Yet Rajiv Gandhi, at a 10 Janpath meeting on 23 March 1991 when he received the liberalisation proposals he had authorized, explicitly avowed the importance of greater resources towards the Judiciary. Dr Singh and his acolytes were not in that loop, indeed they precisely represented the bureaucratic ancien regime intended to be changed, and hence have seemed quite uncomprehending of the roots of the intended reforms ever since 1991.”

Days after the article appeared there were press reports Dr Singh was murmuring about quitting, and then came a fierce speech in Hindi from the Congress President saying “enemies” would receive their dues or whatever – only to be retracted a few days later saying that no more had been meant than a local critique of the BJP in Haryana politics!  (Phew! I said to myself in relief…)

Today I am very happy to learn that Dr Manmohan Singh spoke on Sunday of the importance of the Rule of Law and an effective and efficient judiciary. The new Law Minister in the second Sonia-Manmohan Government has been eagerly saying the same.

All this is constructive and positive, late as it is since Sonia Gandhi and Manmohan Singh both became heavy-duty Congress Party politicians for the first time a dozen years ago.

I was privileged to advise a previous Congress President in his last months from September 1990 as has been told elsewhere. And six years before that I had  said:

“….….The most serious examples of the malfunctioning of civil government in India are probably the failure to take feasible public precautions against the monsoons and the disarray of the judicial system. …The Statesman lamented in July 1980:`The simplest matter takes an inordinate amount of time, remedies seldom being available to those without means or influence. Of the more than 16,000 cases pending in the Supreme Court, about 5,000 were introduced more than five years ago; while nearly 16,000 of the backlog of more than 600,000 cases in our high courts have been hanging fire for over a decade. Allahabad is the worst offender but there are about 75,000 uncleared cases in the Calcutta High Court in addition to well over a million in West Bengal’s lower courts.” Such a state of affairs has been caused not only by lazy and corrupt policemen, court clerks and lawyers, but also by the paucity of judges and magistrates. . . . a vast volume of laws provokes endless litigation as much because of poor drafting which leads to disputes over interpretation as because they appear to violate particular rights and privileges…. When governments determinedly do what they need not or should not do, it may be expected that they will fail to do what civil government positively should be doing.” A few months ago was the 25th anniversary of this statement… ! 🙂

Yes Prime Minister, having an effective and efficient judiciary is indeed a premier public good and one that has failed to be provided to India’s people from Nehru’s time and through Indira’s. I managed to persuade Rajiv about it completely. Might I next be so bold as to draw attention as well to the paragraphs of the 2007 article that followed?

“Similarly, Rajiv comprehended when it was said to him that the primary fiscal problem faced by India is the vast and uncontrolled public debt, interest payments on which suck dry all public budgets leaving no room for provision of public goods.  Government accounts: Government has been routinely “rolling over” its domestic debt in the asset-portfolios of the nationalised banks while displaying and highlighting only its new additional borrowing in a year as the “Fiscal Deficit”. More than two dozen States have been doing the same and their liabilities ultimately accrue to the Union too. The stock of public debt in India is Rs 30 trillion (Rs 30 lakh crore) at least, and portends a hyperinflation in the future. There has been no serious recognition of this since it is political and bureaucratic actions that have been causing the problem. Proper recognition would entail systematically cleaning up the budgets and accounts of every single governmental entity in the country: the Union, every State, every district and municipality, every publicly funded entity or organisation, and at the same time improving public decision-making capacity so that once budgets and accounts recover from grave sickness over decades, functioning institutions exist for their proper future management. All this would also stop corruption in its tracks, and release resources for valuable public goods and services like the Judiciary, School Education and Basic Health. Institutions for improved political and administrative decision-making are needed throughout the country if public preferences with respect to raising and allocating common resources are to be elicited and then translated into actual delivery of public goods and services. Our dysfunctional legislatures will have to do at least a little of what they are supposed to. When public budgets and accounts are healthy and we have functioning public goods and services, macroeconomic conditions would have been created for the paper-rupee to once more become a money as good as gold ~ a convertible world currency for all of India’s people, not merely the metropolitan special interest groups that have been controlling our governments and their agendas.”

Subroto Roy

Kolkata


On the general theory of expertise in democracy: reflections on what emerges from the American “torture memos” today

Twenty years ago, I wrote in Philosophy of Economics (Routledge, London & New York, 1989) quoting from Solzhenitsyn’s experience:

“….the received theory of economic policy… must be silent about the appropriate role of the expert not only under conditions of tyranny (Solzhenitsyn: “The prison doctor was the interrogator’s and executioner’s right-hand man. The beaten prisoner would come to on the floor only to hear the doctor’s voice: ‘You can continue, the pulse is normal’” ); but also where the duly elected government of an open and democratic society proceeded to do things patently wrong or tyrannical (the imprisonment of the Japanese Americans). Hence Popper’s “paradox of democracy” and “tyranny of the majority”..… A theory of economic policy which both assumes a free and open society and bases itself upon a moral scepticism cannot have anything to say ultimately about the objective reasons why a free and open society may be preferred to an unfree or closed society, or about the good or bad outcomes that may be produced by the working of democratic processes…”

Today’s Washington Post reports:

“When the CIA began what it called an “increased pressure phase” with captured terrorism suspect Abu Zubaida in the summer of 2002, its first step was to limit the detainee’s human contact to just two people. One was the CIA interrogator, the other a psychologist. During the extraordinary weeks that followed, it was the psychologist who apparently played the more critical role. According to newly released Justice Department documents, the psychologist provided ideas, practical advice and even legal justification for interrogation methods that would break Abu Zubaida, physically and mentally. Extreme sleep deprivation, waterboarding, the use of insects to provoke fear — all were deemed acceptable, in part because the psychologist said so. “No severe mental pain or suffering would have been inflicted,” a Justice Department lawyer said in a 2002 memo explaining why waterboarding, or simulated drowning, should not be considered torture. The role of health professionals as described in the documents has prompted a renewed outcry from ethicists who say the conduct of psychologists and supervising physicians violated basic standards of their professions. Their names are among the few details censored in the long-concealed Bush administration memos released Thursday, but the documents show a steady stream of psychologists, physicians and other health officials who both kept detainees alive and actively participated in designing the interrogation program and monitoring its implementation. Their presence also enabled the government to argue that the interrogations did not include torture. Most of the psychologists were contract employees of the CIA, according to intelligence officials familiar with the program. “The health professionals involved in the CIA program broke the law and shame the bedrock ethical traditions of medicine and psychology,” said Frank Donaghue, chief executive of Physicians for Human Rights, an international advocacy group made up of physicians opposed to torture. “All psychologists and physicians found to be involved in the torture of detainees must lose their license and never be allowed to practice again.” The CIA declined to comment yesterday on the role played by health professionals in the agency’s self-described “enhanced interrogation program,” which operated from 2002 to 2006 in various secret prisons overseas. “The fact remains that CIA’s detention and interrogation effort was authorized and approved by our government,” CIA Director Leon Panetta said Thursday in a statement to employees. The Obama administration and its top intelligence leaders have banned harsh interrogations while also strongly opposing investigations or penalties for employees who were following their government’s orders. The CIA dispatched personnel from its office of medical services to each secret prison and evaluated medical professionals involved in interrogations “to make sure they could stand up, psychologically handle it,” according to a former CIA official. The alleged actions of medical professionals in the secret prisons are viewed as particularly troubling by an array of groups, including the American Medical Association and the International Committee of the Red Cross. AMA policies state that physicians “must not be present when torture is used or threatened.” The guidelines allow doctors to treat detainees only “if doing so is in their [detainees’] best interest” and not merely to monitor their health “so that torture can begin or continue.” The American Psychological Association has condemned any participation by its members in interrogations involving torture, but critics of the organization faulted it for failing to censure members involved in harsh interrogations. The ICRC, which conducted the first independent interviews of CIA detainees in 2006, said the prisoners were told they would not be killed during interrogations, though one was warned that he would be brought to “the verge of death and back again,” according to a confidential ICRC report leaked to the New York Review of Books last month. “The interrogation process is contrary to international law and the participation of health personnel in such a process is contrary to international standards of medical ethics,” the ICRC report concluded….” (emphasis added)

Twenty-five years ago, the draft-manuscript that became the book Philosophy of Economics got me into much trouble in American academia. As I have said elsewhere, a gang of “inert game theorists”, similar to many (often unemployable ex-mathematicians) who had come to and still dominate what passes for academic economics in many American and European universities, did not like at all what I was saying. A handful of eminent senior economists – Frank Hahn, T W Schultz, Milton Friedman, James M Buchanan, Sidney Alexander – defended my work and but for their support over the decade 1979-1989, my book would not have seen light of day.  Eventually, I have had to battle over years in the US federal courts over it – only to find myself having to battle bribery of court officers and the suborning of perjury by government legal officers  too! (And speaking of government-paid psychologists, I was even required at one point by my corrupt opponent to undergo tests for having had the temerity of being in court at all! Fortunately for me that particular psychologist declined to participate in the nefariousness of his employer!).

I find all this poignant today as Philosophy of Economics may have, among other things, described the general theoretical problem that has been brought to light today.  I was delighted to hear from a friend in 1993 that my book had been prescribed for a course at Yale Law School and was strewn all over an alley in the bookshop.

Separately, I am also delighted to find that a person pioneering the current work is a daughter of our present PM. I have been sharply critical of Dr Singh’s economics and politics, but I have also said I have had high personal regard for him ever since 1973 when he, as a friend of my father’s, visited our then-home in Paris to advise me before I embarked on my study of economics. My salute to the ACLU’s work in this – may it be an example in defeating cases of State-tyranny in India too.

Subroto Roy,

India is not a monarchy! We urgently need to universalize the French concept of “citoyen”! (2009)

Each of the two sons of Feroze and Indira Gandhi died tragically  in his prime, years ago, and it is unbecoming to see their family successors squabble today. Everyone may need to be constantly reminded that this handful of persons are in fact ordinary citizens in our democratic polity, deserving India’s attention principally in such a capacity.

What did, indeed, Feroze Gandhi, Jawaharlal Nehru, Sanjay Gandhi, Indira Gandhi and Rajiv Gandhi “live and die for”?  It was not any one identifiable thing or any set of common things, that seems certain.

Feroze Gandhi from all accounts stood for integrity in Indian politics and journalism; it is not impossible his premature death was related to  his wife’s negligence because she had returned to her father’s side instead.  Jawaharlal Nehru did not do well as a father to promote his daughter so blatantly as his assistant either before 1947

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or after.

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Nehru did not achieve political power until well into middle age; his catastrophic misjudgment of communist ideology and intentions, especially Chinese communist ideology and intentions, contributed to an Indian defeat at war, and led soon thereafter to his health collapsing and his death. He and Indira somewhat nonchalantly made a visit to Ceylon even as the Chinese attack was commencing; a high point of my own childhood was saying namaste on October 13 1962 at Colombo airport when they arrived.

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Feroze and Indira’s younger son evidently came to die in a self-inflicted aeronautical mishap of some sort.  What did Sanjay Gandhi “live for”?  The book Foundations of India’s Political Economy: Towards an Agenda for the 1990s created twenty years ago in America

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has a chapter titled “The State of Governance” by the political scientist James Manor which says:

“After 1973 or so, personal loyalty tended increasingly to become the main criterion for advancement in the Congress Party. People who appeared to be loyal often replaced skilled political managers who seemed too independent.  Many of these new arrivals did not worry, as an earlier generation of Congress officials  had done, that excessive private profiteering might earn the wrath of party leaders.  In 1975, Sanjay Gandhi suddenly became the second most powerful figure in Indian politics.  He saw that the parties of the left and right had strong organizations that could put large numbers of militants into the streets for demonstrations while Congress had no such capacity.  In the belief that Congress should also have this kind of muscle, he began recruiting elements from urban centres including the criminal underworld.  The problem of corruption was exacerbated by demands that State-level Congress leaders place large sums of money at the disposal not of the national party but of the persons who presided over it.  Congress chief ministers realized that a fulsome response to these demands went a long way toward insulating them from interference from New Delhi, and a monumental system of fund-raising sprang up.  When so many people were being drawn into semi-institutionalized malfeasance, which seemed to be condoned by higher authorities, it was inevitable many would skim off portions of the funds raised for personal benefit.  Corruption soared. The problem was compounded by the tendency for people to be dismissed from public and party offices abruptly, leading many Congress politicians to fear that their time in power might be quite short.”

I do not have reason to disagree with this  opinion  contained in the book  that I and WE James created  at the University of Hawaii twenty years ago.   If anything, Sanjay’s political model may have spread  itself across  other Indian  political parties in one way or another.

What does strike me as odd in light of current  political controversy is that  several  of Sanjay’s friends and colleagues  are now part-and-parcel of the   Sonia Congress – one must ask, were they such fair-weather  friends that they never  lent a hand or a shoulder to his young widow and her infant son especially against the cruelties Sanjay’s mother bestowed upon them?  Did they offer help or guidance to Sanjay’s son, have they tried to guide him away from becoming the bigoted young politician he seems to wish to be today?

Indira’s major faults included playing favourites among her bahus and her grandchildren with as much gusto as any mother-in-law portrayed on the tackiest TV-serial today.

What were her good deeds?  There was one, and it was an enormously large one, of paramount significance for the country and our subcontinent as a whole: her statesmanship before, during and to some extent after the war that created Bangladesh.  My father has preserved a classic photograph over the years of Indira’s finest period as an international stateswoman, when she visited Paris and other foreign capitals including Washington in the autumn of 1971.

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She tried to prevent the Yahya Khan/Tikka Khan  genocide in Bangladesh when many  Bangladeshis came to be sacrificed at the altar of the Nixon-Kissinger visits to Mao and Zhou.  She made a major diplomatic effort in world capitals to avert war with West Pakistan over its atrocities in East Pakistan. But war could not be averted, and within a few weeks, in December 1971, Bangladesh was born.

“Indira Gandhi’s one and paramount good deed as India’s leader and indeed as a world leader of her time was to have fought a war that was so rare in international law for having been unambiguously just. And she fought it flawlessly. The cause had been thrust upon her by an evil enemy’s behaviour against his own people, an enemy supported by the world’s strongest military power with pretensions to global leadership. Victims of the enemy’s wickedness were scores of millions of utterly defenceless, penniless human beings. Indira Gandhi did everything right. She practised patient but firm diplomacy on the world’s stage to avert war if it was at all possible to do. She chose her military generals well and took their professional judgment seriously as to when to go to war and how to win it. Finally, in victory she was magnanimous to the enemy that had been defeated. Children’s history-books in India should remember her as the stateswoman who freed a fraternal nation from tyranny, at great expense to our own people. As a war-leader, Indira Gandhi displayed extraordinary bravery, courage and good sense.” (From my review article of Inder Malhotra’s Indira Gandhi, first published in The Statesman May 7 2006.)

“She had indeed fought that rarest of things in international law: the just war. Supported by the world’s strongest military, an evil enemy had made victims of his own people. Indira tried patiently on the international stage to avert war, but also chose her military generals well and took their professional judgment seriously as to when to fight if it was inevitable and how to win. Finally she was magnanimous (to a fault) towards the enemy ~ who was not some stranger to us but our own estranged brother and cousin.  It seemed to be her and independent India’s finest hour. A fevered nation was thus ready to forgive and forget her catastrophic misdeeds until that time….” (From  “Unhealthy Delhi” first published in The Statesman June 11 2007).

What did Indira die for?  I have said it was “blowback” from domestic and/or international politics, similar to what happened to Rajiv Gandhi and Benazir Bhutto in later years.

“Indira Gandhi died in “blowback” from the unrest she and her younger son and others in their party had opportunistically fomented among Sikh fundamentalists and sectarians since the late 1970s.  Rajiv Gandhi died in “blowback” from an erroneous imperialistic foreign policy that he, as Prime Minister, had been induced to make by jingoistic Indian diplomats, a move that got India’s military needlessly involved in the then-nascent Sri Lankan civil war.  Benazir Bhutto similarly may be seen to have died in “blowback” from her own political activity as prime minister and opposition leader since the late 1980s, including her own encouragement of Muslim fundamentalist forces.  Certainly in all three cases, as in all assassinations, there were lapses of security too and imprudent political judgments made that contributed to the tragic outcomes.” From “An Indian Reply to President Zardari”.

And then there was Rajiv.  He did not know me except in his last eight months. It has now emerged that Dr Manmohan Singh’s first bypass operation was in 1990-1991, coinciding precisely with the time I gave Rajiv the results of the perestroika-for-India project that I had led at the University of Hawaii since 1986, an encounter that sparked the 1991 economic reform as has been told elsewhere. Dr Singh was simply not in that loop, nor has he himself ever claimed to have been in it — regardless of what innumerable flatterers, sycophants and other straightforwardly mendacious characters in Delhi’s high power circles have been making out over the years since.  Facts are rather stubborn things.

As a 35-year old newcomer to Delhi and a complete layman on security issues, I did what little I knew  how to try to reduce the vulnerability that I felt  Rajiv  faced from unknown lists of assassins.

“That night KR dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. KR asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.  This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the V. P. Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization…..  the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi. Eleven years later, on 25 May 2002, press reports said “P. V. Narasimha Rao and Manmohan Singh lost their place in Congress history as architects of economic reforms as the Congress High command sponsored an amendment to a resolution that had laid credit at the duo’s door. The motion was moved by…. Digvijay Singh asserting that the reforms were a brainchild of the late Rajiv Gandhi and that the Rao-Singh combine had simply nudged the process forward.” Rajiv’s years in Government, like those of Indira Gandhi, were in fact marked by profligacy and the resource cost of poor macroeconomic policy since bank-nationalisation may be as high as Rs. 125 trillion measured in 1994 rupees. Certainly though it was Rajiv Gandhi as Leader of the Opposition in his last months who was the principal architect of the economic reform that came to begin after his passing.”

(I have had to say that I do not think the policies pursued by Dr Singh thus far have been consistent with the direction I believe Rajiv,  in a second term as PM, would have wished to take. See, for example, “India’s Macroeconomics”, “Fallacious Finance”, “Against Quackery”, “Mistaken Macroeconomics”, and other articles listed and linked at “Memo to Dr Kaushik Basu”.  See also https://independentindian.com/2006/05/21/the-politics-of-dr-singh/ https://independentindian.com/2008/04/25/assessing-manmohan-the-doctor-of-deficit-finance-should-realise-the-currency-is-at-stake/  https://independentindian.com/2013/08/23/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-encounter-with-rajiv-gandhi-just-as-siddhartha-shan/)

The treatment of Indira or Rajiv or Sanjay or their family successors as royalty of any kind whatsoever in India was, is, and remains absurd, reflecting stunted growth of Indian democracy.  I remember well the obsequiousness I witnessed on the part of old men in the presence of Rajiv Gandhi.

Tribal and mansabdari political cultures still dominate Northern and Western regions of the Indian subcontinent (descending from the Sikhs, Muslims, Rajputs, Mahrattas etc).

Nehru in his younger days was an exemplary democrat, and he had an outstanding democratically-minded young friend in Sheikh Mohammad Abdullah.

abdullahnehru1947

But Nehru and Abdullah as Westernized political liberals were exceptions  in the autocratic/monarchical political cultures of north India (and Pakistan) which continue today and stunt the growth of any democratic mindset.

What we may urgently need is some French  Liberté, égalité, fraternité ! to create a simple ordinary citoyen universally in the country and the subcontinent as a whole!  May we please import a Marquis de Lafayette?

Bengal and parts of Dravidian India have long lost fondness for monarchy and autocracy —  Western political liberalism began to reach  Kolkata  almost two centuries ago after all (see e.g. Tapan Raychaudhuri’s  fine study Europe Reconsidered). Both Nepal and Pakistan have been undergoing radical transformation towards democracy in recent  months, as Bengali Pakistanis had done 40 years earlier under Sheikh Mujib.  I said last year and say again that there may be a dangerous  intellectual vacuum around the throne of Delhi.

Subroto Roy

American Voices: A Brief Popular History of the United States in 20 You-Tube Music Videos

Someone once wondered if you can play chess without the Queen;  I wonder,  can a poem be written without words?

Certainly no country other than the United States might have its modern history sought to be told of  in a  medley such as this.

SR

An Open Letter to Professor Amartya Sen about Singur etc (2007)

A letter to Prof. Sen (2007)

First published in The Statesman 31 July 2007, Editorial Page Special Article

Professor Amartya Sen, Harvard University

Dear Professor Sen,

Everyone will be delighted that someone of your worldwide stature has joined the debate on Singur and Nandigram; The Telegraph deserves congratulations for having made it possible on July 23.

I was sorry to find though that you may have missed the wood for the trees and also some of the trees themselves. Perhaps you have relied on Government statements for the facts. But the Government party in West Bengal represents official Indian communism and has been in power for 30 years at a stretch. It may be unwise to take at face-value what they say about their own deeds on this very grave issue! Power corrupts and absolute power corrupts absolutely, and there are many candid communists who privately recognise this dismal truth about themselves. To say this is not to be praising those whom you call the “Opposition” ~ after all, Bengal’s politics has seen emasculation of the Congress as an opposition because the Congress and communists are allies in Delhi. It is the Government party that must reform itself from within sua sponte for the good of everyone in the State.

The comparisons and mentions of history you have made seem to me surprising. Bengal’s economy now or in the past has little or nothing similar to the economy of Northern England or the whole of England or Britain itself, and certainly Indian agriculture has little to do with agriculture in the new lands of Australia or North America. British economic history was marked by rapid technological innovations in manufacturing and rapid development of social and political institutions in context of being a major naval, maritime and mercantile power for centuries. Britain’s geography and history hardly ever permitted it to be an agricultural country of any importance whereas Bengal, to the contrary, has been among the most agriculturally fertile and hence densely populated regions of the world for millennia.

Om Prakash’s brilliant pioneering book The Dutch East India Company and the Economy of Bengal 1630-1720 (Princeton 1985) records all this clearly. He reports the French traveller François Bernier saying in the 1660s “Bengal abounds with every necessary of life”, and a century before him the Italian traveller Verthema saying Bengal “abounds more in grain, flesh of every kind, in great quantity of sugar, also of ginger, and of great abundance of cotton, than any country in the world”. Om Prakash says “The premier industry in the region was the textile industry comprising manufacture from cotton, silk and mixed yarns”. Bengal’s major exports were foodstuffs, textiles, raw silk, opium, sugar and saltpetre; imports notably included metals (as Montesquieu had said would always be the case).

Bengal did, as you say, have industries at the time the Europeans came but you have failed to mention these were mostly “agro-based” and, if anything, a clear indicator of our agricultural fecundity and comparative advantage. If “deindustrialization” occurred in 19th Century India, that had nothing to do with the “deindustrialization” in West Bengal from the 1960s onwards due to the influence of official communism.

You remind us Fa Hiaen left from Tamralipta which is modern day Tamluk, though he went not to China but to Ceylon. You suggest that because he did so Tamluk effectively “was greater Calcutta”. I cannot see how this can be said of the 5th Century AD when no notion of Calcutta existed. Besides, modern Tamluk at 22º18’N, 87º56’E is more than 50 miles inland from the ancient port due to land-making that has occurred at the mouth of the Hooghly. I am afraid the relevance of the mention of Fa Hiaen to today’s Singur and Nandigram has thus escaped me.

You say “In countries like Australia, the US or Canada where agriculture has prospered, only a very tiny population is involved in agriculture. Most people move out to industry. Industry has to be convenient, has to be absorbing”. Last January, a national daily published a similar view: “For India to become a developed country, the area under agriculture has to shrink, urban and industrial land development has to take place, and about 100 million workers have to move out from agriculture into industry and services. This is the only way forward for bringing prosperity to the rural population”.

Rice is indeed grown in Arkansas or Texas as it is in Bengal but there is a world of difference between the technological and geographical situation here and that in the vast, sparsely populated New World areas with mechanized farming! Like shoe-making or a hundred other crafts, agriculture can be capital-intensive or labour-intensive ~ ours is relatively labour-intensive, theirs is relatively capital-intensive. Our economy is relatively labour-abundant and capital-scarce; their economies are relatively labour-scarce and capital-abundant (and also land-abundant). Indeed, if anything, the apt comparison is with China, and you doubtless know of the horror stories and civil war conditions erupting across China in recent years as the Communist Party and their businessman friends forcibly take over the land of peasants and agricultural workers, e.g. in Dongzhou.

All plans of long-distance social engineering to “move out” 40 per cent of India’s population (at 4 persons per “worker”) from the rural hinterlands must also face FA Hayek’s fundamental question in The Road to Serfdom: “Who plans whom, who directs whom, who assigns to other people their station in life, and who is to have his due allotted by others?”

Your late Harvard colleague, Robert Nozick, opened his brilliant 1974 book Anarchy, State and Utopia saying: “Individuals have rights, and there are things no person or group may do to them (without violating their rights)”. You have rightly deplored the violence seen at Singur and Nandigram. But you will agree it is a gross error to equate violence perpetrated by the Government which is supposed to be protecting all people regardless of political affiliation, and the self-defence of poor unorganised peasants seeking to protect their meagre lands and livelihoods from state-sponsored pogroms. Kitchen utensils, pitchforks or rural implements and flintlock guns can hardly match the organised firepower controlled by a modern Government.

Fortunately, India is not China and the press, media and civil institutions are not totally in the hands of the ruling party alone. In China, no amount of hue and cry among the peasants could save them from the power of organised big business and the Communist Party. In India, a handful of brave women have managed to single-handedly organise mass movements of protest which the press and media have then broadcast that has shocked the whole nation to its senses.

You rightly say the land pricing process has been faulty. Irrelevant historical prices have been averaged when the sum of discounted expected future values in an inflationary economy should have been used. Matters are even worse. “The fear of famine can itself cause famine. The people of Bengal are afraid of a famine. It was repeatedly charged that the famine (of 1943) was man-made.” That is what T. W. Schultz said in 1946 in the India Famine Emergency Committee led by Pearl Buck, concerned that the 1943 Bengal famine should not be repeated following dislocations after World War II. Of course since that time our agriculture has undergone a Green Revolution, at least in wheat if not in rice, and a White Revolution in milk and many other agricultural products. But catastrophic collapses in agricultural incentives may still occur as functioning farmland comes to be taken by government and industry from India’s peasantry using force, fraud or even means nominally sanctioned by law. If new famines come to be provoked because farmers’ incentives collapse, let future historians know where responsibility lay.

West Bengal’s real economic problems have to do with its dismal macroeconomic and fiscal position which is what Government economists should be addressing candidly. As for land, the Government’s first task remains improving grossly inadequate systems of land-description and definition, as well as the implementation and recording of property rights.

With my most respectful personal regards, I remain

Yours ever

 

Suby

American Turmoil: A Vice-Presidential Coup — And Now a Grassroots CounterRevolution?

American Turmoil: A Vice-Presidential Coup – And Now a Grassroots CounterRevolution?

First published in

The Statesman, Editorial Page, Special Article June 18 2007

by

Subroto Roy

The Cold War was lost by Soviet and East European communism, and the laurelled victor was the USA along with its loyal allies. Russia and East Europe then transformed themselves. Once there had been Dubcek in the Prague Spring and Sakharov in his apartment. Then there was Lech Walesa the electrician, who, on 14 August 1980, climbed over a fence and led an 18-day strike from which arose the first independent trade union ~ Walesa said “the very basic things: he stood on the shipyard gate and called things by their real names”. Then came Gorbachov and Yeltsin. The despised Berlin Wall was smashed into small saleable bits in November 1989 and people just walked across. That was the end of communism. An unknown student stood down the tanks in Tiananmen Square — though a dozen years earlier the death-watch of Chinese communism had begun with Wei Jingsheng’s “Democracy Wall”. Communist apparatchiks everywhere (except New Delhi and Kolkata) started to unlearn communism; communist societies and economies began to be placed on a road to health and taken off the road to misery.

Winner’s curse

What happened to the victors? Germany quietly unified. Italy’s politics stabilised a little. France achieved its wish of being undominated in Europe. Britain, already forlorn from loss of empire, was left trying to arbitrage between Europe and America (though there too there was new competition from the Irish Republic).

Some political learning, reconciliation and growth took place in Europe but there was none in America ~ the biggest victor of all, the one country but for whose efforts all of Europe might have become and remained communist. Instead, the USA chose to gorge itself on self-accolades, bloated, then started to choke on its own hubris.

The result is that as the 2008 Presidential election campaign gets underway, and the Second Iraq War is at its peak, America’s polity at its highest level may be in turmoil of a sort not seen since the student revolts at the peak of the Vietnam War.

Gerald Ford and Jimmy Carter were an interregnum after the Vietnam and Watergate traumas. It was during the Reagan “restoration” that communism collapsed and Osama bin Laden was befriended. Carter’s military mission to rescue American hostages in Iran notoriously failed; Reagan restored American pride by sending in the US Army’s crack Rangers to defeat an almost non-existent enemy ~ in Grenada. It was the first successful American military action in a long time. But there was also failure in Beirut where Reagan withdrew after 241 US soldiers were killed by a suicide-bomber.

George Bush Sr glided into the Presidency in Reagan’s wake. He felt sure of being re-elected when Saddam’s 1990 invasion of Kuwait gave him a war with which to seal his chances. For his part, Saddam had primly and properly called in the US Ambassador to Iraq, the top career diplomat April Glaspie, and told her he had accounts to settle with Kuwait over the Iran-Iraq war. Glaspie, under instructions of the Bush-Baker State Department, famously told him the USA had no opinion on inter-Arab conflicts. Saddam took this to be a green signal, or at least not a red signal, from America and went ahead with his attack on Kuwait.

The American President worked himself into an angry indignation ~ and soon there were large numbers of American troops in Saudi Arabia, soon Iraq was forced to retreat with thousands slaughtered in a turkey-shoot from the air, soon there would be severe sanctions and bombings by the USA and UK. Bush was sure he would be re-elected in 1992, and indeed he led all the polls ~ except an oddball surprise Ross Perot pulled away his votes, and caused the third man running, a young governor of a minor State, to push through to victory instead. Bill Clinton was as surprised as anyone that he was President of the USA in 1992. Dissimulation and mendacity reached new heights during his time yet he came to be re-elected in 1996.

Osama bin Laden started to rant against his former ally. Remove your troops from our holy land, he said. Clinton and Madelaine (“It’s worth it”) Albright continued to bomb Saddam instead ~ who after all had launched a few backward Scuds at Israel during the First Iraq War of 1991. Somehow or other, Osama and/or someone else then designed the destruction of Manhattan’s tallest buildings on September 11 2001; it remains unclear what projectile hit the Pentagon or exactly what happened over a field in Pennsylvania the same morning. The mass murder of thousands remains unsolved.

America, under Bush’s elder son, attacked Osama’s hosts in Afghanistan (but not so as to upset their common Pakistani friends too much), then turned their really motivated firepower against their old foe, Saddam Hussein. Iraq by the summer of 2003 was destroyed as a nation-state, and today in 2007 under American occupation has been almost wholly destroyed as a culture and a society. The new US Embassy in Baghdad is as large as the Vatican. Fourteen permanent American military bases have been built. The US Government has spoken of moving troops from Saudi Arabia to Iraq, and of being in Iraq for ever on the Korean pattern.

United States history and political culture had never seen a Vice President as being anything more than an invisible silent shadow of the President of the land. That has changed drastically. Indeed in recent months there has been much serious Washington talk of the incumbent Vice President having unlawfully usurped political power from the President himself. Cheney’s people throughout the Bush Administration have been in almost open battle against the official foreign and diplomatic policy of Condoleeza Rice and the professional military represented by the Joint Chiefs of Staff. Before the attack on Iraq they had overturned the CIA’s official intelligence assessments. There is a general perception that Cheney’s people have been far shrewder and more experienced of the Washington Beltway than Bush’s.

Attack on Iran?

Now the central issue has been whether to attack Iran, and if so how and when. Cheney’s people and their think-tank friends are determined America must do so, perhaps with a new Netanyahu Government in Israel early in 2008 or sooner. The President was apparently warned by his generals in December 2006 that such an attack would gravely endanger the supply lines of US troops who would face a Shia insurrection in Iraq; that may have been the sole reason no attack occurred, and also one reason for the present infantry “surge”. Three aircraft carrier battle groups in the Persian Gulf indicate a potential strike, and that level of force has been coming and going from there for months.

The main Democratic Presidential candidates, especially Mrs Clinton, have said nuclear weapons are “not off the table” in reference to striking Iran without provocation. Nine out of ten of the Republican Presidential candidates agree. The exception is Ron Paul who has recognised the United States was not intended by its founders to be launching aggressive nuclear war against non-nuclear countries in the 21st Century. The Reagan-era economist Paul Craig Roberts has said such war will leave America more reviled than Hitler’s Third Reich.

A grassroots democratic counter-revolution could be starting to overturn the elitist coup d’etat that may have occurred in Washington. “People power” beat organised State power in many times and places. Can it win here? Or could there be tanks in Dupont Circle forty years after the tanks in Wenceslas Square?

On Land-Grabbing

ON LAND-GRABBING

Dr Singh’s India, Buddhadeb’s Bengal, Modi’s Gujarat have notorious US, Soviet and Chinese examples to follow ~ distracting from the country’s real economic problems

By SUBROTO ROY

First published in The Sunday Statesman, Editorial Page Special Article, Jan 14 2007

AT a business meet on 12 January 2005, Dr Manmohan Singh showered fulsome praise on Buddhadeb Bhattacharjee as “dynamic”, “the Nation’s Best Chief Minister”, whose “wit and wisdom”, “qualities of head and heart”, “courage of conviction and passionate commitment to the cause of the working people of India” he admired, saying “with Buddhadeb Babu at the helm of affairs it appears Bengal is once again forging ahead… If today there is a meeting of minds between Delhi and Kolkata, it is because the ideas that I and Buddhadebji represent have captured the minds of the people of India. This is the idea of growth with equity and social justice, the idea that economic liberalization and modernization have to be mindful of the needs of the poor and the marginalized.”

With such support of a Congress Prime Minister (as well as proximity to Pranab Mukherjee), Mr Bhattacharjee could hardly have feared the local Congress and Trinamul would pose any threat in the 2006 Assembly Elections despite having more potential voters between them than the CPI-M.

Dr Singh returned to the “needs of the poor and the marginalized” at another business meet on 8 January 2007 promising to “unveil a new Rehabilitation Policy in three months to increase the pace of industrialisation” which would be “more progressive, humane and conducive to the long-term welfare of all stakeholders”, while his businessman host pointedly stated about Singur “land for industry must be made available to move the Indian manufacturing sector ahead”.

The “meeting of minds between Delhi and Kolkata” seems to be that agriculture allegedly has become a relatively backward slow-growing sector deserving to yield in the purported larger national interest to industry and services: what the PM means by “long-term welfare of all stakeholders” is the same as the new CPI-M party-line that the sons of farmers should not remain farmers (but become automobile technicians or IT workers or restaurant waiters instead).

It is a political viewpoint coinciding with interests of organised capital and industrial labour in India today, as represented by business lobbies like CII, FICCI and Assocham on one hand, and unions like CITU and INTUC on the other. Business Standard succinctly (and ominously) advocated this point of view in its lead editorial of 9 January as follows: “it has to be recognised that the world over capitalism has progressed only with the landed becoming landless and getting absorbed in the industrial/service sector labour force ~ indeed it is obvious that if people don’t get off the land, their incomes will rise only slowly”.

Land is the first and ultimate means of production, and the attack of the powerful on land-holdings or land-rights of the unorganised or powerless has been a worldwide phenomenon ~ across both capitalism and communism.

In the mid-19th Century, white North America decimated hundreds of thousands of natives in the most gargantuan land-grab of history. Defeated, Chief Red Cloud of the Sioux spoke in 1868 for the Apache, Navajo, Comanche, Cheyenne, Iroquois and hundreds of other tribes: “They made us many promises, more than I can remember, but they never kept any except one: they promised to take our land, and they took it.”

Half a century later, while the collapse of grain prices contributed to the Great Depression and pauperisation of thousands of small farmers in capitalist America in the same lands that had been taken from the native tribes, Stalin’s Russia embarked on the most infamous state-sponsored land-grab in modern history: “The mass collectivisation of Soviet agriculture (was) probably the most warlike operation ever conducted by a state against its own citizens…. Hundreds of thousands and finally millions of peasants… were deported… desperate revolts in the villages were bloodily suppressed by the army and police, and the country sank into chaos, starvation and misery… The object of destroying the peasants’ independence…was to create a population of slaves, the benefit of whose labour would accrue to industry. The immediate effect was to reduce Soviet agriculture to a state of decline from which it has not yet recovered… The destruction of the Soviet peasantry, who formed three quarters of the population, was not only an economic but a moral disaster for the entire country. Tens of millions were driven into semi-servitude, and millions more were employed as executants…” (Kolakowski, Main Currents of Marxism).

Why did Stalin destroy the peasants? Lenin’s wishful “alliance between the proletariat and the peasantry” in reality could lead only to the peasants being pauperised into proletarians. At least five million peasants died and (Stalin told Churchill at Yalta) another ten million in the resultant famine of 1932-1933. “Certainly it involved a struggle ~ but chiefly one between urban Communists and villagers… it enabled the regime to obtain much of the capital desired for industrialization from the defeated village… it was the decisive step in the building of Soviet totalitarianism, for it imposed on the majority of the people a subjection which only force could maintain” (Treadgold, 20th Century Russia).

Mr Bhattacharjee’s CPI-M is fond of extolling Chinese communism, and the current New Delhi establishment have made Beijing and Shanghai holiday destinations of choice. Dr Singh’s Government has been eager to create hundreds of “Special Economic Zones” run by organised capital and unionised labour, and economically privileged by the State. In fact, the Singur and Nandigram experiences of police sealing off villages where protests occur are modelled on creation of “Special Economic Zones” in China in recent years.

For example, Chinese police on 6 December 2005 cracked down on farmers and fishermen in the seaside village of Dongzhou, 125 miles North East of Hong Kong. Thousands of Dongzhou villagers clashed with troops and armed police protesting confiscation of their lands and corruption among officials. The police immediately sealed off the village and arrested protesters. China’s Public Security Ministry admitted the number of riots over land had risen sharply, reaching more than seventy thousand across China in 2004; police usually suppressed peasant riots without resort to firing but in Dongzhou, police firing killed 20 protesters. Such is the reality of the “emergence” of China, a totalitarian police-state since the Communist takeover in 1949, from its period of mad tyranny until Mao’s death in 1976, followed by its ideological confusion ever since.

Modern India’s political economy today remains in the tight grip of metropolitan “Big Business” and “Big Labour”. Ordinary anonymous individual citizens ~ whether housewife, consumer, student, peasant, non-union worker or small businessman ~ have no real voice or representation in Indian politics. We have no normal conservative, liberal or social democratic party in this country, as found in West European democracies where the era of land-grabbing has long-ceased. If our polity had been normal, it would have known that economic development does not require business or government to pauperise the peasantry but instead to define and secure individual property rights and the Rule of Law, and establish proper conditions for the market economy. The Congress and BJP in Delhi and CPI-M in Kolkata would not have been able to distract attention from their macroeconomic misdeeds over the decades ~ indicated, for example, by increasing interest-expenditure paid annually on Government debt as a fraction of tax revenues (see Table). This macroeconomic rot originated with the Indira Gandhi-PN Haksar capriciousness and mismanagement, which coincided with the start of Dr Singh’s career as India’s best known economic bureaucrat.

Hypocrisy of the CPI-M

Hypocrisy of the CPI-M

Political Collapse In Bengal: A Mid-Term Election/Referendum Is Necessary

First published in The Statesman, Editorial Page Special Article, January 9 2007,

By Subroto Roy

For the 1991 Assembly elections, I happened to draft the West Bengal Congress’s election manifesto although I was not then or ever a member of that or any other party. There was no Trinamul but its future leader had made her jibe of there being watermelons who were red inside and green outside, aptly in case of a few senior leaders. The manifesto quoted George Orwell’s denunciation of communist ruling classes, and was so hard-hitting that the CPI-M’s Sailen Dasgupta came out with a statement he had never read a Congress manifesto that had been so harsh on them; privately, I took that to be a compliment though the Congress of course lost the election. There is no one in Bengal who does not want to see Bengal prosper, and the most candid vigorous political conversation is necessary to discover what in fact is true and what ought or not to be done.

Democratic norms

The functioning of the Basu-Bhattacharjee CPI-M is quite utterly amazing. It deserves to be called such because of the seamless transfer of power that occurred between the two men in November 2000. The Chief Minister in a parliamentary democracy is supposed to have the confidence of the House, yet when Jyoti Basu stopped being CM and anointed Buddhadeb Bhattacharjee to succeed him, not even a perfunctory vote of confidence was asked for in the House ~ a fact I brought to the attention of the-then editor of The Statesman who agreed with me it signified the CPI-M’s contempt for the parliamentary institution they have been ruling over for decades. By contrast, there is already talk in Britain of an early general election as soon as Gordon Brown takes over from Tony Blair.

It is the same contempt for democratic parliamentary norms that Mr Bhattacharjee and company reveal today in pushing through their diabolical plan to acquire farmers’ lands on behalf of their businessmen friends.

All of 37% of those voting in the 2006 Assembly Elections voted for the CPI-M. By contrast, 41.2% voted for Trinamul and Congress together. Add also the 11.4% of those who voted for the Forward Bloc, RSP and CPI all of whom though part of the Left Front have been opposing the CPI-M on this cardinal issue. That constitutes prima facie evidence that a majority of 52.6% vs. 37% of voters may oppose the CPI-M’s present course of action. Mr Bhattacharjee heads a Government that is supposed to act not merely in the interest of members or groups of his own party or those who have flattered or financed it, but everyone in West Bengal including those who voted against the CPI-M as well as those who did not vote at all.

Gerhard Schröder dissolved the German Bundestag in 2005 though his own party held a majority there. He did so merely because his party lost a provincial election and he felt that indicated loss of confidence in it at the federal level also. Such is how genuine modern democracies work. In India to the contrary, we have had notorious misuse of the Constitution when State Governments were dissolved merely because they were ruled by parties opposed to that which had won a Union-level General Election. Even so, India remains a Parliamentary democracy at Union and State levels, and the Government of the day may advise the Head of State to dissolve the House and call for new elections to be held. It may do so even when there is no legal necessity to do so, i.e., even when it is secure with a majority of seats. It may do so because a political necessity has arisen for doing so.

If Mr Bhattacharjee is a genuine democrat, as he wishes to convey an impression of being, he should advise the Governor to dissolve the Assembly because the CPI-M wishes to go to the people to seek a mandate for its plans for the State’s industrialisation and forced acquisition of farm lands towards that end. The Trinamul, Congress, SUCI, Maoists and others including perhaps the CPI, FB, RSP and others will state their opposition, while he, Mr Nirupam Sen and their party will be able to articulate for West Bengal’s voters exactly what they propose to do and why. The CPI-M is adamant its cause is right while the Opposition have been agitating in the streets for months, and miniature civil war conditions now prevail in parts of rural Bengal; worse may be yet to come. There is only one way in a supposedly democratic society like ours to discover what should be done, and that is to dissolve the Assembly and call an election. Both sides will have a chance to articulate their positions to the public, and a vote will be held. There the matter would end. It is the one constructive way forward for the State, and indeed for the nation as a whole. (Alternatively, the Governor could be advised to request the Election Commission to administer India’s first referendum on a single agreed-upon question like “The West Bengal Government’s industrialisation and land-acquisition plan deserves citizens’ support: Yes/No”.)

If an Assembly election comes to be called and the CPI-M falls below a pre-set target of the vote-share, say 33%, or the Left Front below, say, 45%, then Mr Bhattacharjee, even if he commands a majority of seats again, will know he has no mandate and that he must stop and reconsider what he is doing. As I have said in these columns, West Bengal’s main economic problems are financial, having to do with Rs. 92 billion (Rs 9,200 crore) being paid as annual interest on the State Public Debt in 2004, and this may reach Rs 200 billion shortly. Economic development of the State has precious little to do with private businessmen making small cars or motorcycles or putting up buildings for information technology institutes, as Mr Bhattacharjee and his Government have deluded themselves into believing.

CPI-M 2003 statement
Besides its lack of democratic mandate, what surprises most about the modern CPI-M is its sheer hypocrisy. This is a party whose “Central Committee” in June 2003 in Kolkata condemned “non-Left State Governments” for allegedly “giving away thousands of hectares of land either on sale or on lease at throw-away prices to multinational companies and domestic monopolists”, and the Union Government for allegedly issuing “a circular calling for forcible eviction of lakhs of adivasis from the land”. The Basu-Bhattacharjee CPI-M is now clearly hoist with its own petard. Tilak said that what Bengal thinks today, India will think tomorrow. It was not for nothing that he said it. If the CPI-M refers the land-acquisition question to the people in a free and fair election or referendum today, it will set a positive precedent for other States and parties in the country. If instead it pushes forward its current diabolical plans, the example it will have set will be one of initiating a class war in reverse, where the poor shall become poorer and the rich richer. India’s poorest consist of those rural inhabitants without land, and Government would have deliberately contributed to their numbers swelling.

(Author’s Note March 2007: The original article in its first paragraph referred mistakenly to Promode Dasgupta when Sailen Dasgupta had been meant, an error corrected in the next day’s paper.)

Land, Liberty & Value

LAND, LIBERTY & VALUE

Government must act in good faith treating all citizens equally ~ not favouring organised business lobbies and organised labour over an unorganised peasantry

By SUBROTO ROY
First published in The Sunday Statesman Editorial Page Special Article, December 31 2006

EVERY farmer knows that two adjacent plots of land which look identical to the outsider may be very different in character, as different as two siblings of the same family. Adjacent plots may differ in access to groundwater and sunlight, in minerals and salts, in soil, fertilisers, parasites, weeds or a dozen other agronomic factors. Most of all, they will differ in the quality and ingenuity of thought and labour that has gone into their care and cultivation over the years, perhaps over generations.

John Locke said: “Whatsoever that (a man) removes out of the state that Nature hath provided and left it in, he hath mixed his labour with and joined to it something that is his own, and thereby makes it his property… For this labour being the unquestionable property of the labourer, no one but he can have a right to what that once joined to, at least where there is enough and as good left in common for others” (Second Treatise of Government). Plots of land are as specific as the families that have “mixed” their labour with them. Locke wrote of labour being something “unquestionably” the labourer’s own property; in the same libertarian vein, Robert Nozick opened Anarchy, State and Utopia saying “Individuals have rights, and there are things no person or group may do to them (without violating their rights)”.

But as we recognise the universal sanctity of the individual person and his/her private property, we have to start qualifying it. If you purchase a field, forest or estate through which runs a pathway traditionally used by the public to get from one side to the other then even as the new owner you may not have a right to forbid the public’s use of the pathway. By extension, it is clear the State, the community of which you are a citizen, may approach you and demand there should be and will be a public road or thoroughfare through your property in the common interest. Such is the sovereign’s right of “eminent domain” recognised throughout the world, not only in times of war or natural disaster but also in normal times where private property may be taken for public use. The individual’s right to free use of his/her property is circumscribed as a result.

What may be certainly expected though in all matters is that the State will act in good faith, i.e., that it has conducted proper technical surveys and cost-benefit analyses as well as transparent public hearings, and has honestly decided that the road must be constructed using this route and no other. The doctrine of eminent domain implies that while the right to private property may be basic, it is not absolute, as indeed no right is, not even the right to one’s own life. In India, one key difference between the landmark Golaknath (AIR 1967 SC 1643) and Kesavananda Bharati (AIR 1973 SC 1461) rulings had to do precisely with the former recognising the right to property being fundamental as in our original 1950 Constitution, while the latter consented to the Indira Parliament’s denial of this.

When private property is taken, fair compensation must be paid. For example, the American Constitution says “no private property may be taken for public use without just compensation”. What is just compensation? Typically it would be the “fair market value” — but that must be properly adjudged accounting for the best future use of the land, not merely the historical or traditional past use of the land.

Consider, in a mature urban real-estate market, a plot made vacant because a warehouse located on it has accidentally burned down. What is the value of the plot now? Another warehouse could be built, but other bids could come in too for construction of offices or residential flats or a multi-storey garage. The plot’s value would differ depending on which use it is ultimately put to. And this value would be ascertained by calculating the expected cash flows into the future from each of these possibilities, discounted appropriately to account for the fact the future is less valuable than the present, with the highest value alternative being chosen. That is how a mature private real-estate market works in theory, though in practice there would be zoning and environmental restrictions to account for the traditional nature of the neighbourhood as well as possible pollution by effluent waste etc.

In India, Government departments and ministries have inherited prime urban real estate from British times. Amidst the highest value real estate in Kolkata, Bangalore, Delhi etc. will be found a military camp or flats built for military personnel, having nothing whatsoever to do with furtherance of the nation’s defences today. The appalling state of government accounting and audit of our public property and institutions includes the fact that neither the Union nor State Governments and municipalities have the faintest idea of assets, including real estate, that they own. These public assets are frequently open to abuse by managerially uncontrolled government employees.

Fallacies even more curious seem to be currently at work in Indian policy-making, whether by this or that political party. The “eminent domain” doctrine requires a public purpose to exist for acquisition of private property by the State: e.g. construction of a road, bridge, dam, airport or some other traditional public good which is going to be used by the public. In India as elsewhere, “land reform” did involve taking an absentee landlord A’s land and distributing it to B, C, D and E who worked as peasants on it. But nowhere else outside formerly communist China has land been forcibly taken from peasants B, C, D and E and handed over to this or that private capitalist in name of economic development (in a reverse class war)!

Eminent domain doctrine requires good faith on part of the State with respect to its citizens and that implies treating all citizens’ interests equally – not e.g. favouring an organised business lobby or organised industrial labour over the unorganised peasantry uneducated in the wiles of city people.

Also, there is no reason why Government should be interested in a particular product-mix emerging out of a given private factory (such as the so-called inflation-unadjusted “Rs one lakh car” instead of telecom equipment or garments or textiles). Dr Manmohan Singh’s statement last week that he wishes to see “employment-intensive” industries merely added to Government confusion: from Henry Ford to Japanese “lean business” today, everyone knows the direction of change of technology in the automobile industry has been towards robotics, making modern manufacturing less and less manpower-intensive! The Tatas themselves underwent a major downsizing and restructuring in the last decade, hiving off industries not considered part of their “core competence”.

Traditional agriculture of Singur’s sort represents the most labour-intensive employment-generating kind of rural economy. While such rural life may appear unsatisfying to the urban outsider, there is, as Tolstoy, Rabindranath, Gandhi and others knew, subtle happiness, contentment and tranquility there absent in alienated industrial sprawls. “Surplus” labour occurs in agriculture because of technological improvements in quality and delivery of agricultural inputs as well as new education and awareness (Theodore W. Schultz,Transforming Traditional Agriculture). It is mostly seasonal and all hands are used during the harvest when even urban migrants flock back to help. Industry did not leave Bengal in the 1960s and 1970s because of Mamata Banerjee but because of urban unrest, the culture of gheraos and lockouts, and bad regulations of the labour and capital markets associated largely with Ms Banerjee’s Left Front adversaries.

The basic fiction the Union and State Governments have made themselves believe is that their idea of an industrialisation plan is necessary for economic development. It is not. Real economic problems in West Bengal and elsewhere are financial to do with State budgets. “Debt overhang is there” is how the RBI Governor apologetically put it last week. Interest payments on the West Bengal State public debt consume larger and larger fractions of the revenue: these payments were at Rs 13 Bn in 1995 but grew to Rs. 92 Bn by 2004, and may jump to Rs 200 Bn in the next decade. The communists have been in power thirty years and no one but they are responsible. Making the State’s budget healthy would require tackling the gargantuan bureaucracy, slashing ministerial extravagance (foreign trips, VIP security) etc. It is much easier to hobnob with the rich and powerful while tear-gassing the peasants.

On a Liberal Party for India

NON-EXISTENT LIBERALS

By SUBROTO ROY

First published in The Sunday Statesman October 22 2006, Editorial Page Special Article


Communists, socialists and fascists exist in the Left, Congress and BJP-RSS ~ but there is a conservative/”classical liberal” party missing in Indian democracy today

We in India have sorely needed for many years a serious “classical liberal” or “conservative” political party. Major democratic countries used to have such parties which paid lip-service at least to “classical liberal” principles. But the 2003 attack on Iraq caused Bush/McCain-Republicans to merge with Hilary-Democrats, and Blair-Labour with Tory neocons, all united in a cause of collective mendacity, self-delusion and jingoism over the so-called “war on terror”. The “classical liberal” or “libertarian” elements among the Republicans and Tories find themselves isolated today, just as do pacifist communitarian elements among the Democrats and Labour. There are no obvious international models that a new Indian Liberal Party could look at ~ any models that exist would be very hard to find, perhaps in New Zealand or somewhere in Canada or North Eastern Europe like Estonia. There have been notable individual Indian Liberals though whom it may be still possible to look to for some insight: Gokhale, Sapru, Rajagopalachari and Masani among politicians, Shenoy among economists, as well as many jurists in years and decades gone by.

What domestic political principles would a “classical liberal” or conservative party believe in and want to implement in India today? First of all, the “Rule of Law” and an “Efficient Judiciary”. Secondly, “Family Values” and “Freedom of Religious Belief”. Thirdly, “Limited Government” and a “Responsible Citizenry”. Fourthly, “Sound Money” and “Free Competitive Markets”. Fifthly, “Compassion” and a “Safety Net”. Sixthly, “Education and Health for All”. Seventhly, “Science, not Superstition”. There may be many more items but this in itself would be quite a full agenda for a new Liberal Party to define for India’s electorate of more than a half billion voters, and then win enough of a Parliamentary majority to govern with at the Union-level, besides our more than two dozen States.

The practical policies entailed by these sorts of political slogans would involve first and foremost cleaning up the budgets and accounts of every single governmental entity in the country, namely, the Union, every State, every district and municipality, every publicly funded entity or organisation. Secondly, improving public decision-making capacity so that once budgets and accounts recover from having been gravely sick for decades, there are functioning institutions for their proper future management. Thirdly, resolving J&K in the most lawful and just manner as well as military problems with Pakistan in as practical and efficacious a way as possible today. This is necessary if military budgets are ever going to be drawn down to peacetime levels from levels they have been at ever since the Second World War. How to resolve J&K justly and lawfully has been described in these pages before (The Statesman, “Solving Kashmir” 1-3 December 2005, “Law, Justice and J&K”, 2-3 July 2006).

Cleaning up public budgets and accounts would pari passu stop corruption in its tracks, as well as release resources for valuable public goods and services. A beginning may be made by, for example, tripling the resources every year for three years that are allocated to the Judiciary, School Education and Basic Health, subject to tight systems of performance-audit. Institutions for improved political and administrative decision-making are necessary throughout the country if public preferences with respect to raising and allocating common resources are to be elicited and then translated into actual delivery of public goods and services.

This means inter alia that our often dysfunctional Parliament and State Legislatures have to be inspired by political statesmen (if any such may be found to be encouraged or engendered) to do at least a little of what they have been supposed to be doing. If the Legislative Branch and the Executive it elects are to lead this country, performance-audit will have to begin with them.

The result of healthy public budgets and accounts, and an economy with functioning public goods and services, would be a macroeconomic condition for the paper-rupee to once more become a money that is as good as gold, namely, a convertible world currency again after having suffered sixty years of abuse via endless deficit finance at the hands of first the British and then numerous Governments of free India that have followed.

It may be noticed the domestic aspects of such an agenda oppose almost everything the present Sonia-Manmohan Congress and Jyoti Basu “Left” stand for — whose “politically correct” thoughts and deeds have ruined India’s money and public budgets, bloated India’s Government especially the bureaucracy and the military, starved the Judiciary and damaged the Rule of Law, and gone about overturning Family Values. While there has been endless talk from them about being “pro-poor”, the actual results of their politicization of India’s economy are available to be seen with the naked eye everywhere.

One hundred years from now if our souls returned to visit the areas known today as India, Pakistan, Bangladesh etc, we may well find 500+ million inhabitants still below the same poverty-line despite all the gaseous prime ministerial or governmental rhetoric today and projections about alleged growth-rates.

If the Congress and “Left” must oppose any real “classical liberal” or conservative agenda, we may ask if the BJP-RSS could be conceivably for it. The answer is clearly not. The BJP-RSS may pontificate much about being patriotic to the motherland and about past real or imagined glories of Indian culture and religion, but that hardly ever has translated concretely into anything besides anti-Muslim or anti-Christian rhetoric, or breeding superstitions like astrology even at supposedly top technological institutes in the country. (Why all astrology is humbug, and a pre-Copernican Western import at that, is because all horoscopes assume the Sun rotates around the Earth in a geocentric solar system; the modern West’s scientific outlook arose only after astrology had declined there thanks to Copernicus and Galileo establishing the solar system as heliocentric.)

As for a “classical liberal” economic agenda, the BJP in Government transpired to be as bad if not worse than their adversaries in fiscal and monetary profligacy, except they flattered and were flattered by the organised capital of the big business lobbies whereas their adversaries flatter and are flattered by the organised power of the big labour unions (covering a tiny privileged class among India’s massive workforce). Neither has had the slightest interest in the anonymous powerless individual Indian citizen or household. The BJP in Opposition, instead of seeking to train and educate a new modern principled conservative leadership, appear to wish to regress even further back towards their very own brand of coarse fascism. “Family Values” are why Indian school-children have become the envy of the world in their keen discipline and anxiety to learn – yet even there the BJP had nothing to say on Sonia Gandhi’s pet bill on women’s property rights, whose inevitable result will be further conflict between daughters and daughters-in-law of normal Indian families.

At the root of the malaise of our political parties may be the fact we have never had any kind of grassroots “orange” revolution. There has been also an underlying national anxiety of disintegration and disorder from which the idea of a “strong Centre” follows, which has effectively meant a Delhi bloated with power and swimming in self-delusion. The BJP and Left are prisoners of their geriatric leaderships and rather unpleasant ideologies and interest-groups, while the Congress has failed to invent or adopt any ideology besides sycophancy. Let it be remembered Sonia Gandhi had been genuinely disdainful of the idea of leading that party at Rajiv’s death; today she has allowed herself to become its necessary glue. The most salubrious thing she could do for the party (and hence for India) is to do a Michael Howard: namely, preside over a genuine leadership contest between a half-dozen ambitious people, and then withdraw with her family permanently from India’s politics, focusing instead on the legacy of her late husband. Without that happening, the Congress cannot be made a healthy political entity, and hence the other parties have no role-model to imitate. Meanwhile, a liberal political party, which necessarily would be non-geriatric and non-sycophantic, is still missing in India.

Justice & Afzal

Justice & Afzal

first published in The Sunday Statesman Editorial Page

October 14, 2006

There is a difference between law and equity (or natural justice). The power of pardon is an equitable power. Commuting a death-sentence is a partial pardon
By SUBROTO ROY

“Fiat justitia pereat mundus” ~let justice be done even if the world shall perish ~ is a maxim only Immanuel Kant among the great philosophers may have wished to maintain. Yet it serves to remind us that there exist wrong reasons for carrying out as well as wrong reasons for not carrying out the death-sentence on Afzal Guru. Wrong reasons for carrying out the death-sentence include saying that only by his death will families of the victims of the Parliament attack receive satisfaction (justice is hardly the same thing as revenge) or that only thereby can the Indian Republic show itself to be standing up to terrorism. Wrong reasons for not carrying out the death-sentence include saying Afzal’s death would be seen as unjust by many people in J&K and result in further civil or political turmoil there or elsewhere, or that more terrorism will result.

Justice should be done and be seen to be done to Afzal by the Indian Republic ~ here as elsewhere, justice is a matter between an individual and the State. The question remains open whether such justice involves his death or his imprisonment for life or even his being paroled in due course. Unlike Praveen Mahajan for example, Afzal has not committed premeditated first-degree murder or parricide. He is from an Indian State where there has existed some separatist sentiment for decades, and evidently he has been an accomplice to an act of war against India involving attempted kidnapping or mass murder. If he is an Indian national, he may have been treasonous and seditious; if he is a Pakistani national or wishes to be treated as such, he may have been some kind of spy, agent provocateur or saboteur, or an accomplice of such people. The moral question before India today has to do with what precisely is the nature and quality of justice to be dispensed in this particular case, in these particular factual circumstances as far as presently known, given all the principles, precedents, rules and laws available.

Someone may fairly wonder how or why it is possible the President of India has any discretion at all left to commute a sentence of death once the judiciary up until the Supreme Court of India has spoken. The answer has to do with the subtle distinction that is still made in common law countries like Britain, the USA and India between law and equity or “natural justice”. Britain ever since the 13th Century has had an institution known as “Lord Chancellor” in whose person came to be combined the highest judicial and executive roles (Tony Blair’s New Labour Government is due to abolish it). “Chancery” or courts of equity traditionally were parallel to courts of law, recognising that normal legal processes may cause justice to sometimes fail (especially in corrupt times) and hence require direct executive intervention. In the United States today, equity is embodied in Rule 60(b) of the Federal Rules, and federal courts are empowered to oversee all other courts including themselves for violations of natural justice.

By way of example having nothing necessarily to do with capital punishment, “solicitation of counsel, clerks or judges” is embracery curialis, recognized as extrinsic fraud and subversion of justice since Jepps 72 E R 924 (1611), “firmly established in English practice long before the foundation” of the USA, Hazel Atlas, 322 US 238 (1943). “Embracery is an offense striking at the very foundation of civil society” says Corpus Juris 20, 496. A court of equity has inherent power to investigate if a judgement has been obtained by fraud, and that is a power to unearth it effectively, since no fraud is more odious than one to subvert justice. Cases include when “by reason of something done by the successful party… there was in fact no adversary trial or decision of the issue in the case. Where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practised on him by his opponent, as … where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client’s interest to the other side ~ these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree, and open the case for a new and a fair hearing….” Hazel Atlas. Fraud on the court includes that “perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication” Moore’s Federal Practice 60-360.

Equitable action under Rule 60(b) can vacate judgment whenever such action is appropriate to accomplish justice. (In contemporary American federal judicial processes at least in the present author’s experience over two decades, this rather subtle branch of jurisprudence may have become known, however, more in its breach than fulfilment).

The power of pardon is one such supra-legal equitable power of the executive authority. For a state’s chief executive to pardon a crime is to release someone of guilt or to remit punishment. In Britain, the power is with the Government’s Home Office and in the old Commonwealth it was delegated to the Governor-General. In the USA it is a power of the President or State Governors to pardon crimes, and the most famous case was that of President Gerald Ford pardoning his predecessor Richard M. Nixon. Pervez Musharraf recently pardoned A Q Khan. Both highlight the fact the power of granting a full pardon is to be exercised rarely, and may be justifiable only on grounds of “Reasons of State” where someone has done something unlawful which the State is willing to condone for sake of some greater good in the national interest. But a pardon also can be partial, requiring the offender fulfil a condition such as serving a lesser substituted punishment. Commuting a death sentence by requiring the offender to serve life in prison is this sort of conditional pardon.

In India today, the President under Article 72 of the Constitution is empowered “to grant pardons, reprieves, respites or remissions of punishment or to suspend, remit or commute” a sentence of death and also intervene in other cases. Article 161 gives a lesser power to State Governors. These are singular examples of the acknowledged presence of equity in modern Indian jurisprudence, though our customary laws remain a vast untapped source of natural justice, (viz. Tagore Law Lectures 1905-1906 by SN Roy). Just last week, a Supreme Court bench of Justice Arijit Pasayat and Justice SH Kapadia ruled the power of reprieve, pardon or remission of sentence may not be exercised for “political considerations or on the basis of religion, caste or other extraneous factors”. There must be bona fide valid reasons. The bench set aside an Andhra Pradesh order passed by a Governor from the Congress Party remitting the sentence of imprisonment awarded to a Congress leader in a murder case involving a Telegu Desam Party victim. In an egregious violation of his discretion, the Governor had said the sentence already undergone was sufficient and directed release, but the Supreme Court in November 2005 admitted a petition challenging the order and stayed it. The Court has now held that exercise of the power is subject to judicial review and it may not be exercised for extraneous, political or mala fide reasons. The Court has thereby enlarged its role in equity (or natural justice) similar to that which American federal courts have had under Rule 60(b). There is also an argument for abolishing Article 161.

In cases of equitable treatment of capital punishment in India today like that of Afzal (or Dhananjay before him), the fact the Executive has notoriously starved our Judiciary of adequate resources ever since Independence (The Statesman, 26 February 2006) also may not be something irrelevant to evaluating the likelihood of a mistake having been made. All things considered, if justice is to be done and seen to be done in Afzal’s case, the Indian Republic should be in no hurry whatsoever in deciding to either execute him or to even release him.

From Facebook 31 March 2014

Why was Afzal hanged in such a hurry and almost in secret? Why did the BJP bay for his death so loudly every day, getting the Congress scared they would lose an election if they did not? Competitive foolishness just as over Telengana. Afzal had not pulled any trigger. That it was an avoidable injustice is made apparent by the Supreme Court commuting the death sentences of other political murderers, including Rajiv Gandhi’s killers and now Bhullar…


From Facebook 24 November 2012

I did not think Kasab should have been hanged principally as it was on the basis of his evidence that India cracked the case and he deserved some jurisprudential credit for that. He was the star witness for the prosecution against the terrorist masterminds who had sent him. Separately, I also do not believe, all things considered, that Afzal should be hanged, though there may be nothing defective in law against his conviction and sentence and he has had some legal bad luck. The law of pardon or commutation is of an equitable nature, beyond the normal law itself…His cooperation with the police would be the reason for his life to be spared — besides the fact that he pulled no trigger to kill anyone himself nor caused anyone else to do so.

From Facebook August 12 2011:

Subroto Roy has now for the first time been able to read the Supreme Court judgement affirming Afzal Guru’s death sentence, commuting Shaukat’s, and affirming the acquittal of Gillani. It does not seem defective in law. Afzal Guru was perhaps misrepresented by lawyers or misled himself into confessing his crimes very early on. But hand-in-glove with the murderous terrorists he certainly appears to have been. The fact he helped the police with his confession may be the only equitable reason for the President to commute the sentence.

 

Lessons for India from Nepal’s Revolution

Lessons for India from Nepal’s Revolution

Subroto Roy

 

The Statesman, frontpage, April 26 2006

 

 

King Gyanendra of Nepal has lost legitimacy in the eyes of almost all his people. His days as a monarch are numbered. It is as inevitable as night follows day that his dynasty is over, and Nepal will sooner or later become a secular Republic. The practical questions that follow include what is to be done with him and his family, that is, which country should they seek exile in and at what pension, to whom exactly should sovereignty in Nepal pass immediately and in the long term, how may needless bloodshed, civil chaos and mayhem come to be avoided, and how soon can a viable democratic republic and a healthy economy and society emerge.

 

 

Salus populi suprema lex: the good of the people is the supreme law. And the good of the people in Nepal today requires Gyanendra to depart (that is, for exile in Britain), after abdicating in favour of his son ~ or better still his infant grandson, placing a Regent acceptable to the Seven-Party Alliance in charge of calling a Constituent Assembly as everyone and especially the Maoists have demanded.

 

 

The Government and people of India seem strangely ignorant or indifferent about what is happening right next door to us, even when that door is open. While the people of Nepal almost stormed their Bastille, we witnessed instead the bizarre televised parade of politicians and Bollywood personalities to visit another celebrity in hospital (we should be thankful they have not been allowed anywhere near him).

 

 

Our Prime Minister/foreign minister, with his “national security advisor” sitting next to him, flew off to a brief spring holiday in Europe to discuss importation of uranium and BMWs and other such posh things. The Congress Party has said the Prime Minister may have expressed “his own views” on the subject of supporting King Gyanendra’s Friday offer but that the Government of India always supported “multiparty democracy” and the Congress Party supported the government! Have people become even more detached from reality here? If it is the case the Prime Minister has become so utterly consumed by personal hubris that he is making impromptu remarks contrary to his own government’s policies, then it may be time for him to realise he has filled his quota of foreign trips and put in his papers. At the very least, MK Narayanan has been derelict in his duties by joining the Prime Minister in the European spring rather than remaining in India watching Nepal. The Prime Minister has been so negligent as his own foreign minister (for example, handing over his America policy to personal diplomacy by his favoured aide, Mr Montek Singh Ahluwalia) that he is making the country almost miss the foreign minister who had to be fired, an unfortunate thought!

 

 

In the last six months, Nepal’s non-Maoist opposition coalesced and the Maoists declared a unilateral cease-fire. India remained preoccupied with the vanities of its own petty dynasties. Why we Indians, despite our pretensions as the world’s largest democracy (in reality, the world’s largest voting public), may have been so dull and ignorant with respect to Nepal’s “trinamul” democratic movement is that we have never had any kind of revolution ourselves.

 

 

Revolution is anathema to the pompous bureaucrats of New Delhi, just as it is to the pompous generals of Islamabad. Partition was the one all-consuming trauma experienced by the Indian and Pakistani ruling classes, and they are simply unable to understand populist rebellions of the kind now being seen in Nepal or seen under Sheikh Mujib in East Pakistan almost 40 years ago. The Indira Gandhi brand of populism practised by India’s “democratic leaders” has to do with renting crowds and giving speeches while waving to the TV cameras, always making sure to fly back to air-conditioned comfort in Lutyens Delhi by the end of the day if at all possible. Lutyens Delhi is Royal India, and Royal India secretly sympathises with all Royalty and pseudo-Royalty. Ours has become a democracy upside down where it is not a question of how the interests of the people of India should be represented in New Delhi but how New Delhi’s interests can come to be projected upon the people of India.

 

 

In Nepal on the other hand, the questions now precisely have to do with the most difficult issues of sovereignty, political legitimacy and representation. The forced exile of the Shah of Iran was followed by the return of Ayatollah Khomeini from Qom and the brutality and bloodshed of the Islamic Revolution. The exile of Sihanouk of Cambodia was followed by the horrors of the Khmer Rouge. Can mass bloodshed and class war be averted if the exile of King Gyanendra is followed by a Maoist takeover in Nepal? The Maoists are indisputably led by Pushpa Kamal Dahal (Prachanda) who does not appear to be a murderous Pol Pot and has been projected as principled and statesmanlike. But will he be able to control his own creation or could he himself be swept aside? “Revolution is not a tea party” said Mao Zedong. There are at least two other proximate models that are more benign. One was the forced exile of Ferdinand Marcos and his odious family to the USA in 1986, leading to Mrs Benito Aquino becoming President of the Philippines. She and Fidel Ramos had led ordinary people to the most peaceful bloodless revolution ever seen until then, and coined the term “People Power”. Democracy has had its problems here but has survived intact ever since. Another relevant model has to do with the forced departure for Bombay of Hari Singh of Jammu and Kashmir (who pretended to “abdicate” in favour of his young son though in fact no such alternative existed in international law). Sheikh Abdullah knew his constitutional politics well enough and then led J&K to a reasonable Constituent Assembly. Our Pakistani cousins, cut from the same political cloth as ourselves, embarked haplessly saying “That the sovereignty in Pakistan belongs to God Almighty alone and that the Government of Pakistan shall administer the country as His agent”. In the words of Rashid Rida and Maulana Maududi, Islam becomes “the very antithesis of secular Western democracy. The philosophical foundation of Western democracy is the sovereignty of the people. Lawmaking is their prerogative and legislation must correspond to the mood and temper of their opinion… Islam… altogether repudiates the philosophy of popular sovereignty and rears its polity on the foundations of the sovereignty of God and the viceregency (Khilafat) of man.” Sheikh Abdullah by contrast told the J&K Constituent Assembly: “You are the sovereign authority in this State of Jammu & Kashmir; what you decide has the irrevocable force of law. The basic democratic principle of sovereignty of the nation, embodied ably in the American and French Constitutions, is once again given shape in our midst. I shall quote the famous words of Article 3 of the French Constitution of 1791: `The source of all sovereignty resides fundamentally in the nation. Sovereignty is one and indivisible, inalienable and imprescriptable. It belongs to the nation.’ We should be clear about the responsibilities that this power invests us with. In front of us li e decisions of the highest national importance which we shall be called upon to take. Upon the correctness of our decisions depends not only the happiness of our land and people now, but the fate as well of generations to come.”

 

 

The fact the young son of Hari Singh then caused or contributed to a putsch against Abdullah is among the most regrettable events contributing to the misfortunes of J&K’s recent history. Nepal is going through its own French Revolution in which Gyanendra is no longer able to claim the “Divine Right of Kings” simply because his people have permanently withdrawn their acceptance of his legitimacy.

 

In the circumstances, Nepalese of all political colours would do very well to remember that the greatest of them in the history of mankind was a Hindu prince who became the founder of Buddhism. As the Himalayan home of Hindus and Buddhists and many others, the Nepalese Revolution could be among the most exemplary in being peaceful without bloodshed. The aim of Indians and all other friends of Nepal must be to seek to ensure that.

Communists and Constitutions

COMMUNISTS & CONSTITUTIONS

By SUBROTO ROY
first published in The Sunday Statesman, Editorial Page, Special Article,

January 22, 2006

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Constitutions and communists do not go together. The most glaring example comes from Russia — the Motherland not only of modern communism but also of great brave individual souls like Aleksandr Solzhenitsyn and Andrei Sakharov, and the many other men and women who struggled to defeat communism there over seven decades. Before Russia managed to liberate herself from communism — i.e. before the Communist Party of the Soviet Union began under Mikhail Gorbachev and Boris Yeltsin to liberate itself from itself in the late 1980s — the only genuine elections that ever occurred in the country were to the Constituent Assembly of November 1917.

That Constituent Assembly was a multiparty legislative body and it happened to have a large anti-Bolshevik majority. It met only once in January 1918 and was destroyed under Lenin immediately because it quite naturally refused to adopt Bolshevik proposals. Under the Czar, the “Constitutional Democratic Party” (the “Cadets”), formed in 1905, “constituted the most dangerous ranks of revolution”. Under the government of the proletariat, the very same Cadet Party represented “the most dangerous ranks of reaction” (Solzhenitsyn). Constitutionalists inevitably end up battling both the Fascists of the Right and the Communists of the Left. As Hannah Arendt made clear, the organisation of totalitarian governments whether of Hitler’s Germany or Stalin’s USSR or Mao’s China were remarkably similar in nature. Upon seizing power in November 1917, Russia’s Bolsheviks attacked the constitutionalists first, outlawing the Cadet Party and arresting its members, and doing the same to students, workers and soldiers associated with the “Alliance for the Constituent Assembly”.

This is not a coincidence. Communists and fascists are powered by instincts of grabbing State political power for themselves any which way they can, in order to impose by brute force on everyone else the rather shoddy obsolete ideologies they subscribe to themselves. Karl Marx himself most famously said the words “I am not a Marxist”. Communists and fascists cannot stand the idea of the anonymous individual citizen standing up on his or her own; their instinct is one which cannot attribute credit to the individual person for any good that may be done, instead purloining it into a fake “collective” effort. Similarly, errors cannot be simply acknowledged, and instead responsibility is diffused all around until nobody remembers who said or did what or when, and all history becomes a jumble.

Every great scientific and artistic achievement has been an expression of individual genius, often against the reactionary collective will. And constitutions from Magna Carta onwards have been built on the idea of protecting the anonymous, powerless individual citizen against the violent arbitrary power of the established State and its comprador organisations. Britain and America may have contributed their share of evil to world history but they have made up for at least some of it by pioneering Anglo-Saxon constitutional jurisprudence. It may be no coincidence Britain and America have been home to the greatest outpourings of human creativity and invention in modern times, from the steam engine to the Internet.

In fact it has been a singularly American contribution to pioneer the very idea that parliamentary majorities themselves need to be restrained from their own baser proclivities. In 1767, before America had herself become free from British rule, the British Parliament once issued a declaration that a parliamentary majority could pass any law it saw fit. It was greeted with an outcry of horror in Britain’s American colonies. Patrick Henry of Virginia — later famous for his cry “Give me Liberty or give me Death” — led the battle for the anonymous free individual citizen against the arbitrary power that comes to be represented by the herd or mob instincts even of elected parliamentary majorities. Constitutions are written to protect parliaments and peoples from themselves.

The philosopher John Wisdom, who translated the subtle work of Wittgenstein and Freud into normal idioms, once said: “Sometimes a society acts as if all power lay in the hands of the most babyish and animal members, and sometimes as if all power lay in the hands of strict old men, and sometimes it acts more as a whole — mostly when there’s a war on. Sometimes a man is not himself and acts as if a babyish or cunning animal had gained control — that’s the id — sometimes as if an exacting parent, a sarcastic schoolmaster, or an implacable deity possessed him — that’s the super-ego. Sometimes a man is more himself and acts more as a whole, a new whole which is not a combination but a synthesis of the id and the super-ego. Some are constantly at the mercy of the id, some are slaves to the super-ego, and in some first one and then the other gains an unhappy victory in a continual struggle, and in some conflict and control have vanished into cooperation…”

Similarly, we may say that political processes in any country appear to often give play to the most “babyish” and “cunning animal” instincts of the society, while at other times the “strict old men” or “exacting parent” take over. The constant struggle of political reasonableness is to find the rational, normal national self that rests in between.

India at present has been set upon an unproductive and pointless course of inevitable Constitutional collision between Parliament and the Supreme Court. That course has been singly set by the present Speaker even though every attempt is being made now to diffuse his responsibility for the situation that has arisen, so that soon nobody will be able to remember exactly what happened or why. The incumbent Speaker, instead of being wholly self-effacing as called for by the job-requirements of the high and grave office he holds, has remained too much of a normal parliamentary advocate. Before grave irreparable damage comes to be done to India’s Parliamentary and Constitutional traditions, he needs to return at once to the Front Benches of the Communist Party of India (Marxist) as a distinguished senior Member of the House, and from there make whatever arguments he wishes about Parliament’s rights under the Constitution. The high self-effacing office of the Speaker is not from where such arguments as he has been making should be made — unless India’s Parliament and Constitution are soon to be thrown into the dustbin for ever (as has similarly happened for half a century across the border with our Pakistani cousins).

The incumbent Speaker is right that the Supreme Court does not oversee Parliament. The Supreme Court oversees something greater than Parliament, namely, India’s Constitution. Parliament, its Speaker, its Prime Minister, the President of India, and the Supreme Court itself are all creatures of the Constitution. However, the Constitution of India that was adopted on 26 January 1950 is not sui generis a creature of itself. It is the outcome of a clear and well-known constitutional history which has among its modern milestones the Government of India Act of 1935, and thence all the ancient milestones of Anglo-American constitutional jurisprudence going back to Magna Carta. And India’s Supreme Court — sitting not in any of its normal division benches but as a Constitutional Bench — does indeed have jurisdiction, indeed it has sole jurisdiction, over whether India’s Constitution is being made to suffer crimes or misdemeanours at the hands of India’s Government or Parliament of the day. For the Speaker to decline to receive a notice from the High Court is an irrelevancy; many people who are served notices ignore them; it does not reduce jurisdiction by an iota. An “All-Party” meeting of MPs can rail all it wants against the Supreme Court — even the whole of the present Parliament can pass as many unanimous resolutions as they want against the Supreme Court. They will only make themselves look silly and petulant in the eyes of history. As for the BJP Opposition in particular, the present situation may make it perfectly clear that there is not among them a single, principled, liberal constitutionalist hidden in their proto-fascistic ranks.

Solving Kashmir: On an Application of Reason (2005)

SOLVING KASHMIR: ON AN APPLICATION OF REASON

by

Subroto Roy

First published in three parts in The Statesman

Editorial Page Special Article 1, 2, 3 December 2005

This article has its origins in a paper “Towards an Economic Solution for Kashmir” which circulated in Washington DC in 1992-1995, including at the Indian and Pakistani embassies and the Carnegie Endowment, and was given as an invited lecture at the Heritage Foundation on June 23 1998. It should be read along with other articles also republished here, especially “History of J&K”, “Law, Justice and J&K” , “Understanding Pakistan”, “Pakistan’s Allies” and “What to Tell Musharraf”.  See https://independentindian.com/2011/10/13/my-seventy-one-notes-at-facebook-etc-on-kashmir-pakistan-and-of-course-india-listed-thanks-to-jd/  The Washington paper and lecture itself originated from my ideas in the Introduction to Foundations of Pakistan’s Political Economy, edited by WE James and myself in the University of Hawaii project on Pakistan 1986-1992.

Postscript 30 Dec 2015:  I have made clear at Twitter that I find the K.M. Kasuri book, promoted and publicized in India by Mani Shankar Aiyar, Sudheendra Kulkarni, Barkha Dutt and others in Delhi and Mumbai, to be mendacious where it is not merely self-serving.  Its clear intent is to get India to accept the (entirely false) ISI/Hurriyat narratives about 1947, Kashmir, Bangladesh, terrorism etc.  Its purported ideas of demilitarisation and a borderless Kashmir are essentially lifted without the decency of normal acknowledgement from my earlier 1980s work in America cited above — which I myself have rejected as naive since the 1999 Pakistani aggression in Kargil…

NB: https://independentindian.com/2006/07/03/law-justice-and-jk/

https://independentindian.com/2006/10/30/history-of-jk/

 

I. Give Indian `Green Cards’ to the Hurriyat et al

India, being a liberal democracy in its constitutional law, cannot do in Jammu & Kashmir what Czechoslovakia did to the “Sudeten Germans” after World War II.

On June 18 1945 the new Czechoslovakia announced those Germans and Magyars within their borders who could not prove they had been actively anti-fascist before or during the War would be expelled — the burden of proof was placed on the individual, not the State. Czechoslovakia “transferring” this population was approved by the Heads of the USA, UK and USSR Governments at Potsdam on August 2 1945. By the end of 1946, upto two million Sudeten Germans were forced to flee their homes; thousands may have died by massacre or otherwise; 165,000 remained who were absorbed as Czechoslovak citizens. Among those expelled were doubtless many who had supported Germany and many others who had not — the latter to this day seek justice or even an apology in vain. Czechoslovakia punished none of its nationals for atrocities, saying it had been revenge for Hitler’s evil (“badla” in Bollywood terms) and the post Cold War Czech Government too has declined to render an apology. Revenge is a wild kind of justice (while justice may be a civilised kind of revenge).

India cannot follow this savage precedent in international law. Yet we must recognise there are several hundred and up to several hundred thousand persons on our side of the boundary in the State of Jammu & Kashmir who do not wish to be Indian nationals. These people are presently our nationals ius soli, having been born in territory of the Indian Republic, and/or ius sanguinis, having been born of parents who are Indian nationals; or they may be “stateless” whom we must treat in accordance with the 1954 Convention on Stateless Persons. The fact is they may not wish to carry Indian passports or be Indian nationals.

In this respect their juridical persons resemble the few million “elite” Indians who have in the last few decades freely placed their hands on their hearts and solemnly renounced their Indian nationality, declaring instead their individual fidelity to other nation-states — becoming American, Canadian or Australian citizens, or British subjects or nationals of other countries. Such people include tens of thousands of the adult children of India’s metropolitan “elite”, who are annually visited abroad in the hot summer months by their Indian parents and relatives. They are daughters and sons of New Delhi’s Government and Opposition, of retired generals, air marshals, admirals, ambassadors, cabinet secretaries, public sector bureaucrats, private sector businessmen, university professors, journalists, doctors and many others. India’s most popular film-actress exemplified this “elite” capital-flight when, after a tireless search, she chose a foreign husband and moved to California.

The difference in Jammu & Kashmir would be that those wishing to renounce Indian nationality do not wish to move to any other place but to stay as and where they are, which is in Kashmir Valley or Jammu. Furthermore, they may wish, for whatever reason, to adopt, if they are eligible to do so, the nationality of e.g. the Islamic Republic of Afghanistan or the Islamic Republic of Iran or the Islamic Republic of Pakistan.

They may believe themselves descended from Ahmad Shah Abdali whose Afghans ruled or misruled Kashmir Valley before being defeated by Ranjit Singh’s Sikhs in 1819. Or they may believe themselves of Iranian descent as, for example, are the Kashmiri cousins of the late Ayatollah Khomeini. Or they may simply have wished to be, or are descended from persons who had wished to be on October 26 1947, citizens of the then-new British Dominion of Pakistan — but who came to be prevented from properly expressing such a desire because of the war-like conditions that have prevailed ever since between India and Pakistan. There may be even a few persons in Ladakh who are today Indian nationals but who wish to be considered Tibetans instead; there is, however, no Tibetan Republic and it does not appear there is going to be one.

India, being a free and self-confident country, should allow, in a systematic lawful manner, all such persons to fulfil their desires, and furthermore, should ensure they are not penalised for having expressed such “anti-national” desires or for having acted upon them. Sir Mark Tully, the British journalist, is an example of someone who has been a foreign national who has chosen to reside permanently in the Republic of India — indeed he has been an exemplary permanent resident of our country. There are many others like him. There is no logical reason why all those persons in Jammu & Kashmir who do wish not to be Indians by nationality cannot receive the same legal status from the Indian Republic as has been granted to Sir Mark Tully. There are already thousands of Sri Lankan, Bangladeshi and Nepalese nationals who are lawful permanent residents in the Indian Republic, and who travel back and forth between India and their home countries. There is no logical reason why the same could not be extended to several hundred or numerous thousand people in Jammu & Kashmir who may wish to not accept or to renounce their Indian nationality (for whatever personal reason) and instead become nationals, if they are so eligible, of the Islamic Republics of Afghanistan, Iran or Pakistan, or, for that matter, to remain stateless. On the one hand, their renunciation of Indian nationality is logically equivalent to the renunciation of Indian nationality by the adult children of India’s “elite” settled in North America and Western Europe. On the other hand, their wish to adopt, if they are eligible, a foreign nationality, such as that of Afghanistan, Iran or Pakistan, and yet remain domiciled in Indian territory is logically equivalent to that of many foreign nationals domiciled in India already like Sir Mark Tully.

Now if you are a permanent resident of some country, you may legally have many, perhaps most, but certainly not all the rights and duties of nationals of that country. e.g., though you will have to pay all the same taxes, you may not be allowed to (or be required to) vote in national or provincial elections but you may in local municipal elections. At the same time, permanently residing foreign nationals are supposed to be equal under the law and have equal access to all processes of civil and criminal justice. (As may be expected though from human frailty, even the federal courts of the USA can be notorious in their injustice and racism towards “Green Card” holders relative to “full” American citizens.) Then again, as a permanently resident foreigner, while you will be free to work in any lawful trade or profession, you may not be allowed to work in some or perhaps any Government agencies, certainly not the armed forces or the police. Many Indians in the USA were engineering graduates, and because many engineering jobs or contracts in the USA are related to the US armed forces and require US citizens only, it is commonplace for Indian engineers to renounce their Indian nationality and become Americans because of this. Many Indian-American families have one member who is American, another Indian, a third maybe Canadian, a fourth Fijian or British etc.

The same can happen in the Indian State of Jammu & Kashmir if it evolves peacefully and correctly in the future. It is quite possible to imagine a productive family in a peaceful Kashmir Valley of the future where one brother is an officer in the Indian Armed Forces, another brother a civil servant and a sister a police officer of the J&K State Government, another sister being a Pakistani doctor, while cousins are Afghan or Iranian or “stateless” businessmen. Each family-member would have made his/her choice of nationality as an individual given the circumstances of his/her life, his/her personal comprehension of the facts of history, his/her personal political and/or religious persuasions, and similar deeply private considerations. All would have their children going to Indian schools and being Indian citizens ius soli and/or ius sanguinis. When the children grow up, they would be free to join, if they wished, the existing capital flight of other Indian adult children abroad and there renounce their Indian nationality as many have come to do.

II Revealing Choices Privately with Full Information

For India to implement such a proposal would be to provide an opportunity for all those domiciled in Kashmir Valley, Jammu and Laddakh to express freely and privately as individuals their deepest wishes about their own identities, in a confidential manner, citizen by citizen, case by case. This would thereby solve the fundamental democratic problem that has been faced ever since the Pakistani attack on the original State of Jammu & Kashmir commenced on October 22 1947, which came to be followed by the Rape of Baramulla — causing the formal accession of the State to the then-new Dominion of India on October 26 1947.

A period of, say, 30 months may be announced by the Government of India during which full information would be provided to all citizens affected by this change, i.e. all those presently governed by Article 370 of the Indian Constitution. The condition of full information may include, for example, easy access to Afghan, Iranian and Pakistani newspapers in addition to access to Indian media. Each such person wishing to either remain with Indian nationality (by explicitly requesting an Indian passport if he/she does not have one already — and such passports can be printed in Kashmiri and Urdu too), or to renounce Indian nationality and either remain stateless or adopt, if he/she is so eligible, the nationality of e.g. Afghanistan, Iran, or Pakistan, should be administratively assisted by the Government of India to make that choice.

In particular, he/she should be individually, confidentially, and without fear or favour assured and informed of his/her new rights and responsibilities. For example, a resident of Kashmir Valley who chooses to become a Pakistani citizen, such as Mr Geelani, would now enjoy the same rights and responsibilities in the Indian Republic that Mr Tully enjoys, and at the same time no longer require a visa to visit Pakistan just as Mr Tully needs no visa to enter Britain. In case individual participants in the Hurriyat choose to renounce Indian nationality and adopt some other, they would no longer be able to legally participate in Indian national elections or J&K’s State elections. That is something which they say they do not wish to do in any case. Those members of the Hurriyat who chose e.g. Pakistani nationality while still residing in Jammu & Kashmir, would be free to send postal ballots or cross the border and vote in Pakistan’s elections if and when these occur. There are many Canadians who live permanently in the USA who cross home to Canada in order to cast a ballot.

After the period of 30 months, every person presently under Article 370 of the Indian Constitution would have received a full and fair opportunity to privately and confidentially reveal his/her preference or choice under conditions of full information. “Partition”, “Plebiscite”, and “Military Decision” have been the three alternatives under discussion ever since the National Conference of Sheikh Mohammad Abdullah and his then-loyal Deputy, Bakshi Ghulam Mohammad, helped the Indian Army and Air Force in 1947-1948 fight off the savage attack against Jammu & Kashmir State that had commenced from Pakistan on October 22 1947. When, during the Pakistani attack, the Sheikh and Bakshi agreed to the Muslim Conference’s demand for a plebiscite among the people, the Pakistanis balked — the Sheikh and Bakshi then withdrew their offer and decisively and irrevocably chose to accede to the Indian Union. The people of Jammu & Kashmir, like any other, are now bound by the sovereign political commitments made by their forebears. Even so, given the painful mortal facts of the several decades since, the solution here proposed if properly implemented would be an incomparably more thorough democratic exercise than any conceivable plebiscite could ever have been.

Furthermore, regardless of the outcome, it would not entail any further “Partition” or population “transfer” which inevitably would degenerate into a savage balkanization, and has been ruled out as an unacceptable “deal-breaker” by the Indian Republic. Instead, every individual person would have been required, in a private and confidential decision-making process, to have chosen a nationality or to remain stateless — resulting in a multitude of cosmopolitan families in Jammu & Kashmir. But that is something commonplace in the modern world. Properly understood and properly implemented, we shall have resolved the great mortal problem we have faced for more than half a century, and Jammu & Kashmir can finally settle into a period of peace and prosperity. The boundary between India and Pakistan would have been settled by the third alternative mentioned at the time, namely, “Military Decision”.

 

III. Of Flags and Consulates in Srinagar and Gilgit

Pakistan has demanded its flag fly in Srinagar. This too can happen though not in the way Pakistan has been wishing to see it happen. A Pakistan flag might fly in the Valley just as might an Afghan and Iranian flag as well. Pakistan has wished its flag to fly as the sovereign over Jammu & Kashmir. That is not possible. The best and most just outcome is for the Pakistani flag to fly over a recognised Pakistani consular or visa office in Srinagar, Jammu and Leh. In diplomatic exchange, the Indian tricolour would have to fly over a recognised Indian consular or visa office in Muzaffarabad, Gilgit and Skardu.

Pakistan also may have to act equivalently with respect to the original inhabitants of the territory of Jammu & Kashmir that it has been controlling — allowing those people to become Indian nationals if they so chose to do in free private decisions under conditions of full information. In other words, the “Military Decision” that defines the present boundary between sovereign states must be recognised by Pakistan sincerely and permanently in a Treaty relationship with India — and all of Pakistan’s official and unofficial protégés like the Hurriyat and the “United Jehad Council” would have to do the same. Without such a sovereign commitment from the Government of Pakistan, as shown by decisive actions of lack of aggressive intent (e.g. as came to be implemented between the USA and USSR), the Government of India has no need to involve the Government of Pakistan in implementing the solution of enhancing free individual choice of nationality with regard to all persons on our side of the boundary.

The “Military Decision” regarding the sovereign boundary in Jammu & Kashmir will be so recognised by all only if it is the universally just outcome in international law. And that in fact is what it is.

The original Jammu & Kashmir State began its existence as an entity in international law long before the present Republics of India and Pakistan ever did. Pakistan commences as an entity on August 14 1947; India commences as an entity of international law with its signing of the Treaty of Versailles on June 28, 1919  20 1918. Jammu & Kashmir began as an entity on March 16 1846 — when the Treaty of Amritsar was signed between Gulab Singh Dogra and the British, one week after the Treaty of Lahore between the British and the defeated Sikh regency of the child Daleep Singh.

Liaquat Ali Khan and Zafrullah Khan both formally challenged on Pakistan’s behalf the legitimacy of Dogra rule in Jammu & Kashmir since the Treaty of Amritsar. The Pakistani Mission to the UN does so even today. The Pakistanis were following Sheikh Abdullah and Jawaharlal Nehru himself, who too had at one point challenged Dogra legitimacy in the past. But though the form of words of the Pakistan Government and the Nehru-Abdullah position were similar in their attacks on the Treaty of Amritsar, their underlying substantive reasons were as different as chalk from cheese. The Pakistanis attacked the Dogra dynasty for being Dogra — i.e. because they were Hindus and not Muslims governing a Muslim majority. Nehru and Abdullah denounced monarchic autocracy in favour of mass democracy, and so attacked the Dogra dynasty for being a dynasty. All were wrong to think the Treaty of Amritsar anything but a lawful treaty in international law.

Furthermore, in this sombre political game of great mortal consequence, there were also two other parties who were, or appeared to be, in favour of the dynasty: one because the dynasty was non-Muslim, the other, despite it being so. Non-Muslim minorities like many Hindus and Sikhs in the business and governmental classes, saw the Dogra dynasty as their protector against a feared communalist tyranny arising from the Sunni Muslim masses of Srinagar Valley, whom Abdullah’s rhetoric at Friday prayer-meetings had been inciting or at least awakening from slumber. At the same time, the communalists of the Muslim Conference who had broken away from Abdullah’s secular National Conference, sought political advantage over Abdullah by declaring themselves in favour of keeping the dynasty — even elevating it to become an international sovereign, thus flattering the already pretentious potentate that he would be called “His Majesty” instead of merely “His Highness”. The ancestry of today’s Hurriyat’s demands for an independent Jammu & Kashmir may be traced precisely to those May 21-22 1947 declarations of the Muslim Conference leader, Hamidullah Khan.

Into this game stumbled the British with all the mix of cunning, indifference, good will, impatience, arrogance and pomposity that marked their rule in India. At the behest of the so-called “Native Princes”, the 1929 Butler Commission had hinted that the relationship of “Indian India” to the British sovereign was conceptually different from that of “British India” to the British sovereign. This view was adopted in the Cabinet Mission’s 12 May 1946 Memorandum which in turn came to be applied by Attlee and Mountbatten in their unseemly rush to “Divide and Quit” India in the summer of 1947.

It created the pure legal illusion that there was such a thing as “Lapse of Paramountcy” at which Jammu & Kashmir or any other “Native State” of “Indian India” could conceivably, even for a moment, become a sovereign enjoying the comity of nations — contradicting Britain’s own position that only two Dominions, India and Pakistan, could ever be members of the British Commonwealth and hence members of the newly created UN. British pusillanimity towards Jammu & Kashmir’s Ruler had even extended to making him a nominal member of Churchill’s War Cabinet because he had sent troops to fight in Burma. But the legal illusion had come about because of a catastrophic misunderstanding on the part of the British of their own constitutional law.

The only legal scholar who saw this was B R Ambedkar in a lonely and brilliant technical analysis released to the press on June 17 1947. No “Lapse of Paramountcy” over the “Native Princes” of Indian India could occur in constitutional law. Paramountcy over Indian India would be automatically inherited by the successor state of British India at the Transfer of Power. That successor state was the new British Dominion of India as well as (when it came to be finalised by Partition from India) the new British Dominion of Pakistan (Postscript: the deleted words represent a mistake made in the original paper, corrected in “Law, Justice & J&K” in view of the fact the UN  in 1947 deemed  India alone the successor state of British India and Pakistan a new state in the world system). A former “Native Prince” could only choose to which Dominion he would go. No other alternative existed even for a single logical moment. Because the British had catastrophically failed to comprehend this aspect of their own constitutional law, they created a legal vacuum whereby between August 15 and October 22-26 1947, Jammu & Kashmir became a local and temporary sovereign recognised only by the Dominion of Pakistan (until October 22) and the Dominion of India (until October 26). But it was not a globally recognised sovereign and was never going to be such in international law. This was further proved by Attlee refusing to answer the J&K Prime Minister’s October 18 1947 telegram.

All ambiguity came to end with the Pakistani attack of October 22 1947, the Rape of Baramulla, the secession of an “Azad Kashmir”declared by Sardar Ibrahim, and the Pakistani coup détat in Gilgit on October 31 1947 followed by the massacre of Sikh soldiers of the J&K Army at Bunji. With those Pakistani actions, Gulab Singh’s Jammu & Kashmir State, founded on March 16 1846 by the Treaty of Amritsar, ceased to logically exist as an entity in international law and fell into a state of ownerless anarchy. The conflict between Ibrahim’s Muslim communalists backed by the new Dominion of Pakistan and Abdullah’s secularists backed by the new Dominion of India had become a civil war within a larger intra-Commonwealth war that itself was almost a civil war between forces of the same military.

Jammu & Kashmir territory had become ownerless. The Roman Law which is at the root of all municipal and international law in the world today would declare that in the ownership of such an ownerless entity, a “Military Decision” was indeed the just outcome. Sovereignty over the land, waters, forests and other actual and potential resources of the erstwhile State of Jammu & Kashmir has become divided by “Military Decision” between the modern Republics of India and Pakistan. By the proposal made herein, the people and their descendants shall have chosen their nationality and their domicile freely across the sovereign boundary that has come to result.

Can India Become an Economic Superpower or Will There Be a Monetary Meltdown? (2005)

In 2005, I returned to Britain thanks to an invitation from Professor Patrick Minford of the Cardiff Business School, Cardiff University, to deliver a lecture on India’s Money at his Economics Seminar. http://www.cardiff.ac.uk/carbs/research/seminars.html
“Wednesday 13 April 2005 Dr Subroto Roy /India’s Money/ 4.30pm, Room S01 (Economics Seminar Series)

The same lecture was delivered at the Institute of Economic Affairs, London, a fortnight later under the title “Can India Become an Economic Superpower or Will There Be a Monetary Meltdown?”. The IEA’s summary of the lecture was as follows
http://www.iea.org.uk/record.jsp?type=news&ID=263
27 April 2005

“Leading Indian economist, Dr. Subroto Roy discusses the prospects of the Indian economy and warns of dangers ahead.

Can India become an economic superpower or will there be a monetary meltdown?

Dr. Roy discussed the prospects for the Indian economy at a lecture at the IEA on 27th April. Below is a synopsis of his lecture, outlining his hopes and concerns.

New technological progress in a myriad of ways, as well as the discovery of new resources, plus a possible peace-dividend arising from reduced regional tensions and conflict, are all important factors contributing to real economic growth in India today.

While the real side of the economy does well, the “nominal” economy, within the Government’s control, displays disconcerting trends. Continual deficit financing for half a century has led to exponential growth of public debt and broad money. The vast growth of time-deposits in banks may have been misinterpreted as indicating a real phenomenon such as unusual savings behaviour when it is more likely to be a nominal phenomenon resulting from increasing amounts of government debt being held by the largely nationalised banking sector. (The same may be true of China).

Twenty-one years ago, the author’s IEA Occasional Paper No. 69, Pricing, planning and politics: a study of economic distortions in India, proposed microeconomic reforms provoking the Times‘ lead editorial of May 29 1984. Some of these came to be implemented following the author’s role as a senior adviser to Rajiv Gandhi in 1990-1991. Now, monetary and fiscal reforms of a classical liberal nature are vitally necessary if a macroeconomic meltdown is to be prevented. Important among these are complete budgetary transparency, fiscal discipline improving the social productivity of all public expenditure, and monetary and financial policies to restore the integrity of the currency at home and abroad. Dr. Roy was Wincott Professor at the Department of Economics at the University of Buckingham last year. He is editor of Margaret Thatcher’s Revolution available from the recommended books page of the IEA’s website.”

When I returned to India, I was invited to give the same lecture on May 5 2005 to the Reserve Bank of India’s Monetary Economics Seminar, chaired by Chief Economist Dr Narendra Jadav; the invitation came thanks to the intervention of Dr S. S. Tarapore. I subsequently informed a few of India’s key monetary policy decision-makers of these lectures, and I was happy to see policy talk emanating from Delhi and Bombay becoming a little less drunken and disorderly than it had been before.

Subroto Roy, April 14 2007

Science, Religion, Art & the Necessity of Freedom (2004)

Science, Religion, Art & the Necessity of Freedom: Reason’s Response to Islamism

by
Subroto Roy

PhD (Cantab.), BScEcon (London)

(A public lecture delivered as the Wincott Visiting Professor of Economics at the University of Buckingham on August 24 2004, based on a keynote address to the Council of Asian Liberals and Democrats, Manila, November 16 2001.)

I am most grateful to the University of Buckingham for allowing me to refresh and carry forward my research these last several months. For some 25 years I have been learning of and reflecting upon the work of two great modern British philosophers, John Wisdom (1904-1993) and Renford Bambrough (1926-1999). In the 1980s in America, I came to apply their thinking in Philosophy of Economics (Routledge 1989), a book which got me into a lot of trouble there. Returning to Britain in 2004, I am dismayed to find their work almost forgotten or unknown today, even at the Ancient University that had been their home. “Orientalists” from the West once used to comprehend and highlight the achievements of the East for the peoples of the East who were unaware of them; I am happy to return the favour by becoming an “Occidentalist” in highlighting a little of the work of two of Britain’s finest sons of which she has become unaware. Wisdom and Bambrough played a kind of modern-day Plato and Aristotle to the Socrates played by Wittgenstein (1889-1951); the knowledge they achieved in their lives and have left behind for us to use and apply to our own problems make them, in terms of Eastern philosophy, rather like the “Boddhisatvas” of Mahayana Buddhism. I do not expect anyone to share such an extravagant view, and will be more than satisfied if I am able to suggest that we can have a grasp of the nature and scope of human reasoning thanks to their work which may help resolve the most intractable and seemingly irreconcilable of all current international problems, namely the grave cultural conflicts made apparent since September 11 2001.

2. The September 11 attacks aimed to cripple one of the world’s largest and most important countries in a new kind of act of war. The perpetrators apparently saw themselves — subjectively in their own minds — acting in the name of one of the world’s largest and most important religions. Since the attacks, the world has become an unusually bewildering place, as if notions of freedom, tolerance and the rule of law have been proven a lie overnight, as if virtues like patience, common reasoning and good humour have all become irrelevant, deserving to be flushed away in face of a resurgence of ancient savageries. The attackers and their friends taunt the West saying their love of death is greater and more powerful than the West’s love of life; the taunts and the counter-taunts of their powerful adversaries have had the effect of spraying panic, mutual fear, hatred or destruction across the surface of everyday life everywhere, so we now have bizarre scenes of people taking off their shoes and clothes and putting them on again while travelling, and of the British public being advised on how to cope with nerve gas attacks when they might have much rather been watching “reality TV” instead. An Age of Unreason appears upon us.

The very simple proposition I put forward here is this: there are, indeed there cannot be, any conflicts that are necessarily irresoluble. To put it differently, the logical scope of common reasoning is indefinite and limitless. There is no question to which there is not a right answer. If I was asked to answer in one sentence what has been the combined contribution to human thought of Wittgenstein, Wisdom and Bambrough, indeed of modern British philosophy as a whole, I would say it has been the proof that there are no unanswerable questions, that there is no question to which there is not a right answer.
By “common reasoning” I shall mean merely to refer to the structure of any conversation well-enough described by F. R. Leavis’s operators in literary criticism:

“This is so, isn’t it?,

Yes, but….”.

My “yes” to your “This is so, isn’t it?” indicates agreement with what you have said while my “but…” tells you I believe there may be something more to the matter, some further logical relation to be found, some further fact to be investigated or experiment carried out, some further reflection necessary and possible upon already known and agreed upon facts. It amounts to a new “This is so, isn’t it?” to which you may respond with your own, “Yes, but…”; and our argument would continue. Another set of operators is:

“You might as well say…”;

“Exactly so”;

“But this is different…”

This was how Wisdom encapsulated the “case-by-case” method of argument that he pioneered and practised. It requires intimate description of particular cases and marking of similarities and differences between them, yielding a powerful indefinitely productive method of objective reasoning, distinct from and logically prior to the usual methods of deduction and induction that exhaust the range of positivism. We are able to see how common reasoning may proceed in practice in subtle fields like law, psychology, politics, ethics, aesthetics and theology, just as objectively as it does in natural science and mathematics. Wittgenstein had spoken of our “craving for generality” and our “contemptuous attitude towards the particular case”. Wisdom formalised the epistemological priority of particular over general saying: “Examples are the final food of thought. Principles and laws may serve us well. They can help us to bring to bear on what is now in question what is not now in question. They help us to connect one thing with another and another and another. But at the bar of reason, always the final appeal is to cases.” And “Argument must be heard”.

In all conflicts – whether within a given science, between different sciences, between sciences and religion, within a given religion, between different religions, between sciences and arts, within the arts, between religion and the arts, between quarrelling nations, quarrelling neighbours or quarrelling spouses, whether in real relationships of actual life or hypothetical relationships of literature and drama – an approach of this kind tells us there is something further that may be said, some improvement that can be carried out, some further scope for investigation or experiment allowing discovery of new facts, some further reflection necessary or possible upon known facts. There are no conflicts that are necessarily irresoluble. Where the suicide-bombers and their powerful adversaries invite us to share their hasty and erroneous assumption that religious, political or economic cultures are becoming irreconcilable and doomed to be fights unto death, we may give to them instead John Wisdom’s “Argument must be heard.”

Parties to this or any conflict may in fact fail to find in themselves enough patience, tolerance, good humour, courage to take an argument where it leads, or they may fail to find enough of these qualities in adequate time, as Quesnay and the Physiocrats failed to find solutions in adequate time and were swept away by the French Revolution. But the failures of our practical human powers and capabilities do not signal that the logical boundaries of the scope of reason have been reached or even approached or come to be sighted.

3. The current conflict is said to be rooted in differences between religious cultures. We may however wish to first address whether any religious belief or practice can survive the devastating onslaught of natural science, the common modern adversary of all religions. What constitutes a living organism? What is the difference between plants and animals? What is the structure of a benzene ring or carbon atom or subatomic particle? What is light? Sound? Gravity? What can be said about black holes or white dwarfs? When did life begin here and when is it likely to end? Are we alone in being the only form of self-conscious life? Such questions about the world and Universe and our place in it have been asked and answered in their own way by all peoples of the world, from primitive tribes in hidden forests to sophisticated rocket scientists in hidden laboratories. Our best common understanding of them constitutes the state of scientific knowledge at a given time. Once we have accounted for all that modern science has to say, can any reasonable explanation or justification remain to be given of any religious belief or practice from any time or place?

Bambrough constructed this example. Suppose we are walking on the shore of a stormy sea along with Homer, the ancient Greek poet, who has been restored to us thanks to a time machine. We are walking along when Homer looks at the rough sea and says, “Poseidon is angry today”. We look at the waves loudly hitting the rocks and nod in agreement saying, “Yes, Poseidon is angry today”. We may be using the same words as Homer but Homer’s understanding of and expectations about the words “Poseidon is angry today” and our understanding of and expectations about the same words would be utterly different, a difference moreover we are able to understand but he may not. To us with our modern meteorology and oceanography, and the results of the television cameras of Jacques Cousteau and David Attenborough, we know for a fact there is no god-like supernatural being called Poseidon living within the ocean whose moods affect the waves. But to Homer, Poseidon not only exists in the ocean but also leaves footprints and descendants on the land, when Poseidon is angry the sea is vicious, when Poseidon is calm the seas are peaceful. We use the words “Poseidon is angry today” as an accurate description of the mood of an angry sea; Homer uses the same words to mean there was a god-like supernatural being inside the ocean whose anger was being reflected in the anger of the waves.

My second story is from 7th century AD located here in Buckingham, from a spot a few hundred yards behind the Economics Department of the University where there is St Rumbwald’s Well. In 650 AD — just a short while after The Recital of the Prophet of Islam (570-632AD) had been written down as The Q’uran, and just a little while before the Chinese pilgrim I-Ching (635-713AD) would be travelling through India recording his observations about Buddhism – here 12 miles from Buckingham was born the babe known as Rumwold or Rumbwald. England was hardly Christian at the time and the first Archbishop of Canterbury had been recently sent by the Pope to convert the Anglo-Saxons. Rumbwald’s father was a pagan prince of Northumbria; his mother the Christian daughter of the King of Mercia. St Rumbwald of Buckingham or Brackley is today the patron saint of fishermen at Folkestone, and he has been historically revered at monasteries in Mercia, Wessex and distant Sweden. Churches have been dedicated to him in Kent,Essex, Northamptonshire, Lincolnshire, Dorset and North Yorkshire. Pilgrims have washed themselves at St Rumwald’s Well over centuries and it is said Buckingham’s inns originated in catering to them. What is the legend of St Rumbwald? It is that on the day he was born he declared three times in a loud voice the words “I am a Christian, I am a Christian, I am a Christian”. After he had been baptised, he, on the second day of his life, was able to preach a sermon on the Trinity and the need for virtuous living, and foretold his imminent death, saying where he wished to be buried. On the third day of his life he died and was buried accordingly.

When we hear this story today, we might smile, wishing newborn babes we have known waking up in the middle of the night might be more coherent too. Professor John Clarke has shown Catholic hagiography over the centuries has also registered deep doubts about the Rumbwald story. We might be tempted to say the whole thing is complete nonsense. If a modern person took it at face value, we would look on it sympathetically. We know for a fact it is impossible, untrue, there has to be some error.

At the bar of reason, all religions lose to science where they try to compete on science’s home grounds, which are the natural or physical world. If a religious belief requires that a material object can be in two places at the same time, that something can be made out of nothing, that the Sun and planets go around the Earth to make Night and Day, that the Earth is flat and the sky is a ceiling which may be made to fall down upon it by Heavenly Wrath, that the rains will be on time if you offer a prayer or a sacrifice, it is destined to be falsified by experience. Natural science has done a lot of its work in the last few centuries; all the major religions pre-date this expansion so their physical premises may have remained those of the science understood in their time. In all questions where religions try to take on scientific understanding head on, they do and must lose, and numerous factual claims made by all religions will disappear in the fierce and unforgiving heat of the crucible of scientific reasoning and evidence.Yet even a slight alteration of the St Rumbwald story can make it plausible to modern ears. Just the other day Radio 4 had a programme on child prodigies who were able to speak words and begin to master language at age of one or two. It is not impossible a child prodigy of the 7th Century AD in his first or second year of life spoke the words “I’m a Christian”, or that as a toddler with a devout Christian mother, he said something or other about the Holy Trinity or about virtue or that he wished to be buried in such and such place even if he had had no real understanding of what he was talking about. If such a prodigious infant of royal blood then died from illness, we can imagine the grief of those around him, and how word about him might spread through a countryside in an era 1200 years before the discovery of electricity and invention of telecommunications, and for that information to become garbled enough to form the basis of the legend of St Rumbwald through the centuries.

The Rumbwald story is a typical religious story that has its parallels in other times and places including our own. It is impossible for it to have been factually true in the way it has come down to us, but it is completely possible for us with our better knowledge of facts and science today to reasonably explain its power over the beliefs of many generations of people. And if we are able to reasonably explain why people of a given time and place may have believed or practised what they did, we have not reason to be disdainful or scornful of them. The mere fact such religious stories, beliefs, experiences and practices of human beings over several thousand years across the globe have been expressed in widely different and far from well-translated or well-understood languages – Egyptian, Hebrew, Aramaic, Greek, Latin, Sanskrit, Pali, Tibetan, Chinese, Korean, Japanese, Hawaiian, Samoan, Apache, Kwa Zulu, Hausa, Swahili – let aside English, Arabic, Yiddish or a thousand others, provides more than ample explanation of how miscomprehension and misapprehension can arise and continue, of how a vast amount of mutual contempt and scorn between peoples of different cultures is able to be irrationally sustained. The scope for the reasonable “demythologisation” of all these stories in all these languages from all these religions, in the way we have sought to “demythologise” the Rumbwald story here obviously remains immense and indefinite.

Next consider religious practice in the modern world, and the universal act of praying. (Economists have not seemed to look much at this before though a lot of mankind’s energy and resources are rationally spent towards it every day across the world.) Some weeks ago, on the 60th Anniversary of D-Day, Lady Soames, the daughter of Churchill, recalled the incredible fear and tension and uncertainty felt during the buildup to the invasion of Normandy; she said that when she finally heard the roar of the aeroplanes as they started across the English Channel: “I fell to my knees and prayed as I’d never prayed before or since” (BBC 1 June 6 2004, 8.40 am). A policeman’s wife in Costa Rica in Central America is shown making the sign of the cross upon her husband before he goes to work in the morning into a crime-ridden area from which he might not return safely at the end of the day. Footballers and boxers and opening batsmen around the world say a prayer before entering the field of contest. So do stockbrokers, foreign exchange dealers, businessmen, job-candidates and students taking examinations, and of course hospital-patients entering operating theatres. Before a penalty shootout between England and Portugal or Holland and Sweden, many thousands of logically contradictory prayers went up.

All this praying is done without a second thought about the ultimate ontological character of the destination of such prayers, or even whether such a destination happens or happens not to exist at all. The universal ubiquitous act of praying might be a rational human response to fear, uncertainty, hopelessness, and despair, as also to unexpected joy or excessive happiness.

Blake said: “Excess of joy, weeps, Excess of sorrow, laughs”. When there is excess of sorrow or excess of joy, praying may contribute mental resources like courage, tranquillity and equanimity and so tend to restore emotional equilibrium in face of sudden trauma or excitement. A provisional conclusion we may then register is that religious beliefs and practices of people around the world are open to be reasonably comprehended and explained in these sorts of straightforward ways, and at the same time there is a good sense in which progress in religious understanding is possible and necessary to be made following growth and improvement of our factual understanding of the world and Universe in which we live.

We still speak of the Sun “rising in the East” and “setting in the West” despite knowing since Copernicus and Galileo and the testimony of Yuri Gagarin, John Glenn and Neil Armstrong that the Sun has in fact never done any such thing. Our understanding of the same words has changed fundamentally. Tycho Brahe thought the Sun went around Earth; his disciple Kepler the opposite; when Tycho Brahe looked East at dawn he understood something different from (and inferior to) what Kepler understood when Kepler looked East at dawn. It is similar to Homer and us with respect to whether Poseidon’s moods affect the waves of the sea. Examples of traditional religious belief and understanding may get modified by our scientific knowledge and understanding such that the same words may mean something quite different as a result and have a new significance for our consciousness.

Indeed it extends well beyond natural science to our understanding of literature, art and psychology as well. With the knowledge we have gained of ourselves — of our conscious waking minds as well as of our unconscious dreaming minds — after we have read and tried to grasp Blake, Goethe, Dostoevsky or Freud, we may quite well realise and comprehend how the thoughts and feelings residing in the constitutions of actual beings, including ourselves, are more than enough to describe and explain good and evil, and without having to refer to any beings outside ourselves residing elsewhere other than Earth. It is like the kind of progress we make in our personal religious beliefs from what we had first learned in childhood. We do not expect a person after he or she has experienced the ups and downs of adult life to keep to exactly the same religious beliefs and practises he or she had as a child at mother’s knee, and we do not expect mankind to have the same religious beliefs today as it did in its early history.

Bambrough concluded: “There is no incompatibility between a refurbished demythologised Homeric polytheism, a refurbished demythologised Christianity, and a refurbished demythologised Islam…. The Creation and the Resurrection, the Ascension and the Virgin Birth…may be very differently conceived without being differently expressed….we can still learn from the plays and poems of the ancient Greeks, although we reject the basis of the mythological structure through which they express their insight and their understanding. The myths continue to teach us something because they are attached to, and grounded in, an experience that we share. It would therefore be astonishing if the Christian religion, whether when considered as a united and comprehensive body of doctrine it is true or false, did not contain much knowledge and truth, much understanding and insight, that remain valuable and accessible even to those who reject its doctrinal foundations. In and through Christianity the thinkers and writers and painters and moralists of two thousand years have struggled to make sense of life and the world and men…. What is more, the life that they wrestled with is our life; the world they have portrayed is the world that we live in; the men that they were striving to understand are ourselves.”

Bambrough was addressing Church of England clergy forty years ago but in his reference to a refurbished demythologised Islam he might as well have been addressing Muslim clergy today — indeed his findings are quite general and apply to other theists as well as to atheists, and provide an objective basis for the justification of tolerance.

Judaism, Christianity and Islam each starts with a “religious singularity”, a single alleged moment in the history of human beings when a transcendental encounter is believed to have occurred: the Exodus of God’s Chosen People led by Moses; the Birth, Life, Death and Resurrection of God’s Only Son, Jesus Christ; the Revelation of God’s Book to His Messenger, Muhammad, Peace Be Unto Him, the Seal of the Prophets. Each speaks of a transcendental Creator, of just rewards and punishments awaiting us in a transcendental eternal life after mortal earthly death.

A different fork in the road says, however, that the wind blowing in the trees may be merely the wind blowing in the trees, nothing more; it is the path taken by Buddhism and Jainism, which deny the existence of any Creator who is to be owed our belief or reverence. It is also the path taken by Sigmund Freud the ultra-scientific rationalist of modern times: “It seems not to be true that there is a power in the universe, which watches over the well-being of every individual with parental care and brings all his concerns to a happy ending…. it is by no means the rule that virtue is rewarded and wickedness punished, but it happens often enough that the violent, the crafty and the unprincipled seize the desirable goods of the earth, while the pious go empty away. Dark, unfeeling and unloving powers determine human destiny; the system of rewards and punishments, which, according to religion, governs the world, seems to have no existence.”

We then seem to have a choice between a Universe Created or Uncreated, Something and Nothing, One and Zero, God and No God. Pascal said we have to bet on the Something not on the Nothing, bet on the One not on the Zero, bet on God being there rather than not being there. Pascal’s reasoning was clear and forms the basis of “decision theory” today: if you bet on God’s existence and God does not exist, you lose nothing; if you bet on God’s lack of existence and God exists, you’ve had it. The philosophies of my own country, India, speak of Zero and One, Nothing or Something, and almost leave it at that. Perhaps we know, or perhaps we do not says the Rg Veda’s Hymn of Creation.. Does our self-knowledge end with our mortal death or perhaps begin with it? Or perhaps just as there is an infinite continuum of numbers between 0 and 1, there is also an infinite continuum of steps on a staircase between a belief in Nothing and a belief in Something, between the atheism of Freud and the Buddhists and the theism of Judaism, Christianity and Islam. Generalising Bambrough’s findings, it would be surprising if we did not find each and every religion, whether theistic or atheistic, to contain some knowledge and truth, some understanding and insight, that remains valuable and accessible even to those who may otherwise reject the doctrinal foundations of any or all of them. In and through the religions, the thinkers, writers, painters, poets, sculptors and artists of thousands of years have struggled to make sense of our life and the world that we live in; the men and women they were striving to understand are ourselves.

4. Just after the September 11 attacks, I said in the Philippines that the perpetrators of the attacks would have been surprised to know of the respect with which the religious experience of the Prophet of Islam had been treated by the 19th Century British historian Thomas Carlyle: “The great Mystery of Existence… glared in upon (Mohammad), with its terrors, with its splendours; no hearsays could hide that unspeakable fact, ‘Here am I!’. Such sincerity… has in very truth something of divine. The word of such a man is a Voice direct from Nature’s own Heart. Men do and must listen to that as nothing else; all else is wind in comparison.” Carlyle told stories of Mohammad once not abiding by his own severe faith when he wept for an early disciple saying “You see a friend weeping over his friend”; and of how, when the young beautiful Ayesha tried to make him compare her favourably to his deceased wife and first disciple the widow Khadija, he had denied her: “She believed in me when none else would believe. In the whole world I had but one friend and she was that!” Carlyle’s choice of stories suggested the simple humanity and humility of Mohammad’s life and example, even an intersection between Islamic belief and modern science (”a Voice direct from Nature’s own Heart”). Carlyle quoted Goethe: “If this be Islam, do we not all live in Islam?”, suggesting there might be something of universal import in the message well beyond specifically Muslim ontological beliefs.

In general, the words and deeds of a spiritual leader of mankind like that of secular or scientific leaders like Darwin, Einstein, Aristotle, Adam Smith or Karl Marx, may be laid claim to by all of us whether we are explicit adherents, disciples or admirers or not. No private property rights attach upon their legacies, rather these remain open to be discussed freely and reasonably by everyone. Just as war is too important to be left to the generals, politics is too important to be left to the politicians, economics is definitely too important to be left to the economists; even science may be too important to be left to the scientists — certainly also, the religions are far too important to be left to the religious.

Yet Mr Osama Bin Laden and his friends, followers and potential followers, indeed any believing Muslims, are unlikely to be impressed with any amount of “external” praise heaped on Islam by a Carlyle or a Goethe, let aside by a President Bush or Prime Minister Blair. They may be wary of outsiders who bring so much praise of Islam, and will tell them instead “If you like Islam as much as you say you do, why not convert? It’s so easy. You have merely to say ‘God is One and Mohammad is the Seal of the Prophets’ – that’s all, you are Muslim, God is Great”.

Indeed Mr Bin Laden and friends are unlikely to be impressed with any kind of economic or carrot-and-stick policy of counter-terrorism, where incentives and disincentives are created by Western authorities like the US 9/11 Commission or the Blair Cabinet telling them: “If you are ‘moderate’ in your thoughts, words and deed you will earn this, this and this as rewards from the Government, but if you are ‘extremist’ in your thoughts, words and deeds then you shall receive that, that and that as penalties from the Government. These are your carrots and here is the stick.” It is Skinnerian behavioural psychology gone overboard. The incentives mean nothing, and the disincentives, well, they would merely have to be more careful not to end up in the modern Gulags.

We could turn from carrot-and-stick to a more sophisticated mode of negative rhetoric instead. If a doctrine C, declares itself to be resting upon prior doctrines B and A, then C’s reliability and soundness comes to depend on the reliability and soundness of B and A. If Islam declares itself to depend on references to a historical Moses or a historical Jesus, and if the last word has not been spoken by Jews, Christians, sceptics or others about the historical Moses or the historical Jesus, then the last word cannot have been spoken about something on which Islam declares itself to depend.

We can be more forceful too. Suicide-bombers combine the most sordid common crimes of theft and murder with the rare act of suicide as political protest. Suicide as political protest is a dignified and noble and awesome thing – many may remember the awful dignity in the sight of the Buddhist monks and nuns of South Vietnam immolating themselves in 1963 in protest against religious persecution by Diem’s Catholic regime, which led to the start of the American war in Vietnam. Six years and half a world away, Jan Palach, on January 19 1969, immolated himself in Wenceslas Square protesting the apathy of his countrymen to the Soviet invasion that had ended the Prague Spring. Socrates himself was forced to commit suicide for political reasons, abiding by his own injunction that it would be better to suffer wrong oneself than to come to wrong others — suicide as political protest is not something invented recently. And certainly not by Bin Laden and friends, whose greed makes their intentions and actions merely ghastly lacking all dignity: they are not satisfied like the Buddhist monks or like Jan Palach with political protest of their own suicides by self-immolation; they must add the sordid cruelty that goes with the very ordinary crimes of theft and mass murder as well.

Yet this kind of negative rhetorical attack too may not cut much ice with Mr Bin Laden and his friends. Just as they will dismiss our praise for Islam as being a suspicious trick, they will dismiss our criticism as the expected animus of an enemy.

To convict Mr Bin Laden of unreason, of contradicting himself, of holding contrary propositions x and ~x simultaneously and so talking meaninglessly and incoherently, we will have to bring out our heaviest artillery, namely, The Holy Q’uran itself, the Recital of Prophet Muhammad (Peace be upon Him). We may have to show explicitly how Mr Bin Laden’s own words contradict what is in The Q’uran. He and his followers would then be guilty of maintaining x and its contrary ~x at the same time, of violating the most basic law of logical reasoning, the law of excluded middle, of contradicting themselves, and therefore of speaking meaninglessly, incoherently, nonsensically regardless of their language, culture, nationality or religion. The Q’uran is a grand document and anyone reading it must be prepared to either considering believing it or having powerful enough reasons not to do so. “The great Mystery of Existence”, Carlyle said, “glared in upon (Mohammad), with its terrors, with its splendours; no hearsays could hide that unspeakable fact, ‘Here am I!’. Such sincerity… has in very truth something of divine. The word of such a man is a Voice direct from Nature’s own Heart. Men do and must listen to that as nothing else; all else is wind in comparison.”

Certainly, as in many other religions, the believers and unbelievers are distinguished numerous times in the Prophet’s Recital; believers are promised a Paradise of wine and many luxuries, while unbelievers are promised hell-fire and many other deprivations. But who are these unbelievers? They are the immediate local adversaries of the Prophet, the pagans of Mecca, the hanifs, the local tribes and sceptics arrayed against the Prophet. It is crystal clear that these are the people being named as unbelievers in The Q’uran, and there is absolutely no explicit or implicit mention or reference in it to peoples of other places or other times. There is no mention whatsoever of Anglo-Saxons or Celts, Vikings, Goths, or Gauls, of Hindus, Jains, Buddhists, Confucians or Shintos, no mention of Aztecs, Incas, or Eskimos. There is no mention of any peoples of any other places or of any later times. Certainly there is no mention of the people of modern America or Israel or Palestine or Britain or India. Yet Mr Bin Laden evidently sent an email to the head of the Taliban on October 3 2001, in which he referred to “defending Islam and in standing up to the symbols of infidelity of this time” (Atlantic Monthly, Sep. 2004). We are then able to say to him or any of his friends: “Tell us, Sir, when you declare a war between believers and unbelievers in the name of Islam, whom do you mean to refer to as “unbelievers”? Do you mean to refer to every person in history who has not been a Muslim, even those who may have been ignorant of Islam and its Prophet? Or do you mean to refer to the opponents and enemies the Prophet actually happened to encounter in his struggles during his mission as a proselytiser, i.e., the Arabic idolaters of Mecca, the hanifs and Qureshis, this local Jewish tribe or that local Christian or pagan tribe against whom the early Muslim believers had to battle strenuously and heroically in order to survive? If it is these local enemies of the Prophet and his early disciples whom you mean to refer to as “unbelievers” destined for Hell’s fires, there is textual evidence in The Recital to support you. But if you mean by “unbelievers” an arbitrary assortment of people across all space and all time, you are challenged to show the verses that give you this authority because there are none. Certainly you may have military or political reasons for wishing to engage in conflict with A or B or C — because you feel affronted or violated by their actions — but these would be normal secular reasons open to normal discourse and resolution including the normal laws of war as known by all nations and all peoples. There may be normal moral arguments to be made by radical Muslims against the US Government or against the Israeli Government or the British or Indian or some other Government — but there are no generalised justifications possible from within The Q’uran itself against these modern political entities. We should expose Mr Bin Laden and his friends’ lack of reason in both maintaining that Prophet Muhammad is the Seal of the Prophets, and also maintaining that they can extrapolate from The Q’uran something that is not in The Q’uran. The Q’uran speaks of no unbelievers or enemies of the Prophet or the early Muslims who are not their local enemies in that time and place.

Pritchard, the distinguished Oxford philosopher, once wrote an article called “Does Moral Philosophy Rest on a Mistake?” We today may have to ask a similar question “Does Islamist Philosophy Rest on a Mistake?”

5. If all this so far has seemed too clinical and aseptic in approaching the mystical matters of the spirit, I hasten to add finally that a decisive counterattack upon natural science may be made by both religion and art together. Our small planet is a satellite of an unexceptional star in an unexceptional galaxy yet we are still the centre of the Universe in that it is only here, as far as any of us knows, that such things as reason, intelligence and consciousness have come to exist. (Finding water or even primitive life elsewhere will not change this.) We alone have had an ability to understand ourselves and be conscious of our own existence — the great galaxies, black holes and white dwarfs are all very impressive but none of them can do the same. What responsibility arises for us (or devolves upon us) because of this? That is the perfectly good question asked by art and religion on which science remains silent. Life has existed for x million years and will be extinguished in y million more years, but we do not know why it arose at all, or what responsibility falls on those beings, ourselves, who have the consciousness to ask this. Religion and art cannot battle and win on science’s home ground but they can and do win where science has nothing left to say.

That is what DH Lawrence meant when he said the novel was a greater invention than Galileo’s telescope. Other artists would say the same. Art expresses life, and human cultures can be fresh and vigorous or decadent and redolent of death. The culture that evaluates its own art and encourages new shoots of creativity will be one with a vibrant life; the culture that cannot will be vulnerable to a merger or takeover. There is and has been only one human species, no matter how infinitely variegated its specimens across space and time. All have a capacity to reason as well as a capacity to feel a range of emotions in their experience of the world, something we share to an extent with other forms of life as well. And every human society, in trying to ascertain what is good for itself, finds need to reason together about how its members may be best able to survive, grow, reproduce and flourish, and this vitally demands freedom of inquiry and expression of different points of view. The lone voice in dissent needs to be heard or at least not suppressed just in case it is the right voice counselling against a course that might lead to catastrophe for all. To reason together implies a true or right answer exists to be found, and so the enterprise of truth seeking requires freedom as a logical necessity. It takes guts to be a lone dissenter, and all societies have typically praised and encouraged the virtues of courage and integrity, and poured shame on cowardice, treachery or sycophancy. Similarly, since society is a going concern, justice and fairplay in the working of its institutions is praised and sought after while corruption, fraud or other venality is condemned and punished. Leavis spoke of the need for an educated public if there was not to be a collapse of standards in the arts, since it was only individual candour that could expose shallow but dominant coteries.

Freedom is logically necessary to keep all potential avenues to the truth open, and freedom of belief and experience and the tolerance of dissent, becomes most obvious in religion, where the stupendous task facing everyone is to unravel to the extent we can the “Mystery of Existence”. The scope of the ontological questions is so vast it is only wise to allow the widest search for answers to take place, across all possible sources of faith, wherever the possibility of an insight into any of these subtle truths may arise, and this may explain too why a few always try to experience all the great religions in their own lifetimes. A flourishing culture advances in its science, its artistic creativity and its spiritual or philosophical consciousness. It would be self-confident enough to thrive in a world of global transmissions of ideas, practices, institutions and artefacts. Even if it was small in economic size or power relative to others, it would not be fearful of its own capacity to absorb what is valuable or to reject what is worthless from the rest of the world. To absorb what is valuable from outside is to supercede what may be less valuable at home; to reject what is worthless from outside is to appreciate what may be worthwhile at home. Both require faculties of critical and self-critical judgement, and the flourishing society will be one that possesses these qualities and exercises them with confidence. Words are also deeds, and deeds may also be language.

The crimes of September 11 2001 were ones of perverse terroristic political protest, akin on a global scale to the adolescent youth in angry frustration who kills his schoolmates and his teachers with an automatic weapon. But they were not something inexplicable or sui generis, but rather signalled a collapse of the old cosmopolitan conversation with Islam, and at the same time expressed an incoherent cry of stifled people trying to return to an austere faith of the desert. Information we have about one another and ourselves has increased exponentially in recent years yet our mutual comprehension of one another and ourselves may have grossly deteriorated in quality. Reversing such atrophy in our self-knowledge and mutual comprehension requires, in my opinion, the encouragement of all societies of all sizes to flourish in their scientific knowledge, their religious and philosophical consciousness and self-discovery, and their artistic expressiveness under conditions of freedom. Ultra-modern societies like some in North America or Europe may then perhaps become more reflective during their pursuit of material advancement and prosperity, while ancient societies like those of Asia and elsewhere may perhaps become less fearful of their capacity to engage in the transition between tradition and modernity, indeed, may even affect the direction or speed of change in a positive manner. To use a metaphor of Otto Neurath, we are as if sailors on a ship, who, even while sailing on the water, have to change the old planks of the ship with new planks one by one. In due course of time, all the planks get changed one at a time, but at no time has there not been a ship existing in the process — at no time need we have lost our history or our identity.

A General Theory of Globalization & Modern Terrorism (2001)

A General Theory of Globalization & Modern Terrorism with Special Reference to September 11

Subroto Roy

This was a keynote address to the Council of Asian Liberals & Democrats meeting on November 16 2001, Manila, Philippines, and was published in Singapore in 2002, Alan Smith, James Gomez & Uwe Johannen (Eds.) September 11 & Political Freedom: Asian Perspectives. It was republished in the West on January 26 2004 on the University of Buckingham website, when the author was Wincott Visiting Professor of Economics there. It came to be followed a few months later by a public lecture at the University, titled “Science, Religion, Art and the Necessity of Freedom: Reason’s Response to Islamism” which has also been published here.

1. Globalization Through a Wide-Angle Lens
2. Suicide, Terrorism & Political Protest
3. Science, Religion, Art, and the Necessity of Freedom
4. Asia’s Modern Dilemmas: Named Social Life or Anonymous Markets
5. September 11: the Collapse of the Global Conversation
6. Envoi

Synopsis: The world after September 11 2001 has seemed a very bewildering place — as if all liberal notions of universal reason, freedom, tolerance and the rule of law since the Enlightenment have been proven a lie overnight, deserving only to be flushed away in the face of a resurgence of ancient savageries. One aim of this essay is to show this would be too hasty an assessment; another is to provide a general theory of “globalization”, a notion which often has seemed lost for meaning.

1. Globalization Through a Wide-Angle Lens
The perpetrators of September 11 subjectively acted in the name of Islam. It would have surprised them to know of the great respect with which the religious experience of Prophet Muhammad (572-632 AD) had been treated in the English language by Carlyle in 1842:

“The great Mystery of Existence… glared in upon (Muhammad), with its terrors, with its splendours; no hearsays could hide that unspeakable fact, ‘Here am I!’. Such sincerity… has in very truth something of divine. The word of such a man is a Voice direct from Nature’s own Heart. Men do and must listen to that as nothing else; all else is wind in comparison.” 1

Carlyle told the story of Muhammad once not abiding by his own severe faith when he wept for an early disciple saying “You see a friend weeping over his friend”; and of how, when the young beautiful Ayesha tried to make him compare her favourably to his deceased wife and first disciple the widow Khadija, Muhammad had denied her:

“She believed in me when none else would believe. In the whole world I had but one friend and she was that!”

Carlyle suggested the simple humanity and humility of Muhammad’s life and example, and even an intersection between Islamic belief and modern science (“a Voice direct from Nature’s own Heart”). He quoted Goethe: “If this be Islam, do we not all live in Islam?”, suggesting there might be something of universal import in Muhammad’s message well beyond specifically Muslim ontological beliefs.
In general, the life or words of a spiritual leader of mankind like Muhammad, Christ, or Buddha, as indeed of discoverers of the physical world like Darwin or Einstein, or explorers of secular human nature like Aristotle, Adam Smith or Karl Marx, may be laid claim to by all of us whether we are explicit adherents, disciples or admirers or not. No private property rights may be attached upon their legacies, but rather these remain open to be discussed freely and reasonably by everyone.

A second example is more proximate. It is of M. K. Gandhi the Indian sitting in South Africa reflecting on the Christian ideas of Thoreau the American and Tolstoy the Russian, synthesizing these with Hindu-Jain notions of “ahimsa” or “non-hatred” into a technique of political action to be applied eventually to end British rule in India; then transferred a decade after Gandhi’s assassination to the U. S. Civil Rights Movement led by Martin Luther King Jr, and later, after King’s assassination, back to Nelson Mandela languishing in prison, who ends apartheid and brings in its place a “Truth and Reconciliation Commission” in South Africa.2
Construing globalization to mean merely Westernization of the East has been a commonplace error, leading to a narrow cramped perspective and reflecting ignorance of both East and West. There are countless examples of the Easternization of the West including the exportation of Judaism and Christianity, and of Indian and Arab mathematics and astronomy in the Middle Ages. There have been and will be countless cross-fertilizations between East and West, let aside the subtle influences of Africa and other cultures and continents on art, music, dance, sports and beliefs around the world. In general, whenever an idea, practice, institution or artifact transmits itself from its origin elsewhere, we have a little piece of globalization taking place. The speed and volume of such transmissions may have vastly increased in recent decades thanks to the growth of modern transport and communications but that is not to say some of the most important transmissions have not already taken place or may not yet take place. Ours like every generation may be biased in favour of its own importance.

2. Suicide, Terrorism & Political Protest
Global transmissions can be as soft and salubrious as Americans learning to enjoy football which is not American football. But they can be grim and desperate too — like the transfer of “suicide bombing” techniques from Sri Lanka’s civil war to the Palestinian-Israeli conflict; or the idea of schoolboys firing automatic weapons germinating from A Clockwork Orange to actuality thirty years later in an American or a German school.

In fact the Thoreau-Tolstoy-Gandhi techniques of civil disobedience or a hunger-strike inflicting pain or sacrifice on oneself to show an adversary his folly, slide naturally to a limit of suicide as political protest — as when the Buddhist Superior Thich Quang Duc, protesting religious persecution by Diem’s regime in South Vietnam, immolated himself on June 2 1963, soon to be followed by other Buddhist monks and nuns, leading to the end of the Diem regime and start of the American war in Vietnam. Six years and half a world away, Jan Palach, on January 19 1969, immolated himself in Wenceslas Square protesting the apathy of his countrymen to the Soviet invasion that had ended the Prague Spring. Suicide as political protest still abides by the Socratic injunction that it would be better to suffer wrong than to wrong others.3

Terrorism by suicide killing crosses that line — over into a world of utilitarian calculation on the part of the perpetrator that his or her suicide as political protest would be inadequate, and must be accompanied by causing death among the perceived adversary as well.

Gandhi, King and Mandela each had conservative, accommodative currents on one side, as well as radical dissident or parallel terrorist offshoots on the other, and we will return to ask why no non-violent political movement seems identifiable of which September 11 was the violent terrorist offshoot.

Where political protest is absent from the motivation, and killing the adversary becomes the aim with suicide merely the means, as with Japan’s kamikaze pilots, we have passed into a realm of international war between organized authorities in contrast with mere terrorism against some organized authority. A suicide-killer may of course subjectively believe himself/herself to be making a political protest though his/her principals may see him/her as an instrument of war.

Also, if it is correct to distinguish between kamikaze pilots and the perpetrators of September 11 by absence and presence of political protest in their motivation, terrorism typically arises as rebellion against some organized authority, and is to be contrasted precisely with war between organized authorities. “State terrorism” can then only refer to an organized authority being repressive to the point of using its power to cause terror, physical or mental, upon a people or individuals under its control. “State-sponsored” terrorism would be something else again, where an organized authority assists a terroristic rebellion against some other organized authority, amounting effectively to an undeclared international war.4

3. Science, Religion, Art, and the Necessity of Freedom
The question arises whether anything in human nature or society may be identified to help analyse, explain or predict the myriad transmissions of globalization taking place, whether salubrious or not. If such a theory claims to be “general”, it will need to be wide enough to try to explain the motivation for modern terrorism and September 11 2001 in particular.

We could start with the observable fact there is and has been only one human species, no matter how infinitely variegated its specimens across space and time. All have a capacity to reason as well as a capacity to feel a range of emotions in their experience of the world, something we share to an extent with other forms of life as well. And every human society, in trying to ascertain what is good for itself, finds need to reason together about how its members may be best able to survive, grow, reproduce and flourish. This process of common reasoning and reflection vitally requires freedom of inquiry and expression of different points of view. The lone voice in dissent needs to be heard or at least not suppressed just in case it is the right voice counselling against a course which might lead to catastrophe for all. To reason together implies a true or right answer exists to be found, and the enterprise of truth-seeking thus requires freedom as a logical necessity. It takes guts to be a lone dissenter, and all societies have typically praised and encouraged the virtues of courage and integrity, and poured shame on cowardice, treachery or sycophancy. Similarly, since society is a going concern, justice and fairplay in the working of its institutions is praised and sought after while corruption, fraud or other venality is condemned and punished.

A flourishing society may be viewed as one advancing in its scientific knowledge, its artistic achievements, and its religious or philosophical consciousness. Each of these dimensions needs to be in appropriate balance in relation to the others during the process of social and economic growth, and each has a necessity for its own aspect of freedom.

Science is our public knowledge regardless of culture or nationality gained of ourselves as members of the world and the Universe, and has been the most important common adversary of all religions. Who or what is homo sapiens relative to other living species? What is the difference between plants and animals? What constitutes a living organism? What is the structure of a benzene ring or a carbon atom or any atom or subatomic particle? What is light, sound, gravity? What can we say about black holes or white dwarfs? When did life begin on Earth and when is it likely to end? Are we alone in the Universe in being the only form of self-conscious life? Such questions have been asked and attempted to be answered in their own way by all peoples of the world, whether they are primitive tribes in hidden forests or sophisticated rocket scientists in hidden laboratories. Our best common understanding of them constitutes the state of scientific knowledge at a given time.
At the bar of reason, all religions lose to science wherever they try to compete on science’s home grounds, namely, the natural or physical world. If a religious belief happens to imply a material object can be in two places at the same time, that something can be made out of nothing, that the Sun and planets go around the Earth, that if you offer a sacrifice the rains will be on time, then it is destined to be falsified by experience. Science has done a lot of its work in the last few centuries, while the religions pre-date this expansion so their physical premises may have remained those of the science understood in their time. In all questions where religions try to take on the laws of scientific understanding head on, they do and must lose, and numerous factual claims made by all religions will disappear in the fierce and unforgiving heat of the crucible of scientific reasoning and evidence.
With the enormous growth of science, some scientists have gone to the limit of declaring no religious belief can possibly survive — that we are after all made up of dust and atoms alone, that there is no real difference between a mechanical talking doll and a gurgling baby who has just discovered her hands and feet.

Yet reasonable religious belief, action and experience does exist and may need to make its presence felt. Religion may not battle science and expect to win on science’s home ground but can and does win where science has nothing and can have nothing to say. It has been reasonable everywhere for men or women faced with death or personal tragedy to turn to religion for strength, courage or comfort. Such would be a point where religion offers something to life on which science has nothing of interest to say. These include the ultimate questions of life or death or the “Mystery of Existence” itself, in Carlyle’s term.

In fact the ultra-scientific prejudice fails ultimately to be reasonable enough, and is open to a joint and decisive counter-attack by both the religious believer and the artist. Modern science has well established that our small planet orbits an unexceptional member of an unexceptional galaxy. Copernicus by this started the era of modern science and began the end of the grip on Western culture of astrology, which was based on a geocentric Ptolomaic worldview (many Asian cultures like India and perhaps China still remain in that grip).

Yet the pre-modern geocentrism contained a subtle truth which has formed the foundation of both art and religion: to the best of scientific knowledge to this day, Earth is the centre of the Universe inasmuch as it is only here that reason and intelligence and consciousness have come to exist, that there is such a thing as the power to think and the power to love.5

We are, as far as anyone knows, quite alone in having the ability to understand ourselves and to be conscious of our own existence. The great galaxies, black holes and white dwarfs are all very impressive, but none of them is aware of its own existence or capable of the thought or love of any human baby or for that matter the commonest street dog.

What responsibility arises for human beings because of the existence of this consciousness? That is the common and reasonable question addressed by both religion and art, on which science is and must remain silent. We may come to know through science that life has existed for x million years and is likely to be extinguished in y million more years, but we do not know why it arose at all, or what responsibility devolves on those beings, namely ourselves, who have consciousness and reason to comprehend their own existence in the Universe.
D. H. Lawrence meant to raise this when he said the novel was a greater invention than Galileo’s telescope. Great painters, composers, or other artists can be imagined saying something similar. Art is the expression of life, and human cultures, like plants, may be fresh and vigourous with life or decadent and doomed to death. The society which both recognizes and comprehends its own artistic traditions through reasonable evaluation while encouraging new shoots of artistic creativity, will be one with a vibrant cultural life; the society incapable of evaluating its own art self- critically enough will be likely also to kill new creativity from within itself, and become vulnerable to a merger or takeover.

Science, religion and art each vitally requires freedom in order to thrive. In art, the function of reason arises in critical evaluation of literature, paintings, cinema, drama, music, dance, architecture and other aspects of aesthetics. Swimming against a full tide of majority opinion here often may be the right thing to do. The critic F. R. Leavis spoke of the importance of there being an educated public to maintain serious cultural standards; he meant that the freedom to be vigourously critical, often against shallow entrenched coterie opinions, may be the only safeguard preventing artistic or cultural standards from collapse. In science, the activity of reasoning whether in public with one another or privately within oneself, dispels scientific illusions (like astrology) and so enlarges the area occupied by a common empirical understanding. Freedom is logically necessary here to keep potential avenues towards the truth open; it extends also to protecting through tolerance those factual beliefs which may be manifestly false — it may be a crime to steal or commit murder but it is not a crime to hold erroneous factual beliefs about the world as such (e.g. astrology is wrong because Copernicus is right, but it would be illiberal to jail people for believing in astrology.) Such a need for freedom of belief and experience, as well as the tolerance of dissent, becomes most obvious in religion, where the stupendous task facing all human beings is of attempting to unravel the “Mystery of Existence”. The scope of these ontological questions, unanswered and unanswerable by science, is so vast it would be only wise to allow the widest search for answers to take place, across all possible sources and religious faiths, wherever the possibility of an insight into any of these subtle truths may arise. Perhaps that is why some solitary thinkers have sought to experience all the great religions in their own lifetimes, sometimes by deliberate conversion from one faith to the next.

A flourishing society, then, would be one which grows along the three planes of science, religion and art under conditions of freedom. And such a notion may be measured at different scales of social life. It starts with the family as the author of Anna Karenina knew in its famous opening sentence: “All happy families resemble one another, but each unhappy family is unhappy in its own way”. It could then move to flourishing tribes, neighborhoods or local communities, to flourishing towns, provinces, or whole nations. At any of these levels, the flourishing society is one which inhales deeply the fresh air of natural science, and so sees its knowledge of the material world grow by leaps and bounds; it encourages religious and philosophical discussions and tolerance so does not fail to comprehend its own purpose of being; and it lives creatively and self-critically in trying to improve the expressiveness of its artistic achievements. Such a society would be self-confident enough to thrive in a world of global transmissions of ideas, practices, institutions and artifacts. Even if it was small in economic size or power relative to others, it would not be fearful of its own capacity to absorb what is valuable or to reject what is worthless from the rest of the world. To absorb what is valuable from outside is to supercede what may be less valuable at home; to reject what is worthless from outside is to appreciate what may be worthwhile at home. Both require faculties of critical and self-critical judgement, and the flourishing society will be one which possesses these qualities and exercises them with confidence.

4. Asia’s Modern Dilemmas: Named Social Life or Anonymous Markets
Actual societies, whether small like families or large like nations, in East or West, now or in the past, typically display these qualities in relative balance, excess, or shortage.6 Broadly speaking, throughout the vast span of Asia, there has been unstinting admiration over the last two hundred years for the contribution of the modern West to art, architecture and the growth of scientific knowledge. Where it has come to be known and applied, there has been admiration for liberal Western political thought; while ancient Asian nations which hastily imported ideologies like fascism and communism have lived to regret it. Western political morality at its finest derives from the philosophy of Immanuel Kant that rational beings recognise one another’s autonomy and treat one another as ends in themselves, not as means towards each other’s ends. 7 We see this in action today in for example the cordial relations between the USA and Canada, or between North America and Europe, or in recent attempts at European integration.

Asian nationalists in the 20th Century struggled to try to establish individual autonomous national identities, as the West had done in the 18th and 19th centuries. Asian nationalism represented an unwillingness to be treated as mere means towards the ends of Western nations, something we still see today when country B is used to counter A, then C used to counter B, then D used to counter C, etc in the old imperial manner of divide and rule This remains a serious problem of international relations but is something Asia can resolve independently by seeking to create for herself free societies which flourish in science, religion and the arts which would then be robust, self-confident and autonomous enough to decline to be used as means towards others’ ends. Furthermore, Asian societies in some respects all resemble one another and pre-modern Western societies more than they do the contemporary West. These pre-modern societies were ones in which a person was identified by rights and obligations flowing from the place he or she came to occupy through inheritance or brave achievement, and centred around the loyalty of friendship and kinship, as well as fidelity of the household. The relationships between the sexes, between generations, between friends, all these across Asia today may still perhaps resemble one another and the pre-modern West more than they do some trends in the contemporary West. History and identity continue to predominate our cultures in Asia: everyone is someone’s son or daughter, someone’s brother or sister or friend or relative, everyone is from some place and is of some age; and every deed has a history to it which everyone knows about or wants to talk about.

In contrast, the modern Western financial economics which the present author teaches his students, describes a world of anonymous “efficient markets” with no memory; where anyone can thrive as long as he or she brings something of value to trade; where all information needed to determine prices tomorrow is contained in today’s prices and events; where nothing from yesterday is necessary to determine anything in the future; where the actual direction of price-change is random and cannot be consistently foretold, so we cannot in general make any prediction which will lead to profit without risk. We are to imagine a large number of players in such a market, each with only a tiny bit of market-power itself, and none able to move the terms of trade on its own. Each of these players then, according to the textbooks, seizes every chance to improve his or her own position regardless of all else, he or she will “buy low” and “sell high” whatever and whenever possible, until price differences between identical assets vanish and no extra profit remains to be squeezed out from anything. Such briefly is the pure theory of the efficient market economy which one teaches as an economist. One tells one’s students it is a good thing, and it is to be found, if anywhere in the best international financial markets, and that what globalization refers to is the whole world becoming like one big efficient marketplace.8

Yet, privately, Asia may have watched with dismay the near-collapse of family and social life which has sometimes accompanied the modern prosperity and technological advancement. The war in Vietnam brought obvious physical destruction to parts of Asia but may also have had more subtle corrosive long-term effects on the social fabric of the West. If there has been something liberal and humane about Western politics while Asian politics have been cruel and oppressive, there may also be something stable and chaste about traditional Asian family life while modern Western societies have sometimes seemed vapid and dissolute. Specifically, if it is fair to say there has been too little autonomy experienced by women and children in many Asian societies, it may be fair as well to observe a surfeit of choices may have arisen in some Western societies, greater than many women and children there may privately wish for. How does a society find its right balance on the question of the autonomy, modesty and protection of family life and other social relationships? The divorce courts of the ultra-modern world are places of deep misery for everyone except the lawyers involved in the trade, and as some Asian leaders have observed, something the globalization of Asia could well seek to avoid. Thus the dilemma faced by many Asians today may be how to absorb the efficiency of markets and sound governance of liberal political institutions, without the kind of private social collapse that seems to have occurred in many ultramodern societies, nor the kind of loss of political sovereignty against which Asian nationalists had struggled during the age of imperialism. We may now see how far this brief but general theory of globalization may be applied in explaining the bewildering events of September 11 2001.

5. September 11 : the Collapse of the Global Conversation
Words are also deeds while deeds may also convey meaning.9 The words and deeds of the perpetrators of September 11 2001, and of the nation-states organized against them since that date, are both components of a complex and subtle global conversation taking place as to the direction of our common future.
In earlier times, Gandhi, King and Mandela each led successful non-violent political protests of “non-white” peoples against “white” organized authorities. Their protests assumed a level of tolerance arising out of mutual respect between rebel and authority. None was a totalitarian revolutionary out to destroy his adversary in toto but rather each intended to preserve and nurture many aspects of the existing order. Each had first become the master of the (Christian?) political idiom of his adversary and was willing and able to employ this idiom to demonstrate the selfcontradiction of his opponent, who was typically faced with a charge of hypocrisy, of maintaining both x and its contrary ~x and so becoming devoid of meaning. Such political conversations of words and deeds required time and patience, and the movements of Gandhi, King and Mandela each took decades to fructify during the 20th Century. They had more conservative accommodative currents on one side, and more impatient radical terroristic offshoots on the other.

All such aspects seem absent from September 11 and its aftermath, which seems at first sight sui generis. No patient non-violent political protest movement can be identified of which September 11 was a violent terroristic offshoot or parallel. Tolerance has not merely vanished but been replaced by panic, mutual fear and hatred. Violence appears as the first and not last recourse of political discussion. The high speed of the modern world almost demands a winner to be declared instantly in conflicts with subtle and unobvious roots, and the only way to seem to win at speed is by perpetrating the largest or most dramatic amount of violence or cruelty. The world after September 11 2001 has seemed a very bewildering place — as if all liberal notions of universal reason, freedom, tolerance and the rule of law since the Enlightenment have been proven a lie overnight, deserving only to be flushed away in face of a resurgence of ancient savageries.

But this would be too hasty an assessment. The global conversation clearly collapsed very badly from the time of e.g. Carlyle’s effort in 1842 to understand Islam’s legacy to the point of September 11 2001 being carried out against the United States or Western civilisation in general in Islam’s name. Even so, the universal liberal virtues of patience, tolerance and common reasoning can still find use here — in identifying possible deep, long-term historical factors which may have accumulated or congregated together to cause such a crime to take place.
One such historical factor has been technological and economic: the invention and immense use of the internal combustion engine throughout the 20th Century, coupled with discovery of petroleum beneath the sands of Arabia — all of which has made the material prosperity of the modern West depend, in the current state of technology, on this link not becoming ruptured. A second and independent factor has been the history of Christian Europe’s alternating persecution and emancipation of the Jewish people, which leads in due course to the Balfour declaration of 1919 and, following the Nazi Holocaust, to the creation of modern Israel among the Arabic- speaking peoples. The history between Christianity and Judaism is one in which the Arabic-speaking peoples were largely passive bystanders. Indeed, they may have been almost passive bystanders in creation of their own nation-states as well — for a third historical factor must be the lack of robust development of modern political and economic institutions among them, with mechanisms of political expression and accountability often having remained backward perhaps more so than in many other parts of Asia.

The end of World War I saw not only Balfour’s declaration but also Kitchener, Allenby and T. E. Lawrence literally designing or inventing new nationstates from areas on a desert-map:

“Our aim was an Arab Government, with foundations large and native enough to employ the enthusiasm and self-sacrifice of the rebellion, translated into terms of peace. We had to … carry that ninety percent of the population who had been too solid to rebel, and on whose solidity the new State must rest…. In ten words, (Allenby) gave his approval to my having impertinently imposed Arab Governments… upon the chaos of victory…”

“(The secret Arab societies) were pro-Arab only, willing to fight for nothing but Arab independence; and they could see no advantage in supporting the Allies rather than the Turks, since they did not believe our assurances that we would leave them free. Indeed, many of them preferred an Arabia united by Turkey in miserable subjection, to an Arabia divided up and slothful under the easier control of several European powers in spheres of influence.” 10

Beginning with the Allied-induced Arab revolt against the Turks, the classic imperial doctrine of “balance of powers” or “divide and rule” has seemed to continue to be applied in rather more subtle diplomatic form up until the present: with post-Mossadeq Iran against any incipient Arab nationalism, then with Iraq against post-Revolutionary Iran, then against Iraq in the Gulf War of 1991. It is only during and after the Gulf War that Osama Bin Laden, as a totalitarian revolutionary, arose as an adversary of the West.

Throughout these decades, little or no spontaneous cosmopolitan political conversation seems to have occurred from which a mature, sustained indigenous Arab or other Muslim nationalism may have arisen as the basis for nation-states, as had done e.g. with Indian, Chinese, Japanese, Indonesian or Vietnamese nationalism.11

From 1919 to 1945, the global conversation became preoccupied with other matters, and from 1945 to the end of the Cold War, with yet other matters again. While the three long-term factors unfolded themselves through these turbulent decades, the natural vibrant free conversation vitally necessary for the political life of any people continued for the Arabic-speaking peoples to remain mostly stifled, dormant, inchoate or abortive. Expectedly enough, whatever little current it had turned inward to the insular austere roots of a faith of the desert:

“The Beduin of the desert…found himself indubitably free…. In his life he had air and winds, sun and light, open spaces and a great emptiness. There was no human effort, no fecundity in Nature: just the heaven above and the unspotted earth beneath. There unconsciously he became near God…. The Beduin could not look for God within him: he was too sure that he was within God. He could not conceive anything which was or was not God, Who alone was great…. This creed of the desert seemed inexpressible in words, and indeed in thought. It was easily felt as an influence, and those who went into the desert long enough to forget its open spaces and its emptiness were inevitably thrust upon God as the only refuge and rhythm of being…. This faith of the desert was impossible in the towns…” 12

But this attempt to return inevitably became something reactionary in the late 20th Century. Finding the Beduin and the original deserts of Arabia transformed over the intervening decades, it could only try to recreate itself among the Pashtoon in the barrenness of Afghanistan, and led to the bizarre scenes of the Taliban attempting to destroy televisions and cassette-tapes in the name of Islam.

6. Envoi
The crimes of September 11 2001 were ones of perverse terroristic political protest, akin on a global scale to the adolescent youth in angry frustration who kills his schoolmates and his teachers with an automatic weapon. But they were not something inexplicable or sui generis. They represented a final collapse of the centuries-old cosmopolitan conversation with Islam, while at the same time it was an incoherent cry of a stifled people trying to return to the austere faith of the desert. Words are also deeds, and deeds may also be language. What September 11 has demonstrated is that even while the information we have about one another and ourselves has increased exponentially in recent years, our mutual comprehension of one another and ourselves may well have grossly deteriorated in quality.

Reversing such atrophy in our self-knowledge and mutual comprehension requires, in the opinion of the present author, the encouragement of all societies of all sizes to flourish in their scientific knowledge, their religious and philosophical consciousness and self-discovery, and their artistic expressiveness under conditions of freedom. Ultra-modern societies like some in North America or Europe may then perhaps become more reflective during their pursuit of material advancement and prosperity, while ancient societies like those in Asia or elsewhere may perhaps become less fearful of their capacity to engage in the transition between tradition and modernity, indeed, may even affect the direction or speed of change in a positive manner.

To use a metaphor of Otto Neurath, we are as if sailors on a ship, who, even while sailing on the water, have to change the old planks of the ship with new planks one by one. In due course of time, all the planks get changed one at a time, but at no time has there not been a ship existing in the process — at no time need we have lost our history or our identity.

© Subroto Roy, November 16 2001; January 26 2004

1 Thomas Carlyle, Heroes and Hero Worship, London 1842.
2 In fact, “Gandhi’s correspondence with Tolstoy… only started after passive resistance had begun, and he only read Thoreau’s essay on civil disobedience when he was in prison for that very offence”. Judith M. Brown, Gandhi’s Rise to Power,Indian Politics 1915-1922, Cambridge University Press 1972.
3 Cf. The Collected Dialogues of Plato, Princeton, 1961, Gorgias 474b, 483a, b.Hannah Arendt, The Life of the Mind, Thinking, pp. 181-182, Harcourt Brace Jovanovich, 1971
4 Applying this to the Israeli-Palestinian conflict, the precise question would be
how far the present Palestinian authority may be objectively considered the organized authority of a nation-state: if it is, then Palestinian suicide-killings are acts of war; if it is not, they are acts of terrorism. The rhetoric on each side
5 Finding water or even primitive life elsewhere will not change this.
6 For example, the relatively new nation-states created upon the ancient societies of the Indian subcontinent to which the present author belongs, apparently display a surfeit of religiosity combined with a shortage of rational scientific growth, including the sciences of governance and economics. Despite the examples of solitary thinkers from Kabir and Nanak to Gandhi, the political and economic benefits of social tolerance still seem badly understood in the subcontinent. Equally, the mechanism of holding those in power accountable for their actions or omissions in the public domain has often remained extremely backward. A mature grasp of the division between the private and public spheres may also have been absent in Asia; the distinction between private and public property is often fuzzy or opaque; the phenomena of corruption and pollution are then easily explained as mirror-images of one another: corruption is the transmutation of something valuable from the public domain into private property; pollution is the expulsion of private waste into the public domain. Each is likely to be found with the other.
7 Groundwork of the Metaphysic of Morals, ed. H. J. Paton, Oxford
8 The contrast between “named” and “anonymous” societies occurred to the
author on the basis of the theoretical work of Professor Frank Hahn of Cambridge University, Cf. Equilibrium and Macroeconomics, MIT 1984.
9 This was emphasized by the late Cambridge philosopher Renford Bambrough, “Thought, word and deed”, Proceedings of the Aristotelian Society, Supp. Vol.
LIV, 1980, pp. 105-117.
10 T. E. Lawrence, Seven Pillars of Wisdom, A Triumph, 1926, Doubleday 1935, pp. 649, 659; pp. 46-47
11 The most may have been Attaturk’s Turkey, M. A. Jinnah’s creation of a Pakistan separate from India, and Algeria’s independence from France — all distant from the fulcrum of Arabia. In case of Pakistan, it was Hitler’s invasion of Poland that led the British, in something of a panic, to begin on September 3 1939 to treat Jinnah’s Muslim League on par with Gandhi ‘s Indian National Congress. The 1937 provincial election results had shown little support for Pakistan in the areas which today constitute that country. Cf. F. Robinson, “Origins” in Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s, edited by William E. James & Subroto Roy, Hawaii MS 1989, Sage 1992, Karachi OUP 1993.
12 Seven Pillars of Wisdom, pp. 40-41

Transparency and Economic Policy-Making

Transparency and Economic Policy-Making

An address by Professor Subroto Roy to the Asia-Pacific Public Relations Conference, (panel on Transparency chaired by C. R. Irani) January 30 1998.

This talk is dedicated to the memory of my sister Suchandra Bhattacharjee (14.02.1943-10.01.1998).
1. I would like to talk about transparency and economic policy-making in our country. For something to be transparent is, in plain language, for it to be able to be openly seen through, for it to not to be opaque, obscure or muddy, for it to be clear to the naked eye or to the reasonable mind. A clear glass of water is a transparent glass of water. Similarly, an open and easily comprehensible set of economic policies is a transparent set of economic policies.

The philosopher Karl Popper wrote a famous book after the Second World War titled The Open Society and its Enemies. It contained a passionate defence of liberal institutions and democratic freedoms and a bitter attack on totalitarian doctrines of all kinds. It generated a lot of controversy, especially over its likely misreading of the best known work of political philosophy since the 4th Century BC, namely, Plato’s Republic .[1] I shall borrow Popper’s terms ‘open society’ and ‘closed society’ and will first try to make this a useful distinction for modern times, and then apply it to the process of economic policy-making in India today.

2. An open society is one in which the ordinary citizen has reasonably easy access to any and all information relating to the public or social interest — whether the information is directly available to the citizen himself or herself, or is indirectly available to his or her elected representatives like MP’s and MLA’s. Different citizens will respond to the same factual information in different ways, and conflict and debate about the common good will result. But that would be part of the democratic process.

The assessment that any public makes about the government of the day depends on both good and bad news about the fate of the country at any given time. In an open society, both good news and bad news is out there in the pubic domain — open to be assessed, debated, rejoiced over, or wept about. If we win a cricket match or send a woman into space we rejoice. If we lose a child in a manhole or a busload of children in a river, we weep. If some tremendous fraud on the public exchequer comes to be exposed, we are appalled. And so on.

It is the hallmark of an open society that its citizens are mature enough to cope with both the good and the bad news about their country that comes to be daily placed before them. Or, perhaps more accurately, the experience of having to handle both good and bad news daily about their world causes the citizens in an open society to undergo a process of social maturation in formulating their understanding of the common good as well as their responses to problems or crises that the community may come to face. They might be thereby thought of as improving their civic capacities, as becoming better-informed and more discerning voters and decision-makers, and so becoming better citizens of the country in which they live.

The opposite of an open society is a closed society — one in which a ruling political party or a self-styled elite or nomenclatura keep publicly important information to themselves, and do not allow the ordinary citizen easy or reasonably free access to it. The reason may be merely that they are intent on accumulating assets for themselves as quickly as they can while in office, or that they are afraid of public anger and want to save their own skins from demands for accountability. Or it may be that they have the impression that the public is better off kept in the dark — that only the elite nomenclatura is in position to use the information to serve the national interest.

In a closed society it is inevitable that bad news comes to be censored or suppressed by the nomenclatura, and so the good news gets exaggerated in significance. News of economic disasters, military defeats or domestic uprisings gets suppressed. News of victories or achievements or heroics gets exaggerated. If there are no real victories, achievements or heroics, fake ones have to be invented by government hacks — although the suppressed bad news tends to silently whisper all the way through the public consciousness in any case.

Such is the way of government propaganda in almost every country, even those that pride themselves on being free and democratic societies. Dostoevsky’s cardinal advice in Brothers Karamasov was: “Above all, never lie to yourself”. Yet people in power tend to become so adept at propaganda that they start to deceive themselves and forget what is true and what is false, or worse still, cannot remember how to distinguish between true and false in the first place. In an essay thirty years ago titled Truth and Politics, the American scholar Hannah Arendt put it like this:

“Insofar as man carries within himself a partner from whom he can never win release, he will be better off not to live with a murderer or a liar; or: since thought is the silent dialogue carried out between me and myself, I must be careful to keep the integrity of this partner intact, for otherwise I shall surely lose the capacity for thought altogether.”[2]

3. Closed societies may have been the rule and open societies the exception for most of human history. The good news at the end of the 20th Century is surely that since November 7 1989, when the Berlin Wall fell, the closed society has officially ceased to be a respectable form of human social organization. The age of mass access to television and telecommunications at the end of the 20th Century may be spelling the permanent end of totalitarianism and closed societies in general. The Berlin Wall was perhaps doomed to fall the first day East Germans were able to watch West German television programs.

Other than our large and powerful neighbour China, plus perhaps North Korea, Myanmar, and some Islamic countries, declared closed societies are becoming hard to find, and China remains in two minds whether to be open or closed. No longer is Russia or Romania or Albania or South Africa closed in the way each once was for many years. There may be all sorts of problems and confusions in these countries but they are or trying to become open societies.

Under the glare of TV cameras in the 21st Century, horrors like the Holocaust or the Gulag or even an atrocity like Jalianwalla Bag or the Mai Lai massacre will simply not be able to take place anywhere in the world. Such things are not going to happen, or if they do happen, it will be random terrorism and not systematic, large scale genocide of the sort the 20th Century has experienced. The good news is that somehow, through the growth of human ingenuity that we call technical progress, we may have made some moral progress as a species as well.

4. My hypothesis, then, is that while every country finds its place on a spectrum of openness and closedness with respect to its political institutions and availability of information, a broad and permanent drift has been taking place as the 20th Century comes to an end in the direction of openness.

With this greater openness we should expect bad news not to come to be suppressed or good news not to come to be exaggerated in the old ways of propaganda. Instead we should expect more objectively accurate information to come about in the public domain — i.e., better quality and more reliable information, in other words, more truthful information. This in turn commensurately requires more candour and maturity on the part of citizens in discussions about the national or social interest. Closed society totalitarianism permitted the general masses to remain docile and unthinking while the nomenclatura make the decisions. Dostoevsky’s Grand Inquisitor said that is all that can be expected of the masses. Open society transparency and democracy defines the concept of an ordinary citizen and requires from that citizen individual rationality and individual responsibility. It is the requirement Pericles made of the Athenians:

“Here each individual is interested not only in his own affairs but in the affairs of the state as well; even those who are mostly occupied with their own business are extremely well-informed on general politics – this is a peculiarity of ours: we do not say that a man who takes no interest in politics is a man who minds his own business; we say that he has no business here at all.”[3]

5. All this being said, I am at last in a position to turn to economic policy in India today. I am sorry to have been so long-winded and pedantic but now I can state my main substantive point bluntly: in India today, there is almost zero transparency in the information needed for effective macroeconomic policy-making whether at the Union or State levels. To illustrate by some examples.

(A) Macroeconomic policy-making in any large country requires the presence of half a dozen or a dozen well-defined competing models produced by the government and private agencies, specifying plausible causal links between major economic variables, and made testable against time-series data of reasonably long duration. In India we seem to have almost none. The University Economics Departments are all owned by some government or other and can hardly speak out with any academic freedom. When the Ministry of Finance or RBI or Planning Commission, or the India teams of the World Bank or IMF, make their periodic statements they do not appear to be based on any such models or any such data-base. If any such models exist, these need to be published and placed in the public domain for thorough discussion as to their specification and their data. Otherwise, whatever is being predicted cannot be assessed as being very much more reliable than the predictions obtained from the Finance Minister’s astrologer or palmist. (NB: Horse-Manure is a polite word used in the American South for what elsewhere goes by the initials of B. S.). Furthermore, there is no follow-up or critical review to see whether what the Government said was going to happen a year ago has in fact happened, and if not, why not.

(B) The Constitution of India defines many States yet no one seems to be quite certain how many States really constitute the Union of India at any given time. We began with a dozen. Some 565 petty monarchs were successfully integrated into a unitary Republic of India, and for some years we had sixteen States. But today, do we really have 26 States? Is Delhi a State? UP with 150 million people would be the fifth or sixth largest country in the world on its own; is it really merely one State of India? Are 11 Small States de facto Union Territories in view of their heavy dependence on the Union? Suppose we agreed there are fifteen Major States of India based on sheer population size: namely, Andhra, Assam, Bihar, Gujarat, Haryana, Karnataka, Kerala, MP, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, UP and West Bengal. These States account for 93% of the population of India. The average population of these 15 Major States is 58 million people each. That is the size of a major country like France or Britain. In other words, the 870 million people in India’s Major States are numerically 15 Frances or 15 Britains put together.

Yet no reliable, uniformly collected GDP figures exist for these 15 States. The RBI has the best data, and these are at least two years old, and the RBI will tell you without further explanation that the data across States are not comparable. If that is the case at State-level, I do not see how the national-level Gross Domestic Product can possibly be estimated with any meaningfulness at all.

(C) Then we hear about the Government Budget deficit as a percentage of GDP. Now any national government is able to pay for its activities only by taxation or borrowing or by using its monopoly over the domestic medium of exchange to print new money. In India today, universal money-illusion seems to prevail. It would not be widely recognised by citizens, journalists or policy-makers that, say, 100,000 Rupees nominally taxed at 10% under 20% inflation leaves less real disposable income than the same taxed at 20% with 5% inflation. This is in part because inflation figures are unknown or suspect. There is no reliable all-India or State-level consumer price index. The wholesale price index on the basis of which the Government of India makes its inflation statements, may not accurately reflect the actual decline in the purchasing power of money, as measured, say, by rises in prices of alternative stores of value like land. The index includes artificially low administered or subsidized prices for petroleum, cereals, and electricity. To the extent these prices may be expected to move towards international equilibrium prices, the index contains a strong element of deferred inflation. One urgent task for all macroeconomic research in India is construction of reliable price-data indices at both Union and State levels, or at a minimum, the testing for reliability by international standards of series currently produced by Government agencies.

Without reliable macroeconomic information being spread widely through a reasonably well-informed electorate, the Government of India has been able to wash away fiscal budget constraints by monetization and inflation without significant response from voters. The routine method of meeting deficits has become “the use of the printing press to manufacture legal tender paper money”, either directly by paying Government creditors “with new paper money specially printed for the purpose” or indirectly by paying creditors “out of loans to itself from the Central Bank”, issuing paper money to that amount. Every Budget of the Government of India, including the most recent ones of 1996 and 1997, comes to be attended by detailed Press discussion with regard to the minutae of changes in tax rates or tax-collection — yet the enormous phenomena of the automatic monetization of the Government’s deficit is ill-understood and effectively ignored. Historically, a policy of monetization started with the British Government in India during the Second World War, with a more than five-fold increase in money supply occurring between 1939 and 1945. Inflation rates never seen in India before or since were the result (Charts 0000), attended by the Great Famine of 1942/43. Though these were brought down after succession of C. D. Deshmukh as Governor of the Reserve Bank, the policy of automatic monetization did not cease and continues until the present day. Inflation “sooner or later destroys the confidence, not only of businessmen, but of the whole community, in the future value of the currency. Then comes the stage known as “the flight from the currency.” Had the Rupee been convertible during the Bretton Woods period, depreciation would have signalled and helped to adjust for disequilibrium. But exchange-controls imposed during the War were enlarged by the new Governments of India and Pakistan after the British departure to exclude convertible Sterling Area currencies as well. With the Rupee no longer convertible, internal monetization of deficits could continue without commensurate exchange-rate depreciation.

The Reserve Bank was originally supposed to be a monetary authority independent of the Government’s fiscal compulsions. It has been prevented from developing into anything more than a department of the Ministry of Finance, and as such, has become the captive creditor of the Government. The RBI in turn has utilized its supervisory role over banking to hold captive creditors, especially nationalized banks whose liabilities account for 90% of commercial bank deposits in the country. Also captive are nationalized insurance companies and pension funds. Government debt instruments show on the asset side of these balance-sheets. To the extent these may not have been held had banks been allowed to act in the interests of proper management of depositors’ liabilities and share-capital according to normal principles, these are pseudo-assets worth small fractions of their nominal values. Chart 0000 shows that in the last five years the average term structure of Government debt has been shortening rapidly, suggesting the Government is finding it increasingly difficult to find creditors, and portending higher interest rates.

General recognition of these business facts, as may be expected to come about with increasing transparency, would be a recipe for a crisis of confidence in the banking and financial system if appropriate policies were not in place beforehand.

(D) As two last examples, I offer two charts. The first shows the domestic interest burden of the Government of India growing at an alarming rate, even after it has been deflated to real terms. The second tries to show India’s foreign assets and liabilities together – we always come to know what is happening to the RBI’s reserve levels, what is less known or less understood is the structure of foreign liabilities being accumulated by the country. Very roughly speaking, in terms that everyone can understand, every man, woman and child in India today owes something like 100 US dollars to the outside world. The Ministry of Finance will tell you that this is not to be worried about because it is long-term debt and not short-term debt. Even if we take them at their word, interest payments still have to be paid on long-term debt, say at 3% per annum. That means for the stock of debt merely to be financed, every man, woman and child in India must be earning $3 every year in foreign exchange via the sale of real goods and services abroad. I.e., something like $3 billion must be newly earned every year in foreign exchange merely to finance the existing stock of debt. Quite clearly, that is not happening and it would stretch the imagination to see how it can be made to happen.

In sum, then, India, blessed with democratic political traditions which we had to take from the British against their will — remember Tilak, “Freedom is my birthright, and I shall have it” — may still be stuck with a closed society mentality when it comes to the all-important issue of economic policy. There is simply an absence in Indian public discourse of vigourous discussion of economic models and facts, whether at Union or State levels. A friendly foreign ambassador pointedly observed an absence in India of political philosophy. It may be more accurate to say that without adequate experience of a normal agenda of government being seen to be practised, widespread ignorance regarding fiscal and monetary causalities and inexperience of the technology of governance remains in the Indian electorate, as well as among public decision-makers at all levels. Our politicians seem to spend an inordinate amount of their time either garlanding one another with flowers or garlanding statues and photographs of the glorious dead. It is high time they stopped to think about the living and the future.

[1] Renford Bambrough (ed.) Plato, Popper and Politics: Some Contributions to a Modern Controversy, 1967.

[2] Philosophy, Politics and Society, 2nd Series, Peter Laslett & W. G. Runciman (eds.), 1967.

[3] Thucydides, History of the Pelopennesian War, II.40.

Constitution for a Second Indian Republic (April 1991)

Constitution for a Second Indian Republic

Author’s Note April 2007: I wrote “A Second Constitution for India” on October 2 1990 while working in an advisory capacity for Rajiv Gandhi, then Leader of the Opposition. But he did not get to see it and I was not able to guide any coherent discussion towards this vital subject. I published it on April 20 1991 in The Statesman in its Saturday supplement. While I am not sure I agree with all of my 1991  “Constitution” today, it may be useful for discussion. One salient feature of this concise 60-article Constitution is having a directly elected PM and Deputy PM with a tough Senate somewhat on the US pattern (though the distinction between Head of Government and Head of State is  maintained as in the present system) with a modified British pattern of parliamentary democracy continuing in the States.

I do, however, fully endorse what I wrote on December 30 2002 in a personal letter to the late C. R. Irani, in his capacity as a member of the “Constitutional Review Commission” (to which he responded with very warm agreement). That letter is placed below the text of the proposal and outlines some of what I think is most urgent today in India’s constitional progress.

“Nai Duniya”, Constitution of a Second Republic

by Subroto Roy

First published in The Statesman, April 20 1991

Preamble

We the People of India, in order to establish a more perfect Union of PERPETUAL PEACE; in which the ancient virtues of COURAGE,TRUTHFULNESS and JUSTICE may be better practiced; in which the FREEDOM and WELFARE of all our People may be more easily secured, do adopt, enact and give to ourselves this Constitution, on this the 26th day of January 1995.

FOUNDATION
1. India, that is Bharat or Hindustan, shall be a Union of States and Territories, and a sovereign member of the community of nations.

2. The Union of India shall be a democratic republic, and the Union shall guarantee a democratic and republican form of governance in each of its States and Territories.

3. The Union of India shall protect every State and Territory against foreign aggression and armed rebellion, and shall ensure its governance to be in accordance with  provisions of the Union Constitution.

4. A State or Territory may elect to establish its own Constitution, but no provision of the Constitution of any State of Territory shall be valid if it violates any provision of the Union Constitution.

FUNDAMENTAL RIGHTS OF CITIZENS
5. Every person born in the territory of India, or either of whose parents or any of whose grandparents was born in the territory of India, or who is a citizen of India at the commencement of this Constitution shall be a citizen of India by birth. Any person who has been domiciled in India for five years may become a citizen of India by naturalization according to law.

6. Every citizen of India who is not less than 21 years of age shall have the right to vote, and the right to vote shall not be denied or abridged on account of religion, race, sex, descent, caste or place of birth, or by reason of failure to pay any poll tax or any other tax.

7. The Union of India or any of its States or Territories shall not deny to any person within the territory of India equality before the laws or the equal protection of the laws.

8. No person within the territory of India shall be deprived of life, liberty or property save by authority of law, nor shall private property be taken for public use without just compensation.

9. The rights of citizens to be secure in their persons, homes, communications, papers and effects, against unreasonable searches and seizures shall not be violated, and no warrants shall issue but upon probable cause, supported by oath or affirmation, and describing the place to be searched, and the person or things to be seized.

10. No person accused of a criminal offence shall be compelled to be a witness against himself or herself, nor shall any person be arrested without being informed of the grounds of such arrest, nor shall any person in custody be deprived of the right to legal
counsel, nor shall the privilege of the writ of habeas corpus be suspended unless in the case of war or armed rebellion the public safety requires it.

11. No person shall be prosecuted or punished for the same offence more than once, nor shall excessive bail be required or excessive fines imposed, nor shall punishments be cruel or unusual.

12. The Union of India or any of its States or Territories shall not deny to any citizen the right to move freely throughout the territory of India or to reside or settle in any part of the territory of India.

13. The Union of India or any of its States or Territories shall not deny to any citizen the right to freedom of conscience, or the right to freely profess or practice religion, or establish, maintain and manage religious institutions in accordance with law and subject to public safety, order and health.

14. No citizen shall be subject on account of religion, race, caste, sex, descent or place of birth to any disability, liability or restriction with regard to public institutions, public places or places of worship, or use of public facilities, maintained wholly or partly out of public funds or otherwise dedicated to the use of the public.

15. The Union of India or any of its States or Territories shall not deny any citizen equality of opportunity or discriminate on account of religion, race, caste, sex, descent or place of birth.

16. The Union of India or any of its States or Territories shall not deny or abridge the freedom of speech, inquiry or expression of citizens, or the freedom of the press or broadcasting, subject to public safety, order, health, laws of defamation and standards of common morality.

17. The Union of India or any of its States or Territories shall not deny the right of citizens to form associations and unions, to assemble peaceably without arms, or to petition for redress of grievances, subject to public safety, order and health.

18. The Union of India or any of its States or Territories shall not deny to any citizen the right to practice any profession, trade or business, or carry on any occupation or means of livelihood, subject to public safety, order, health and standards of common morality.

19. Trade, commerce and enterprise throughout the territory of India shall be free, and the Union of India or any of its States or Territories shall not make any law to restrict them except in the interests of public safety, order, health, standards of common morality or economic efficiency.

20. No tax shall be levied or collected except by authority of law.

DUTIES OF CITIZENS
21. It shall be the duty of every person within the territory of India to abide by the Constitution of India and show no disrespect to its institutions; to participate in democratic processes and to vote in elections according to law; to make timely payments of taxes, fees and dues according to law; to keep clean and hygienic streets, roads, highways, neighbourhoods, waterways, railways, parks, public buildings and institutions; to protect public property; to protect the natural environment and to treat living creatures without cruelty; to abjure violence and promote harmony among all people; to value and preserve the languages and cultural history of the Indian subcontinent; to renounce practices derogatory to women or children.

EXECUTIVE, LEGISLATIVE AND JUDICIAL POWERS
22. There shall be a President of India in whom shall be vested the executive power of the Union, and who shall be the Supreme Commander of the Armed Forces of the Union. The President shall be elected indirectly by the citizens of India in the manner prescribed in Article 40 of this Constitution.

23. There shall be a Vice-President of India, who shall exercise the duties and functions of the President in the event of the death, resignation, incapacitation, absence or impeachment of the President. The Vice-President shall be elected indirectly by the citizens of India in the manner prescribed in Article 41 of this Constitution.

24. The President of India shall appoint a Prime Minister upon the advice of the citizens of India in a direct election in the manner prescribed in Article 43 of this Constitution. The Prime Minister of India shall be the Chief Executive Officer of the Union, and the President shall, in exercising the executive power of the Union, act at all times upon the advice of the Prime Minister. The Prime Minister shall keep the President of India informed at all times, and shall reconsider advice rendered if the President so requests it.

25. There shall be a Union Parliament which shall consist of the President, the Vice-President, the Prime Minister and two elected Houses.

The Upper House, or Council of the Nation, shall consist of members elected directly by the citizens of India according to States in the manner prescribed in Article 37 of this Constitution. The Lower House, or House of the People, shall consist of members elected indirectly by the citizens of India according to States, in the manner prescribed in Article 35 of this Constitution. The legislative power of the Union of India shall be vested in the Union Parliament.

A Bill, except a Tax Bill, may originate in either House. A Tax Bill, that is to say any Bill for the raising of revenue, shall originate in the Lower House. After a Bill has been passed in one House, it shall be sent to the other House which shall pass, modify or reject it. A Bill passed by both Houses shall be sent to the Prime Minister, upon whose approval it shall be sent to the President for signature upon which it shall become law. A Bill passed by both Houses which does not receive the approval of the Prime Minister shall be returned to the House where it shall have originated. If, after reconsideration, both Houses pass the Bill, each House by two thirds of its members, then the Bill shall be sent to the Prime Minister who shall advise the President that it be signed and become law.

26. There shall be a Supreme Court of India, consisting of a Chief Justice and Associate Justices appointed by the President upon the nomination of the Prime Minister with the advice and consent of the Upper House of the Union Parliament. The judicial power of the Union of India shall be vested in the Supreme Court and such courts inferior to it that it may establish or authorize. The Supreme Court of India shall have its seat in the capital of the Union and also in every State of the Union.

27. Each State shall have a Governor appointed by the President of India upon the nomination of the Prime Minister with the advice and consent of the Upper House of the Union Parliament. The Governor shall be vested with the executive power of the State, and shall be the supreme commander of all police forces within the State.

28. Each State shall have a Parliament, which shall consist of the Governor of the State and one or two chambers, elected by the citizens of the State in accordance with the Constitution or laws of the State. All legislative power of the State shall be vested in the State Parliament or such duly elected bodies of local government which the State Parliament shall establish by law.

29. The Governor of a State shall appoint a Chief Minister who shall be a member of the State Parliament enjoying the confidence of that Parliament. The Governor shall act upon the advice of the Chief Minister in exercising the executive powers of the State except in conditions of Emergency as stated in Article 56 of this Constitution. In the event no member of the State Parliament shall have its confidence, or in conditions of Emergency as stated in Article 56, the Governor of the State shall exercise the executive powers of the State in consultation with the State Parliament, until such a time as either such confidence comes to obtain, or new elections to the State Parliament take place within a maximum time of one year, or conditions of Emergency come to an end.

30. Each State Parliament shall elect its representatives to the Lower House of the Union Parliament in accordance with the provisions of Articles 34 and 35 of this Constitution.

31. Each State shall have a Supreme Court consisting of a Chief Judge and Associate Judges appointed by the Governor as the Constitution or laws of the State may establish. The judicial power of the State shall be vested in the Supreme Court of the State and such courts inferior to it as the Constitution or laws of the State may establish.

ELECTIONS AND TERMS OF OFFICE
32. All elections in the Union of India and its States and Territories shall be held on the 2nd day of October in any year, and this day shall be known as Election Day or Gandhi Jayanti and shall be a bank holiday. There shall be no more than 14 other bank holidays in the year, and no more than  2  in any month of the year.

33. The power required for the conduct of all elections to the Union Parliament and all State Parliaments shall be vested in a Chief Election Commissioner, who shall be appointed by the President upon the nomination of the Chief Justice of India with the advice and consent of the Prime Minister and the Upper House of the Union Parliament. The Chief Election Commissioner shall be assisted by four Associate Commissioners, one each for Northern, Central, Southern and Eastern India, and State Election Commissioners, one for each State.

34. Election to any State Parliament shall be for a maximum term of 4 years. A State Parliament shall consist of no more than 1000 members, chosen by direct election from territorial constituencies of the State, each member representing no more than 100,000 citizens so far as is possible.

35. Elections to the Lower House of the Union Parliament shall be for a term of 2 years, and the House shall stand dissolved every 2 years. The Lower House shall be elected indirectly by the citizens of the States, the delegations from a State being elected by members of the State Parliament. Each member of the Lower House shall represent indirectly 1 million citizens of the State so far as is possible. The Lower House of the Union Parliament shall have no more than 1000 members, each member having one vote.

36. The Lower House shall choose its own Speaker; determine the rules of its own proceedings; punish its members including by expulsion with the approval of two thirds of its members; keep a record of its proceedings and publish the same regularly except such parts as may in the judgement of the House require secrecy in the national interest. During their attendance in Parliament or travel to and from Parliament, members shall be privileged from arrest except for treason, felony or breach of peace. Nor shall any speech made in the Lower House be questioned in any other place. No member of the Lower House shall hold any other office of profit or honour of the Union of India or any State or Territory of India.

37. The Upper House of the Union Parliament shall have no more than 100 members, of whom 90 shall be chosen by direct election from territorial constituencies of the Union and shall have one vote each. Elections to the Upper House shall be for a term of 6 years, with one third of the elected members retiring every 2 years. No person shall be elected to the Upper House for more than three terms successively. For purposes of elections to the Upper House, the Union of India shall be divided into territorial constituencies each of approximately 10 million citizens, so long as there are no more than 22 constituencies from the States of Southern India (presently consisting of Tamil Nadu, Kerala, Andhra Pradesh, Karnataka and Goa); 22 constituencies from the States of Eastern India (presently consisting of Arunachal Pradesh, Tripura, Mizoram, Manipur, Meghalaya, Nagaland, Assam, Sikkim, West Bengal and Bihar); 22 constituencies from the States of Northern India (presently consisting of Uttar Pradesh, Himachal Pradesh, Jammu and Kashmir,Rajasthan, Punjab and Haryana); and 22 constituencies from the States of Central India (presently consisting of Gujarat, Maharashtra, Madhya Pradesh and Orissa). There shall be one constituency in the Union Territory of Delhi and one constituency in all other UnionTerritories together.

38. The President of India may appoint up to 10 members of the Upper House each of whom shall have no vote and shall hold one term of office of 2 years. The President shall make such appointments in view of considerations such as the representation of the arts, sciences, sports, literature or social work, as also the representation of any community, caste, religion or other group which, in the opinion of the President, deserves a voice in the Upper House in the national interest.

39. The Vice President of India shall chair the Upper House but shall have no vote unless they are equally divided. The Upper House shall choose its own Chairman pro tempore in the absence of the Vice President; determine the rules of its own proceedings; punish its members including by expulsion with the concurrence of two thirds of its members; keep a record of its proceedings and publish the same except as may in the judgement of the House require secrecy in the national interest. During their attendance in Parliament or their travel to and from Parliament, members shall be privileged from arrest except for treason, felony or breach of peace. Nor shall any speech made in the Upper House be questioned in any other place. No member of the Upper House shall hold any other office of profit or honour of the Union of India or any State or Territory of India.

40. The President of India shall be elected for a term of 5 years by the Union Parliament, and shall be a citizen of India not less than 35 years of age. If there are more than two nominations, there shall be a primary election in the Upper House by secret vote, and the names of those receiving the highest and second highest number of votes shall be sent to the Lower House which shall elect between them by secret ballot. The President of India shall not hold any other office of profit or honour.

41. The Vice-President of India shall be elected for a term of 5 years by the Union Parliament, and shall be a citizen of India not less than 35 years of age. If there are more than two nominations, there shall be a primary election in the Lower House by secret vote, and the names of those receiving the highest and second highest number of votes shall be sent to the Upper House which shall elect between them by secret ballot. The Vice-President of India shall not hold any other office of profit or honour.

42. The terms of the President and Vice-President shall not be concurrent.

43. The Prime Minister of India shall be appointed by the President upon the advice of the citizens of India in a direct election, and shall hold office for four years. The Prime Minister shall be a citizen of India not less than 35 years of age, and no person shall hold the office of Prime Minister for two terms successively. Candidates shall register 12 months prior to the date of the election with the Chief Election Commissioner. The Chief Election Commissioner shall report to the President the results of the election to the office of the Prime Minister, and the President shall appoint the candidate receiving the highest number of votes.

44. Upon the nomination of the Prime Minister, the President shall appoint a Deputy Prime Minister and a Council of Ministers, who shall hold office at the pleasure of the President and who shall assist the Prime Minister in the discharge of the duties of the office. The Deputy Prime Minister shall exercise the duties and functions of the Prime Minister in the event of the death, resignation, incapacitation, absence or impeachment of the Prime Minister.

45. The Prime Minister, the Deputy Prime Minister and the Council of Ministers shall from time to time answer the questions of members of the Union Parliament as requested by the latter, and the Prime Minister shall no less than once every year address the Union Parliament on the State of the Republic.

46. Neither the Prime Minister nor the Deputy Prime Minister nor any member of the Council of Ministers shall hold any other office of profit or honour.

DUTIES OF THE UNION AND THE STATES
47. The duties of the Union of India shall include

— defence of the Republic from foreign aggression, armed rebellion and crime
— foreign relations and foreign trade
— management of currency and exchange-rate
— management of the public debt of the Union
— inter-State highways, waterways and dams
— regulation of inter-State railways
— regulation of harbours and airports
— regulation of civil aviation
— regulation of communications and broadcasting
— protection of national monuments and archives
— development of space and atomic research, research
universities and institutes of national importance
— planning of metropolitan areas
— environmental protection, national forests, parks and wildlife
— regulation of banking other than rural banking
— regulation of stock exchanges and futures markets
— census, voter registration, and social security

48. The Union of India shall in addition
— promote and encourage State and local democracy
— reduce disparities of income and wealth consistent with economic efficiency
— reduce inequitable transfers of debt to future generations by ensuring balance in the Union Budget over a quincennial period
— promote harmony among the nations of the world, abjure violencein the settlement of international conflicts, foster respect for international law, and maintain just and honourable relations with other nations.

49. The original jurisdiction of the Supreme Court of India shall extend to substantive questions of law and constitutional interpretation; fundamental rights of citizens, and relations between the citizen and the Union and its States and Territories; international law; inter-State relations and commerce; relations between the Union and any State.

50. There shall be a Reserve Bank of India. Upon the nomination of the Prime Minister and with the advice and consent of the Upper House of the Union Parliament, the President of India shall appoint a Governor and Deputy Governors of the Reserve Bank of India. It shall be the duty of the Reserve Bank of India to maintain a sound currency, that is, a stable value of the Rupee for transactions within the Union and outside it. The Reserve Bank of India shall be further responsible for the charter and regulation of banks, and the efficient working of financial and credit markets.

51. Upon the nomination of the Prime Minister and with the advice and consent of the Upper House of the Union Parliament, the President of India shall appoint a Comptroller and Auditor General of India, who shall be responsible for the issue of public moneys and the audit of the accounts of the Union of India.

52. There shall be a Public Services Commission of India. Upon the nomination of the Prime Minister and with the advice and consent of the Upper House of the Union Parliament, the President of India shall appoint a Secretary-General of the Public Services Commission, who shall be responsible for all matters relating to the civil services of India.

53. The duties of each State of India shall include
— civil order and police forces in the State
— State highways, waterways and dams
— regulation of State railways
— land registration and tenurial reform
— agricultural pricing, stocks and extension
— animal husbandry
— colleges and non-research universities
— finance of schools and setting of school standards
— regulation of electricity
— regulation of insurance
— regulation of rural banking
— management of the public debt of the State
— vital statistics
— public health
— environmental protection
— State parks and forests

A State of India shall in addition
— extend processes of democracy by promoting ad encouraging constitutional local government
— reduce disparities of income and wealth consistent with requirements of economic efficiency
— reduce inequitable transfers of debt to future generations by ensuring balance in the State Budget over a quincennial period
— endeavour to secure a common civil code for citizens of the State
— promote harmony among the peoples of India.

The duties of local governments established in a State by law shall include provision of primary and secondary education or regulation thereof; provision of and maintenance of streets, roads and lighting or regulation thereof; provision of fresh water and sewage disposal or regulation thereof.

54. The original jurisdiction of the Supreme Court of a State shall extend to substantive questions of law and interpretation of the State Constitution; civil and criminal law within the State; marriage, divorce, custody and guardianship of minors; fundamental rights of citizens and relations between citizens and the State.

WAR AND EMERGENCY
55. The President of India, upon the advice of the Prime Minister and with the consent of a majority of each of the Union Parliament, shall have authority to declare and make war on behalf of the Union of India and its State and Territories, and to raise armed forces and resources for this purpose. A declaration of war may include the suspension of fundamental rights so long as that no such suspension shall continue for longer than 30 days without the consent of a majority of each House of the Union Parliament.

56. The President of India, upon the advice of the Prime Minister and with the consent of a two thirds majority of the Upper House of the Union Parliament, shall have authority to declare the whole of India or any part of its territory to face an imminent danger from foreign aggression, armed rebellion, disturbance or natural calamity, and proclaim an Emergency accordingly. Proclamation of Emergency may include declaration of Governor’s Rule in a State according to Article 29 and suspension of fundamental rights, so long as that no such suspension shall continue for longer than 30 days without the consent of a two thirds majority of the Upper House, and no elections to any State shall be delayed for longer than one year.

AMENDMENTS AND MISCELLANY
57. Within the groupings of States given in Article 37, new States may be formed or State boundaries altered by authority of the President of India, upon the advice of the Prime Minister and with the consent of two thirds of the members of each House of the Union Parliament and the consent of a majority of each State Parliament affected thereby.

58. The provisions of this Constitution may be amended by the authority of the President of India with the consent of a four fifths majority of each House of the Union Parliament.

59. Impeachment from office of the President, Vice-President, Prime Minister or Deputy Prime Minister of India shall be initiated by a four fifths majority of each House of the Union Parliament. The Speaker of the Lower House shall inform the Chief Justice of India of such a majority in each House, whereupon the Chief Justice shall constitute a Special Bench of the Supreme Court of India which shall act as the Court of Impeachment.

60. Written and printed communications between the Union of India and foreign nations; between the Union of India and the States of India, and between the States of India and the Union of India; and between the Union of India and citizens of India shall be in the Hindustani (Hindi) and English languages. Any language or dialect of India may be spoken in the Union Parliament or any State Parliament with the prior permission of the Chairman or Speaker of the chamber.”

December 30 2002 letter to Mr C. R. Irani, Constitutional Review Commission:

“Dear Mr. Irani, Other than yourself and Mr. Sorabji, most other members of the Constitutional Review panel seem to be retired judges or bureaucrats. How many are under 50 years of age? Or have demonstrable knowledge of e.g. modern economics or constitutional political theory? Such a panel may be worse than nothing, since after its fossilized reports are in, it will take another 50 years before genuine constitutional reform can be addressed. Here are some examples:1. There is no such thing as a “Central” Government of India. There used to be one taking orders from London, giving orders to “Provinces” on the periphery. Free India has been a Union of States. Each Indian is supposed to be and to feel as being a citizen both of the Union and of his/her State, owing loyalty and taxes at both levels. Yet the colonial anachronism continues in all our thought with devastating results, so, e.g. the States remain mendicants before an all-powerful “Centre” which remains a mendicant before the new “London”. Ergo, your panel should be talking about Union-State relations, and the proper nature of federalism in modern India. But is any member a recognised expert on fiscal finance? For a start, all our State and Union Government accounting would need to be sorted out properly before anyone can comprehend what is going on between them. 2. The Governor of the RBI must be made a Constitutional post, on par with e.g. the Auditor-General. Reason: Monetary policy needs to be made independent of the fiscal compulsions of the Government of the day, which was the intended function of the RBI at its inception in 1935. Instead it has become a large Department of the Finance Ministry. The RBI’s sole job should be to establish and maintain the soundness of the currency, both domestically and internationally. I wonder if such an idea will arise from the panel appointed to look into it. 3. Our 16 large States have an average population of 61 million people. Each needs to be allowed to have its own Constitution if it so wishes on the American model, where the Union Constitution presides over a large number of State Constitutions. Indeed the resolution of the J&K problem and indeed our problems with Pakistan may rest in a broad, controlled devolution of fiscal and monetary powers to all States, with the Union’s mandate becoming clearer and more focussed and feasible and realistic as a result. Will your panel talk about this? (Delhi does not forsake its own power, as even Old Man Tughlak found many years ago.) I could go on. Eleven years ago, I wrote in Foundations of India’s Political Economy “The 1950 Constitution was a marvellous document at the time. Since then it has become too bulky, too full of exceptions and qualifications, and far from comprehensible to the ordinary Indian. A neater, cleaner and shorter document may be sought which keeps the best of the 1950 Constitution and integrates it with the experience of forty years as well as the best of foreign constitutions, with the aim of promoting a system with less uncertainty and more stability.” The Statesman on April 20 1991 published my proposed Constitution for a Second Indian Republic, now … I enclose a copy for your interest. In Keshavananda Bharati the Supreme Court meant that liberal, republican, representative democracy in a free society with separation of powers must not be subverted by any sort of constitutional gimmickry. My proposals enhance such political values. I hope your panel may do the same.”

Three Memoranda to Rajiv Gandhi 1990-1991

THREE MEMORANDA TO RAJIV GANDHI 1990-1991

I. PAKISTAN, SECULARISM AND HINDU COMMUNALISM

II. FOREIGN POLICY

III. ECONOMIC POLICY

by

SUBROTO ROY

Author’s Note, April 2007: As told elsewhere here, in September 1990 I was appointed by Rajiv Gandhi to advise on the long-term agenda for the country. These advisory memoranda were first written by me in that capacity. The Economic Policy Memo was written in September-October 1990; the Foreign Policy Memo was written in February 1991 (during and after the Gulf War); the one on Secularism was a compendium of several smaller ones written in late 1990. These were confidential at the time though were based on the work of the perestroika projects on India and Pakistan that I had been leading since 1986 at the University of Hawaii.  As has been told elsewhere, I warned against Rajiv’s vulnerability to assassination.  My warnings went in vain.  When he was killed, I published these documents in The Statesman Editorial Pages of July 31, August 1, August 2 1991. The published subtitles were “Stronger Secular Middle”, “Saving India’s Prestige”, and “Salvation in Penny Capitalism” respectively. Needless to say, I do not today at age 52 agree with everything I wrote in these documents some 16 years ago at age 35-36, and my perspectives on the economy, Pakistan etc have matured further as may be seen from my current writings; but I am pleased to find I am today not  embarrassed more than very slightly by any statement I made back then.  My most recent writings relevant to the change in my thought since these documents include “What to tell Musharraf”, “Solving Kashmir”, “Law, Justice and J&K”, “India’s Macroeconomics”, “Fiscal Instability” and “India’s Trade and Payments”.

I. PAKISTAN, SECULARISM, AND HINDU COMMUNALISM (“Stronger Secular Middle”)

The world political order has seen immense structural changes recently. The most important of these are the result of the collapse of totalitarianism in the Soviet Union and Eastern Europe, and its replacement there by free and self-critical thought and  debate, with all the risks and responsibilities that these carry. As a result, the world economy too is on the verge of major change. There may well be by 2000 a pact led by people of European descent from Australia via the Americas and Europe to Siberia, and a smaller pact of East Asian peoples from the Sea of Japan to the Straights of Malacca. Competition between the powers in such a world will be for new markets and cheap sources of labour, energy and natural resources.  Given the fragmentation of the Islamic world and the overall weakness of Africa, it is China and our subcontinent which may be the only significant counterweights in this new balance of power. Both have long histories, resilient cultures, and vast populations, which make others apprehensive. But the future of China is far from clear to anyone. The collapse of totalitarianism seems certain after the passing of the present gerontocracy, but what will follow is anybody’s guess. At best, it may be the emergence after a power struggle of a Chinese Gorbachev who will free the domestic economy, restore political freedom, and restore Tibet’s self-governance. At worst, it may be a civil war between the remnants of the communists and some new Kuomingtang nationalists backed by Taiwan and Hong Kong. The one thing certain about China’s near term future is the oncoming uncertainty. This leaves our subcontinent, and here the key is India-Pakistan relations.

There is little doubt that the post-Partition configuration of India, Pakistan, and a divided and disputed Kashmir has been extremely detrimental to the welfare of all the people of the subcontinent, and has impoverished the general budgets and distorted the economies of both countries. If it has benefited important sections of the political and military elites of both countries, it has done so only at the expense of the general welfare of the masses. So long as the arms-race and elite-rivalry continues, the economies of both countries are likely to remain severely distorted, and there is little genuine prospect of improvements in mass welfare or the large-scale economic development of either country.

It seems hard to remember that little more than a generation or two ago, there was no problem of Kashmir on the subcontinent, or that, for the most part, the Muslims and Hindus lived in amity in undivided India. Partition came about because of the failure of the political dialogue between the Congress and Jinnah. This dialogue failed for three sets of reasons: the British role in the middle, the specific international context at the time, and the fact Congress and Jinnah were more often at cross-purposes than addressing the same issues. The proof they were largely at cross-purposes is indicated by the fact that Kashmir was never on the agenda of any serious discussion before Partition, yet ever since it has come to precisely symbolize the crisis over national identity in both India and Pakistan.
Now, in general, a country cannot have large land and naval forces at the same time. If it is assumed Pakistan and India must remain the perpetual military enemy of one another, both may have today more than adequate land and naval forces. But if that assumption is mistaken, then the real military weakness of the subcontinent taken as a whole becomes immediately apparent. This is made clear by the recent Gulf War, which is a defining event of the last half-century, and even perhaps of the whole century. If India and Pakistan are to protect themselves adequately in the modern world, they must do so by combined forces.

From a practical point of view, this cannot happen so long as each has its army trained at the other and calling it the “dushman”. On the other hand, the combination of both forces would immediately make the resulting force one of significant power, even though there would have to be further transition towards naval forces while infantries are transformed towards amphibious, airborne, reserve, and civil duties.

In the modern age, the defence of our subcontinent as a whole has to be naval and strategic, and such a defence cannot be made adequately so long as there are instead large rival armies facing one another in anger across a disputed border in Kashmir. The lesson of the Gulf War for the people of the subcontinent is that our bitter problems must be resolved, and resolved completely and permanently, in the way the bitter problems between France and Germany came to be resolved by De Gaulle and Adenauer.

Eventually, Kashmir (with or without Jammu and Ladakh) has to be united and demilitarized by both countries. But Kashmir cannot be independent any more than Punjab, Sind or Assam. Nor can a united Kashmir “go” to either India or Pakistan without further needless bloodshed. So the solution must be to try to mutually re-define the foundational basis of the sovereign states of our subcontinent after Partition. Indians and Pakistanis are free peoples who can voluntarily agree together to alter in their own interests the terms set hurriedly by Attlee or Mountbatten in the Indian Independence Act of 1947. Nobody but we ourselves keeps us prisoners of British or American definitions of who we are or might be.

For such a redefinition to take place, there has to be recognition that the configuration which occurred after Partition was a monumental mistake, which even Jinnah — the chain-smoking secular-minded Muslim nationalist — had not wanted at the time. (Jinnah’s cheerless speech to the Constituent Assembly of Pakistan is, incidentally, as secular a document as any.) The solution must be to reopen the dialogue where it failed almost fifty years ago, and to work towards a major constitutional revision for a new and stable configuration to emerge in all of our subcontinent. Fifty years is, after all, not a long time in the history of our peoples. This kind of a solution is further implied by an understanding of the nature of the three nationalist forces on the subcontinent: secular nationalism as is supposed to be represented by the Congress and its offshoots; Muslim nationalism as represented today by Pakistan; and Hindu nationalism as represented today by the BJP. For the whole of the present century, these have been the three permanent political forces on the subcontinent. Congress has been the most important and central force. But the fact Congress was started mostly by Hindus was enough for a Muslim political force in the form of the Muslim League to get created on one side of it. Muslim politicization had its own reaction of an explicitly Hindu politicization in the form of the Hindu Mahasabha on the other side of Congress. It is not long ago, relative to the length of our history, that the Muslim League and Hindu Mahasabha were just factions of the Congress in its struggle for independence, and many people like Jinnah had joint membership of both a communal and a secular organization.

The fact these three forces are permanent fixtures of our politics is of the highest importance. Each has changed in name, form and strength from time to time. The Muslim force went into the hands of Jinnah who, in course of bluffing his way with Congress and the British in the hope of gaining maximum advantage for his constituents, inadvertently created a moth-eaten Pakistan, which soon collapsed into military rule, foreign domination, civil war and secession. The Hindu political force became associated in the public mind with the assassination of Mahatma Gandhi, was eclipsed for a short while, then re-emerged in the form of the RSS, the Jana Sangha and now the BJP. Congress has stayed more or less in the middle. But with a frequent policy of expediency instead of a clear and convincing national philosophy, during decades of extreme economic and political crisis, Congress has been experiencing continuous factionalism and splintering into various disunited and opportunistic groups.

Nevertheless, a permanent configuration of political forces on the subcontinent can be identified of a secular middle, with Hindu and Muslim communal interests on either side of it. Each force is of such a size and importance that it must be respected and cannot be ignored. None of the three can be destroyed or converted by any one or combination of the other two. Congress and the BJP cannot destroy Muslim communalism as represented today by Pakistan. Congress and the Muslims cannot destroy Hindu communalism as represented today by the BJP. And the BJP and Pakistan will destroy one another and the whole of our subcontinent with them before they destroy secularism. Much as they might like to, neither can the RSS impose universal Hindu domination nor can the Pakistani ulema impose Islamic law over all parts of the subcontinent. Nor, for that matter, can Congress and its offshoots expect to spread secularism everywhere on the subcontinent.

These are the fundamental facts of political life on the subcontinent. They have not changed for 100 years, and, come what may, they are not likely to change for the next 50 years. If the forces are not recognised correctly and accomodated and reconciled properly, all that will happen is that the real and emotional resources of all sides will be drained against each other, until such a time as there is perhaps a break-up of the subcontinent and a repeat of the 18th century, with elites panicking and fleeing abroad if they can, mass blood-letting, while foreigners roam the country competitively in search of aluminium, manganese, coal, iron ore, oil, women, cheap labour, quick profits or whatever. Both the national movement for Independence from European rule and Jinnah’s desire to preserve the cultural identity of Indian Muslims will have become ghastly long-term failures. So long as the conflict between the Hindus and Muslims of the subcontinent continues, with secular forces caught in the middle, it is certain that the people of our subcontinent will not experience genuine mass economic improvement or be able to take their proper position in the world. Instead, we shall be completely vulnerable and defenceless with respect to predaory foreign powers in the post-Cold War world.

A genuine reconciliation between Pakistan and Hindu communalism is possible only via the revitalised leadership of a secular centre, with a clear-headed understanding of the facts and the way forward. It will require courage and calm statesmanship of a high order, of the kind shown by Willy Brandt, Sadat and Gorbachev in recent years. (Postscript: Rajiv Gandhi may have been able to show such statesmanship in his second term.)

II. FOREIGN POLICY (“Saving India’s Prestige”)
A key principle by which to guide the foreign policy of a large and potentially great nation like ours can be stated simply as follows:

An action of the Government of India outside the territory of India, i.e., an act of foreign policy, should be undertaken if and only if it protects or promotes Indian interests outside the territory of India.

Indian interests outside India encompass the private interests of Indian businessmen, Indian migrant workers and their descendants, Indian pilgrims, Indian students, Indian tourists etc, as well as the public interests of the Indian Republic such as the defence of the territory and property of India and the promotion overseas of the culture, languages and values of India.

It is a fact that Indian prestige on the world-stage has declined steadily since Independence. India’s share of world trade and finance used to be large in the 1750s, considerable in the 1850s, small but significant in the 1950s. It is close to insignificant today as we approach 2000. Accurately or not, we are perceived by those who think about us at all as a complex mess of a society, rife with caste, class and religious conflicts; moralistic and hypocritical beggars and braggarts on the world stage; very weak relative to our potential and our pretensions; with all talk and little ability. True or false, whether we like it or not, that is how we are perceived by many people outside India.

Repercussions of this view that the world has of us today are felt everywhere. A cynical Pakistani foreign minister once said about Non-Alignment: “Zero plus zero equals zero”. He was wrong then but would be right today. In public international circles, the Government of India is mostly ignored, and not even humoured or flattered the way some are because of their oil. Many Indians outside India face harrassment, hostility and discrimination of various degrees. This is related not only to the fact they are often competent and successful relative to local populations, but also to the perception that India is a weak and flabby country unable to protect her citizens abroad or offer them a proper life at home. If we are to formulate a new and effective foreign policy for India, we have to be first candid and realistic in our assessment of the facts and circumstances of the world situation and our present place in it.

Ideally, the foreign policy and defence of the subcontinent should be common. Differences between private Indians, Pakistanis, etc tend to disappear outside the subcontinent in face of common opportunities and adversities. If we are not able to persuade our neighbours about this in the short run, we may nevertheless act as far as possible as if we have a common policy, hoping to thereby persuade our neighbours by our example of the gains from such a policy. With this in mind, the broad aims of a new foreign policy may be formulated as follows:

A. Independence from so-called “foreign aid”. We do not ask for or accept public foreign aid from foreign Governments or international organizations at “concessional” terms. Requiring annual foreign aid is an indication of economic maladjustment, having to do with the structure of imports and exports and the international price of the Indian rupee. Receiving the so-called aid of others, e.g. the so-called Aid-India Consortium or the soft-loans of the World Bank, diminishes us drastically in the eyes of the donors, who naturally push their own agendas and gain leverage in the country in various ways in return. Self-reliance from so-called foreign aid would require making certain economic adjustments in commercial and exchange-rate policies, as well as austerity in foreign-exchange spending by the Government. Emergency aid from abroad (e.g. for disaster relief) or private voluntary aid need not be affected.

B. Promotion of amity and demilitarisation on the subcontinent. The idea would be to aim towards a more or less common foreign and military policy on the pattern of Western Europe within five or ten years. This will require some outstanding statesmanship and domestic political courage vis-a-vis Pakistan on the lines suggested in the previous memorandum.

C. Resolving the border-dispute with China by treaty. This too will require some clear-thinking statesmanship. The general trade-off between sectors may be a commonsensical way of breaking the impasse. Prima facie at least, Arunachal which we already have is probably more valuable to us than Aksai Chin which they already have, unless there are defence reasons to the contrary. A sound settlement should allow us to take a firm if quiet stand with them on Tibet. What they do at Tiannanmen may be not be our affair but what they do in Tibet is. Our position on Tibet has not been an altogether honourable one in the last 40 years.  Also we should seek to protect those of Indian descent in Hong Kong from the chaos that is likely to occur in 1997.

D. Promotion of emigration and reverse migration to and from e.g. North America, Hong Kong, Africa etc. On the one hand, we should export our most exportable product, which is inexpensive good quality labour skills. At the same time, any Indian or descendant of an Indian living abroad should be encouraged to return at will. This is important for economic reasons, in effect adding value to the stock of human capital in the country. It is even more important for political reasons, as it will undercut to some extent the overseas financing of domestic terrorism. Nationality laws have to be amended giving Indian nationality to as many people as possible of Indian descent. Every Indian abroad who has taken a foreign passport but wishes to retain or re-acquire Indian nationality at the same time should be encouraged by us to do so. This may go to isolate extremist opinion, as thousands of moderate emigrants in Britain and North America will presumably prefer to maintain or freely re-acquire Indian nationality alongside their new nationalities. Many may rediscover patriotism for their homeland, where they now feel rootless in alien cultures which is what subconsciously motivates the demand for an abstract separatism.

E. Promotion of commerce, finance and investment abroad — exports, imports, capital flows in and out, tourism, contacts and exchanges. This is of fundamental importance for economic reasons. It will entail establishing as quickly as possible conditions favourable for the freeing of the rupee, as will be described in the next memorandum.

F. Achievement of tolerable standards in sports, music, and the arts. Our sporting prowess has become laughable. This contributes to our dismal image in the outside world. The present system is utterly hopeless, because of the heavy and completely unnecessary Government involvement in sports. Sports can be and must be privatized as completely as possible. Let commercial advertising and private sponsorship help our athletic development with minimum Government involvement. For example, Government can give tax breaks to sponsors who finance athletes for competitive international sport. There is plenty of black money in the economy which can be induced to come out to support sports in the country. To a lesser extent, the state of music and the arts and the culture in general have also become hopeless due to the unnecessary Government involvement.

For these six new objectives of an effective Indian foreign policy to be achieved, there must be a clear-headed and consistently formulated long-term view. The basic means would be to make a major and distinct move away from multilateralism towards bilateralism in international affairs. This would begin with Pakistan, on the lines discussed in the previous memorandum. Our most active foreign policy must be on the subcontinent, followed by South East Asia to where we once exported Buddhism, Islam, Sanskrit and Hinduism. South East Asia is today thriving economically and is quite stable politically. We have to learn what we can from them and offer whatever we have in exchange. Then there are the major powers: the United States, the Soviet Union, Germany, Japan, Britain and France. Then there is the Islamic crescent from Morocco to Indonesia. Then there are the countries where Indians have gone or can still go as emigrants or where there are significant Indian interests. These include Australia, Canada, South Africa, East Africa, Fiji and the West Indies. Then there are continental powers like Brazil, Argentina, Egypt and Nigeria. Then there are regional groups like the European Community and Scandinavia as collectivities.

On the subcontinent, the relationship should be made domestic and familiar with the aim of identifying common interests and forging a common policy as soon as possible. With the others, a rational bilateralism would involve starting with a thorough assessment of bilateral relations country-by-country. What are the principal components of imports and exports and their rates of expansion or contraction? What are Indian assets and liabilities in each of these countries and how liquid are these? How significant are private Indian interests in each — immigrants, tourists, students, businesses, etc.? What is the scope for expansion of ties in view of our objectives? Etc. Long-term foreign policy requires a constant stock of reliable information and also a continuous flow into and out of that stock. This may require overhauling some of the civil services. For good foreign policy to be made and implemented, there should be easy flow between the IFS and IAS, academia and the military and intelligence services. The aim would be to have a pool of highly qualified people voluntarily pursuing foreign languages and research of national importance with respect to the different countries of the world. The dozens of unthinking think-tanks in Delhi may have to be drastically overhauled to actually produce something useful after all.

Having determined what are the priorities and what are not, a reallocation of the foreign exchange resources of the Government of India will be called for to achieve stated foreign policy objectives. This has to accompany the process of economic reform, as well as the vigourous pursuit of reasonable solutions to the subcontinent’s continuing political problems. Obtaining a broad national consensus on the objectives is very important. Once the thinking has been clarified and the pieces put in place, this may not be so hard to achieve.

III. ECONOMIC POLICY (“Salvation in Penny Capitalism”)
Our economic problems have to do with the misdefinition which has occurred since Independence of the role of government in the economy. Partly under the influence of numerous domestic and foreign economists and pseudo-economists, our Government since the 1950s has frequently done things which need not or should not be done by government at the expense of things which have to be done or can only be done by government. The prime indicator of economic mismanagement today is not the annual deficit, but rather the vast public debt today of more than Rs. 273,000 crores. Our Government has borrowed something like Rs. 3500/- on behalf of each man, woman and child in the country — and spent it. A pile of rupee coins adding up to the public debt of India would stretch 4.55 million km into the sky, or be as long as six trips to the moon and back. That is the size of the problem.
Commonsense says that for the individual family or business or the nation as a whole, if you borrow funds for productive purposes which repay their worth, the size of the debt incurred is immaterial. If you borrow on the credit of the Government of India and then add to the country’s capital stock (whether human capital via better health and education or physical capital like roads and bridges), then the size of the debt does not matter, as long as the payments of interest on the debt are matched by increases in the capital stock. But if Government spends borrowed funds recklessly without a thought to rates of return, no capital gets created and instead the economy approaches technical bankruptcy at which time foreign creditors come knocking at the door.

The roots of the crisis may be traced to the following:

(A) Politicians in democratic systems make competitive soft promises of cash and immediate benefits, without thinking of where the revenue is going to come from. It is recognition of this which this has led to the turnaround in the Western economies since 1979, and made politics there much more sober from an economic point of view.
(B) Our closed economy with a captive Reserve Bank and credit market has caused any amount of the currency to be debased internally. To correct the problem at the roots, these two factors have to be faced squarely.

Short Run Policy (0-6 months) All political parties, national or regional, whether they have been in power or not, are mutually responsible for the crisis. It has been one of the unintended side-effects of the democratic system we have chosen. Therefore, all parties have a responsibility to set things right, and the way to do so was thoughtfully placed in the Constitution by its framers in Article 360: in a situation in which the “financial stability or credit” of India is threatened, the President is entitled to declare a financial emergency. This would permit freezing all levels and increases in Government spending outside essential functions (defence, law and order, roads, transport and comunications, basic education and health), initiate cost-cutting in all non-essential parts of the Government, and create the appropriate mood of seriousness in the country.
Next there will have to be an increase in revenue without increasing taxes. Can this be done? (Bush had once called this Reagan/Thatcher idea “voodoo economics”.) In our economy it may be possible via the appropriate use of two facts — the vast black economy of undeclared income of perhaps Rs. 43,000 crores, and the vast Government-owned industrial and services sector plus any amount of Government-owned land and capital. The black economy has made our businessmen waste their enterprise in trying to cheat or buy out the Government. The Government-owned sector has led our workers to waste their skills and learning abilities in overmanned and unproductive occupations. Any reform-minded Government must be prepared to tackle corrupt or lazy businessmen, union bosses and Government employees, while creating a system which rewards initiative, honesty, enterprise and effort on the part of business, labour and the bureaucracy.
As part of the financial emergency, every Government department can be instructed to reduce costs by 10-25% every year for the next five years. Much of this may be possible without layoffs but by internal economies and tough administration — freezing wages and benefits, saving office-space, more clatter and less chatter, etc.

More crucially, there must be an absolute moratorium on strikes in the public sector. Only if an industry is vital to the national interest should it be in the public sector, e.g. space research, defence production or oil. Strikes in such industries damage the whole country and not just the individual employer. Therefore, either there are no strikes, or the industry is not vital to the nation and can be safely placed in the private sector.

This will set the example for more fundamental changes in industrial relations. Labour laws have to be applied or amended to ensure unions are run for the benefit of their members and not of union bosses or political parties. Unions are vital in industrial society to protect individual workers from exploitation, discrimimation and safety hazards. They are not supposed to be empires for unelected union bosses, arenas for party politics, or excuses for overmanning. Our productivity is shockingly low relative to international standards, and without crucial improvements in it we shall be wiped out if and when the economy is opened as it will have to be for other reasons.

Increasing productivity per head throughout the economy is therefore a vital preparatory step, and must be tackled in the first few months. The device of a strike has to be made a last resort. Workers have to be free to elect their leaders by secret ballot without fear or intimidation. Political parties have to be removed from the workplace. The power of toughs and vandals has to be broken by the ballot box.

At the same time, employment can be made to increase by leaps and bounds by freeing all domestic enterprise from licensing, controls and permits. Freeing domestic enterprise from retrograde Central and State laws may be again most easily done via the Constitution. Subject only to local laws of safety, morality and environmental protection, all trade, commerce and enterprise throughout the territory of India should be made free from Government interference or restriction. That was what was envisioned by Articles 19 and 301 of the Constitution.

The increase may be incalculable in employment, wages and income, and hence the consumption of the masses of our people. Important side-benefits will be that urban discontent, political vandalism and communalism will be reduced. An idle mind is the devil’s workshop — with increased employment via enterprise, there will be less time and inclination for political or communal crimes.

Special notice has to be given to banking policy, as banks affect all other enterprises. Our nationalised banks are in disastrous shape. Private banks are responsible to their share-holders; if bad loans are made or bad risks taken, or if costs are too high or service poor, then managements get replaced by the power of share-holders. In public sector banks this does not happen. Costs are very high, profit rates low or negative, loans are not repaid or should not have been made in the first place, and service is appalling. Small depositors place their confidence in them because they have no other place to put their meagre savings, and because they believe the Government knows best and is not itself bankrupt. If a serious opening of the economy is to be planned in the medium and long-term, there has to be adequate preparation of the monetary system, else there may be a run on the banks and a collapse in public confidence in the currency.

It becomes essential that costs in the public sector banks are slashed, loans get repaid, loan melas stop, and banks are run as banks and not as public charities or employment agencies. At the same time, the Reserve Bank has to be made independent of the Ministry of Finance and of parliamentary pressure, and preferably made constitutionally independent like the UPSC or the Auditor-General. The task of any central bank is to maintain a currency in which the domestic public can have confidence in making their economic transactions, and to reflect a realistic price on international currency markets. The Reserve Bank’s role has been severely distorted by it being forced practically at gunpoint to hold massive amounts of the Government’s debt, and to finance this by printing more and more paper money. Instead, the currency has to reflect real economic transactions, and the Reserve Bank can be instructed (as its own 1985 report said) to follow a non-inflationary monetary rule of expanding the money-supply only relative to the rate of growth of real income and output in the economy.
Similarly, markets for insurance and life-insurance have to be rescued from the bankruptcy of nationalisation. Insurance is a highly complicated industry involving the correct assessment and sharing of business and personal risks. The present industry is in a shambles and will probably have to learn the modern business almost from scratch. Yet reforming it is vital to a new and invigorated economy, and also to laying the basis for heath-insurance for the masses.

Medium-Run Policy (6-18 months) Next, a concerted effort will have to be made to raise revenue without raising taxes. To the contrary, tax rates have to be simplified and reduced if possible, and especially the system of invisible indirect excise taxes (which tend to hurt the poor most heavily) gradually changed as far as possible to visible direct income and wealth taxes. If revenues are to be raised without increasing taxes, it is black money and the public sector which must be made to come to the rescue of the country. The public sector belongs to the public — not to the IAS, not to the public sector unions and certainly not to local politicians.  Ideally, the most efficient and equitable means of share-holding of the public sector would be for every Indian adult to receive at the address of his or her domicile (or voter registration), upon a simple application and a processing fee, oe share-certificate in each enterprise being run by the Government of India. (An even better model would be to have a poverty-citerion, and give the shares to the poorest of the poor villages or village panchayats.) The shares would become tradeable; markets of penny-capitalism would spread throughout the villages of India, as each penny-capitalist decided whether to hold or sell the share-certificates thus received, and the Government would have safely handed over the ownership of the public sector to its rightful owners.

It would be a historic move for the distribution of national wealth, as scores perhaps hundreds of millions of new shareholders are created. The hidden hoards of black money would come out and become distributed equitably. Of course the shares of some public sector enterprises will not be worth much, but they will not be worth less than nothing. Nor would anyone be obliged to sell until it was privately profitable to do so. Future entrepreneurs (domestic or foreign) who wished to take over or turn around the fortunes of a bankrupt public sector firm would have to solicit the shares from a vast population of penny-capitalists.

Long-Run Policy (18+ months) Thus the key objective would be to control wasteful Government spending in order to place the Government in a position to redirect public resources towards the fundamental sources of economic growth for the common people of India. One further step would be necessary. This would be to make the rupee a hard currency of the world.
This will have to be done with utmost care and proper preparation of economic and political expectations. It will mean making every Indian — high or lowly, rich or poor — free to hold his or her assets, small as these may be, in any currency or precious metal of choice without Government intervention. Government would use its own reserves of foreign exchange and gold for its own purchases and obligations abroad — e.g. defence, diplomacy, or emergency reserves.  Success or failure will depend squarely on the credibility and resolve of the Government that there will be no U-turn. If the Government is steadfast and is believed, the rupee will fall some distance for some months and then turn upwards and rise some lesser distance, at which point it would have become a hard currency. The initial fall will bring out black money and pent-up demand, and may reduce the present (October 26 1990) artificial price of Rs. 20 to the dollar to even Rs. 40 or Rs 50 to the dollar. The import bill will become enormous, and immediate relief will have to be given by cutting back on import duties and excise taxes on petroleum equivalently, leading to a fall in revenue from these sources. Export incentives should be immediately withdrawn, as Indian exporters will face an unprecedented boom as the dollar prices of their goods tumble, and goods which were previously high-cost and unexportable become very exportable. The export boom may be so huge as to be inflationary in the short term, requiring the same steady monetary policy plus corrective action by release of food and other stocks. The critical burden will fall on expansion of supply and production — it is here that the importance of first establishing domestic free enterprise and cooperative industrial relations is seen, as domestic enterprise must be in a position to respond to an export boom when the rupee becomes a hard currency. The rupee would become a hard currency the moment its initial fall comes to an end and it starts upwards at a new and steady equilibrium value. At this value, our credit-worthiness in the world would be firm, our export-led boom would have begun, capital owned by Indians abroad would have begun to flow freely in, and the Government would be in a position to embark on fundamental changes for long term economic growth and welfare of the masses — specifically, village-based economic development and school-based village development. Most important, as people gain more control over their own individual futures, the mood and momentum should make the position one of strong confidence.

Rajiv Gandhi and the Origins of India’s 1991 Economic Reform

Rajiv Gandhi and the Origins of India’s 1991 Economic Reform

Subroto Roy

Author’s Note May 2008: The family of Rajiv Gandhi received a copy of this when it was first written in July 2005. An earlier abbreviated version “Encounter with Rajiv Gandhi: On the Origins of India’s 1991 Economic Reform” was published in October 2001 in Freedom First, Bombay, a journal founded by the late Minoo Masani and now edited by S V Raju. A copy of that article was received by all Congress MPs of the 13th Lok Sabha. In May 2002, the Congress Party passed an official resolution stating Rajiv Gandhi and not Narasimha Rao or Manmohan Singh was to be credited with having originated the 1991 economic reforms. This article has now been published in print in The Statesman Festival Volume, October 2007.  It may be profitably followed by “The Dream Team: A Critique”, “Solving Kashmir”, “Law, Justice & J&K”, “What to tell Musharraf”, “India’s Macroeconomics”, “Fiscal Instability”, “India’s Trade and Payments”, “Fallacious Finance”, “Against Quackery”, etc. My original advisory memoranda to Rajiv in 1990-1991 were published in The Statesman’s Editorial Pages July 31-August 2 1991, and now have been republished elsewhere here as well. See too https://independentindian.com/thoughts-words-deeds-my-work-1973-2010/rajiv-gandhi-and-the-origins-of-indias-1991-economic-reform/did-jagdish-bhagwati-originate-pioneer-intellectually-father-indias-1991-economic-reform-did-manmohan-singh-or-did-i-through-my-e/  https://independentindian.com/2014/08/07/haksar-manmohan-and-sonia/

I met Rajiv Gandhi for the first time on 18th September 1990 thanks to an introduction by S. S. Ray (see “I’m on my way out”: Siddhartha Shankar Ray (1920-2010)… | Independent Indian: Work & Life of Professor Subroto Roy) We met a half dozen or so times until his assassination in May 1991. Yet our encounter was intense and consequential, and resulted directly in the change of the Congress Party’s economic thinking prior to the 1991 elections. I had with me results of an interdisciplinary “perestroika-for-India” project I had led at the University of Hawaii since 1986. This manuscript (later published by Sage as Foundations of India’s Political Economy: Towards an Agenda for the 1990s edited by myself and W. E. James) was given by me to Rajiv, then Leader of the Opposition, and was instrumental in the change of thinking that took place. In interests of fairness, I tried to get the work to V. P. Singh too because he was Prime Minister, but a key aide of his showed no interest in receiving it.

The Hawaii project manuscript contained inter alia a memorandum by Milton Friedman done at the request of the Government of India in November 1955, which had been suppressed for 34 years until I published it in May 1989. Milton and Rose Friedman refer to this in their memoirs Two Lucky People (Chicago 1998). Peter Bauer had told me of the existence of Friedman’s document during my doctoral work at Cambridge under Frank Hahn in the late 1970s, as did N. Georgescu-Roegen in America. Those were years in which Brezhnev still ruled in the Kremlin, Gorbachev was yet to emerge, Indira Gandhi and her pro-Moscow advisers were ensconced in New Delhi, and not even the CIA had imagined the Berlin Wall would fall and the Cold War would be over within a decade. It was academic suicide at the time to argue in favour of classical liberal economics even in the West. As a 22-year-old Visiting Assistant Professor at the Delhi School of Economics in 1977, I was greeted with uproarious laughter of senior professors when I spoke of a possible free market in foreign exchange. Cambridge was a place where Indian economists went to study the exploitation of peasants in Indian agriculture before returning to their friends in the well-known bastions of such matters in Delhi and Calcutta. It was not a place where Indian (let alone Bengali) doctoral students in economics mentioned the unmentionable names of Hayek or Friedman or Buchanan, and insisted upon giving their works a hearing.

My original doctoral topic in 1976 “A monetary theory for India” had to be altered not only due to paucity of monetary data at the time but because the problems of India’s political economy and allocation of resources in the real economy were far more pressing. The thesis that emerged in 1982 “On liberty and economic growth: preface to a philosophy for India” was a full frontal assault from the point of view of microeconomic theory on the “development planning” to which everyone routinely declared their fidelity, from New Delhi’s bureaucrats and Oxford’s “development” school to McNamara’s World Bank with its Indian staffers.

Frank Hahn protected my inchoate liberal arguments for India; and when no internal examiner could be found, Cambridge showed its greatness by appointing two externals, Bliss at Oxford and Hutchison at Birmingham, both Cambridge men. “Economic Theory and Development Economics” was presented to the American Economic Association in December 1982 in company of Solow, Chenery and other eminences, and then Pricing, Planning and Politics: A Study of Economic Distortions in India published by London’s Institute of Economic Affairs, provoking the lead editorial of The Times on May 29 1984. The Indian High Commission sent the editorial to the Finance Ministry where it caused a stir as the first classical liberal attack on post-Mahalonobis Indian economic thought since B. R. Shenoy’s original criticism decades earlier. The “perestroika-for-India” project was to follow at Hawaii starting in 1986. New Delhi was represented at the project’s conference held between May 22-27 1989 by the accredited Ambassador of India to the USA, the accredited Consul General of India to San Francisco, and by the founder-director of ICRIER (see photo).

friedman-et-al-at-uh-india-conf-19891

All this I brought into that first meeting with Rajiv Gandhi on September 18 1990. That first day he came to the door to greet me. He was a handsome tall man with the most charming smile and manner, seemed pleased to see me and put me at ease at once. I gave him my books as well as the manuscript of the “perestroika for India” project. He gave me a celebratory volume that had just been published to mark his grandfather’s centenary. He began by talking about how important he felt panchayati raj was, and said he had been on the verge of passing major legislation on it but then lost the election. He asked me if I could spend some time thinking about it, and that he would get the papers sent to me. I said I would and remarked panchayati raj might be seen as decentralized provision of public goods, and gave the economist’s definition of public goods as those essential for the functioning of the market economy, like the Rule of Law, roads, fresh water, and sanitation, but which were unlikely to appear through competitive forces.

I distinguished between federal, state and local levels and said many of the most significant public goods were best provided locally. Rajiv had not heard the term “public goods” before, and he beamed a smile and his eyes lit up as he voiced the words slowly, seeming to like the concept immensely. It occurred to me he had been by choice a pilot of commercial aircraft. Now he seemed intrigued to find there could be systematic ways of thinking about navigating a country’s governance by common pursuit of reasonable judgement. I said the public sector’s wastefulness had drained scarce resources that should have gone instead to provide public goods. Since the public sector was owned by the public, it could be privatised by giving away its shares to the public, preferably to panchayats of the poorest villages. The shares would become tradable, drawing out black money, and inducing a historic redistribution of wealth while at the same time achieving greater efficiency by transferring the public sector to private hands. Rajiv seemed to like that idea too, and said he tried to follow a maxim of Indira Gandhi’s that every policy should be seen in terms of how it affected the common man. I wryly said the common man often spent away his money on alcohol, to which he said at once it might be better to think of the common woman instead. (This remark of Rajiv’s may have influenced the “aam admi” slogan of the 2004 election, as all Congress Lok Sabha MPs of the previous Parliament came to receive a previous version of the present narrative.)

Our project had identified the Congress’s lack of internal elections as a problem; when I raised it, Rajiv spoke of how he, as Congress President, had been trying to tackle the issue of bogus electoral rolls. I said the judiciary seemed to be in a mess due to the backlog of cases; many of which seemed related to land or rent control, and it may be risky to move towards a free economy without a properly functioning judicial system or at least a viable system of contractual enforcement. I said a lot of problems which should be handled by the law in the courts in India were instead getting politicised and decided on the streets. Rajiv had seen the problems of the judiciary and said he had good relations with the Chief Justice’s office, which could be put to use to improve the working of the judiciary.

The project had worked on Pakistan as well, and I went on to say we should solve the problem with Pakistan in a definitive manner. Rajiv spoke of how close his government had been in 1988 to a mutual withdrawal from Siachen. But Zia-ul-Haq was then killed and it became more difficult to implement the same thing with Benazir Bhutto, because, he said, as a democrat, she was playing to anti-Indian sentiments while he had found it somewhat easier to deal with the military. I pressed him on the long-term future relationship between the countries and he agreed a common market was the only real long-term solution. I wondered if he could find himself in a position to make a bold move like offering to go to Pakistan and addressing their Parliament to break the impasse. He did not say anything but seemed to think about the idea. Rajiv mentioned a recent Time magazine cover of Indian naval potential, which had caused an excessive stir in Delhi. He then talked about his visit to China, which seemed to him an important step towards normalization. He said he had not seen (or been shown) any absolute poverty in China of the sort we have in India. He talked about the Gulf situation, saying he did not disagree with the embargo of Iraq except he wished the ships enforcing the embargo had been under the U.N. flag. The meeting seemed to go on and on, and I was embarrassed at perhaps having taken too much time and that he was being too polite to get me to go. V. George had interrupted with news that Sheila Dixit (as I recall) had just been arrested by the U. P. Government, and there were evidently people waiting. Just before we finally stood up I expressed a hope that he was looking to the future of India with an eye to a modern political and economic agenda for the next election, rather than getting bogged down with domestic political events of the moment. That was the kind of hopefulness that had attracted many of my generation in 1985. I said I would happily work in any way to help define a long-term agenda. His eyes lit up and as we shook hands to say goodbye, he said he would be in touch with me again.

The next day I was called and asked to stay in Delhi for a few days, as Mr. Gandhi wanted me to meet some people. I was not told whom I was to meet but that there would be a meeting on Monday, 24th September. On Saturday, the Monday meeting was postponed to Tuesday because one of the persons had not been able to get a flight into Delhi. I pressed to know what was going on, and was told I was to meet former army chief K.V. Krishna Rao, former foreign secretary M. K. Rasgotra, V. Krishnamurty and Sam Pitroda.

The group met for the first time on September 25 in the afternoon. Rasgotra did not arrive. Krishna Rao, Pitroda, Krishnamurty and I gathered in the waiting room next to George’s office. The three of them knew each other but none knew me and I was happy enough to be ignored. It seemed mysterious while we were gathering, especially when the tall well-dressed General arrived, since none of us knew why we had been called by Rajiv, and the General remarked to the others he had responded at once to the call to his home but could not get a flight into Delhi for a day.

Rajiv’s residence as Leader of the Opposition had a vast splendid meeting room, lined with high bookshelves on one or two walls, a large handsome desk on one side, two spacious comfortable sofa sets arranged in squares, and a long conference table with leather chairs occupying most of the rest of the room. The entrance to it was via a small 10 ft by 10 ft air-conditioned anteroom, where George sat, with a fax machine, typewriters and a shredding machine, plus several telephones, and a used copy of parliamentary procedures on the shelf. Getting to George’s office was the final step before reaching Rajiv. There were several chairs facing George, and almost every prospective interviewee, no matter how senior or self-important, had to move from one chair to the next, while making small talk with George, as the appointment with Rajiv drew near. Opening into George’s office was a larger and shabbier waiting room, which is where we sat, which was not air-conditioned, and which opened to the outside of the building where a plainclothes policeman sometimes stood around with a walkie-talkie. There were large photographs of Mahatma Gandhi, Nehru and Indira Gandhi on the wall, and a modern print also hung incongruously. A dozen or more plastic chairs lined the walls. There were faded torn issues of a few old magazines on the plastic coffee-table, and on one occasion there was a television playing the new sporadic domestic cable news and weather information for the entertainment of the many visitors waiting. Via this waiting room went the vast majority of people who were to meet Rajiv in his office. To reach the waiting room, one had to walk a hundred yards along a path lined by splendid high hedges from the initial reception desk at the rear-gate, manned by Congress Seva Dal volunteers in khadi wearing Gandhi-caps. These persons were in touch with George’s office by telephone, and would check with George or his assistant Balasubramaniam before sending a visitor along. The visitor would then pass through a metal-detector manned by a couple of policemen. If someone’s face came to be known and had been cleared once, or if someone acted to the policemen like a sufficiently important political personage, such a person seemed to be waved through. Outside, the front-entrance of the premises were closed unless extremely important people were entering or exiting, while at the rear-entrance there were usually two or three jeeps and several plainclothes policemen, who might or might not challenge the prospective visitor with a kind of “Who goes there?” attitude before the visitor reached the Seva Dal reception desk. The whole arrangement struck me from the first as insecure and inefficient, open to penetration by professional assassins or a terrorist squad, let aside insiders in the way Indira Gandhi had been assassinated. I could not imagine counter-terrorist commandos would suddenly appear from the high hedges in the event of an emergency.

On that Tuesday when Rajiv finally called in our group, we entered hesitantly not knowing quite what the meeting was going to be about. Rajiv introduced me to the others and then spoke of why he had gathered us together. He wanted us to come up with proposals and recommendations for the direction the country should take on an assumption the Congress Party was returned to power in the near future. He said it would help him to have an outside view from specialists who were not party functionaries, though the others obviously had been closely involved with Congress governments before. Rajiv said we were being asked to write a draft of what may enter the manifesto for the next election, which we should assume to be forthcoming by April 1991. I asked what might have become of the “perestroika” manuscript I had given him at our previous meeting. He said he had gotten it copied and bound, and that along with my 1984 monograph, it had been circulated among a few of his party colleagues who included P. Chidambaram and Mani Shankar Aiyar.

The initial meeting left us breathless and excited. Yet within a few days, the others became extremely tied up for personal causes, and I found myself alone in getting on with doing what we had been explicitly asked to do. I felt I should get done what I could in the time I had while keeping the others informed. Rajiv had said to me at our first meeting that he felt the Congress was ready for elections. This did not seem to me to be really the case. He actually seemed very isolated in his office, with George seeming to be his conduit to the outside world. I decided to start by trying to write a definite set of general principles that could guide and inform thought about the direction of policy. I spent the evening of October 26 in the offices at Rajiv’s residence, preparing an economic policy memorandum on a portable Toshiba computer of his, the first laptop I ever used. After Rajiv’s assassination, this was part of what was published in The Statesmen’s center pages July 31-August 2, 1991.

Rajiv read the work and met me on October 30 or 31, even though he was down badly with a sore throat after his sadbhavana travels around the country; he looked odd clad in khadi with a muffler and gym shoes. He said he liked very much what I had written and had given it to be read by younger Congress leaders who would discuss it for the manifesto, for an election he again said, he expected early in 1991. I said I was grateful for his kind words and inquired whom he had shown the work to. This time he said Chidambaram and also mentioned another name that made me wince. In December 1990, I was back in Hawaii when I was called on the phone to ask whether I could come to Delhi. With the rise of Chandrashekhar as Prime Minister, Rajiv had called a meeting of the group. But I could not go.

In January 1991, the Gulf War brought an odd twist to my interaction with Rajiv. On January 15, the UN deadline for the withdrawal of Iraq from Kuwait passed without Iraqi compliance, and American-led forces started the heavy aerial bombardment of Iraq. The American media had built up the impending war as one of utter devastation and mass killing, especially when the American infantry became engaged. Estimated casualties on the American side alone were being wildly exaggerated by the number of “body-bags” being ordered by the Pentagon. An even larger conflagration was being imagined if Israel entered the fighting, while Saddam Hussein had vowed to set fire to Kuwait’s oil-fields before retreating. I like everyone else erroneously believed the media’s hyperbole about the impending regional catastrophe. On January 16, just after the bombing of Iraq had begun, I called an American family friend who had retired from a senior foreign policy role and who had known me from when I was an infant. In informal conversation, I mentioned to him that since other channels had by then become closed, an informal channel might be attempted via India, specifically via Rajiv who was still Leader of the Opposition but on whom the Chandrashekhar Government depended. The sole aim would be to compel an immediate Iraqi withdrawal without further loss of life. What transpired over the next few days was that a proposal to that effect was communicated at Rajiv’s decision to a high level of the Iraqis on the one hand, and evidently received their assent, while at the same time, it was mentioned to the authorities on the American side. But nothing came of it. Rajiv initiated a correspondence with Chandrashekhar beginning January 19, demanding a coherent formulation of Indian policy in the Gulf war, and faxed me copies of this. By February 8, the Times of India led by saying Rajiv’s stand “on the Gulf War demonstrates both his experience and perspicacity … in consonance with an enlightened vision of national interest”, and urged Rajiv to “give the nation some respite from [the] non-government” of Chandrashekhar. I taped my phone conversations with Rajiv during the Gulf War because notes could not be taken at the necessary speed; in late December 1991, I was to give his widow a copy of the tape for her personal record.

I returned to Delhi on Monday, March 18, 1991 as new elections had been announced. Rasgotra said I should be in touch with Krishna Rao, and the next day March 19 Krishna Rao met me for several hours. I told him what I thought were the roots and results of the Gulf war. He in turn generously told me what had happened while I had been away. He said the group had met Rajiv in December with the proposal that Rajiv better organize his time by having an “office manager” of larger political stature than George. The name of a UP Congressman of integrity had been put forward, but nothing had come of it. Rajiv had been advised to keep Chandrashekhar in power through the autumn of 1991, as Chandrashekhar was doing Rajiv’s work for him of sidelining V. P. Singh. The idea was to cooperate with Chandrashekhar until he could be pushed up to the Presidency when that fell vacant. Rajiv had been advised not to work in a Chandrashekhar cabinet, though in my opinion, had we been like the Scandinavians, it was not impossible for a former prime minister to enter another cabinet on the right terms in the national interest of providing stable government, which was imperative at the time. Things seem to have slipped out of control when Chandrashekhar resigned. At that point, Rajiv called the group together and instructed them to write a draft of the manifesto for the impending elections. I had advised readiness back in September but the lack of organization had prevented much tangible progress at the time. Our group was to now report to a political manifesto-committee of three senior party leaders who would report to Rajiv. They were Narasimha Rao, Pranab Mukherjee and Madhavsingh Solanki. Krishna Rao liased with Narasimha Rao, Krishnamurty with Mukherjee, Pitroda with Solanki. While Rajiv would obviously lead a new Congress Government, Mukherjee was the presumptive Finance Minister, while Narasimha Rao and Solanki would have major portfolios though Narasimha Rao was expected to retire before too long.

Krishna Rao said I should be in touch with Krishnamurty who was preparing the economic chapters of the draft of the manifesto. Krishnamurty told me he had brought in A. M. Khusro to the group, and there would be a 5 p.m. meeting at Khusro’s office at the Aga Khan Foundation. I arrived early and was delighted to meet Khusro, and he seemed pleased to meet me. Khusro seemed excited by my view that India and Pakistan were spending excessively on defence against each other, which resonated with his own ideas, and he remarked the fiscal disarray in India and Pakistan could start to be set right by mutually agreed cuts in military spending. (Khusro was eventually to accompany Prime Minister Vajpayee to Lahore in 1999).

Krishnamurty had prepared a draft dated March 18 of several pages of the economic aspects of the manifesto. After our discussions, Krishnamurty was hospitable enough to open the draft to improvement. That evening, the 19th, I worked through the night and the next morning to get by noon copies of a revised version with all the members of the group. At 4 p.m. on the 20th there was a meeting at Andhra Bhavan of the whole group except Pitroda, which went on until the night. The next day the 21st , Krishnamurty, Khusro and I met again at Andhra Bhavan for a few hours on the economic aspects of the draft. Then in mid-afternoon I went to Rasgotra’s home to work with him and Krishna Rao. They wanted me to produce the economic draft which they could then integrate as they wished into the material they were dictating to a typist. I offered instead to absorb their material directly on to my laptop computer where the economic draft was. Rasgotra was reluctant to let go control, and eventually I gave in and said I would get them a hard copy of the economic draft, which they then planned to re-draft via a stenographer on a typewriter. At this, Rasgotra gave in and agreed to my solution. So the work began and the three of us continued until late.

That night Krishna Rao dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. Krishna Rao asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.

This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the V. P. Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization.

The next day, Friday March 22, I worked from dawn to get the penultimate draft to Krishna Rao before noon as planned the night before. Rasgotra arrived shortly, and the three of us worked until evening to finish the job. I left for an hour to print out copies for a meeting of the entire group, where the draft we were going to submit would come to be decided. When I got back I found Rasgotra had launched an extended and quite unexpected attack on what had been written on economic policy. Would someone like Manmohan Singh, Rasgotra wanted to know, agree with all this talk we were putting in about liberalization and industrial efficiency? I replied I did not know what Manmohan Singh’s response would be but I knew he had been in Africa heading something called the South-South Commission for Julius Nyrere of Tanzania. I said what was needed was a clear forceful statement designed to restore India’s credit-worthiness, and the confidence of international markets. I said that the sort of thing we should aim for was to make clear, e.g. to the IMF’s man in Delhi when that person read the manifesto, that the Congress Party at least knew its economics and was planning to make bold new steps in the direction of progress. I had argued the night before with Rasgotra that on foreign policy we should “go bilateral” with good strong ties with individual countries, and drop all the multilateral hogwash. But I did not wish to enter into a fight on foreign policy which he was writing, so long as the economic policy was left the way we said. Krishnamurty, Khusro and Pitroda came to my defence saying the draft we had done greatly improved on the March 18 draft. For a bare half hour or so with all of us present, the draft was agreed upon. Later that night at Andhra Bhavan, I gave Krishna Rao the final copy of the draft manifesto which he was going to give Narasimha Rao the next day, and sent a copy to Krishnamurty who was liaising with Pranab Mukherjee. Pitroda got a copy on a floppy disc the next day for Solanki.

In its constructive aspects, the March 22 1991 draft of the Congress manifesto went as follows with regard to economic policy: “CHAPTER V AGENDA FOR ECONOMIC ACTION 1. Control of Inflation …. The Congress believes the inflation and price-rise of essential commodities… is a grave macroeconomic problem facing the country today. It has hit worst the poorest and weakest sections of our people and those with fixed incomes like pensioners. The Congress will give highest priority to maintaining the prices of essential commodities, increasing their production and supply using all appropriate economic instruments. 2. Macroeconomic Policy Framework To control inflation of the general price-level, the Congress will provide a predictable long-term policy framework. The average Indian household and business will not have their lives and plans disrupted by sudden changes in economic policy. Coherent monetary policy measures will be defined as called for by the Report of Experts of the Reserve Bank of India in 1985. The Long-Term Fiscal Policy introduced by the Congress Government of 1984-1989 will be revived. Medium and long-term export-import policies will be defined. The basis for a strong India must be a strong economy. The Congress believes a high rate of real growth is essential for securing a strong national defence, social justice and equity, and a civilized standard of living for all. As the party of self-reliance, Congress believes resources for growth must be generated from within our own economy. This means all wasteful and unproductive Government spending has to be cut, and resources transferred from areas of low priority to areas of high national priority. Subsidies have to be rationalized and reduced, and productivity of investments already made has to be improved. The widening gap between revenue receipts and revenue expenditure must be corrected through fiscal discipline, and the growing national debt brought under control as a matter of high priority. These policies in a consistent framework will create the environment for the freeing of the rupee in due course, making it a hard currency of the world of which our nation can be proud. Public resources are not unlimited. These have to be allocated to high priority areas like essential public services, poverty-reduction, strategic sectors, and protection of the interests of the weaker sections of society. Government has to leave to the initiative and enterprise of the people what can be best done by themselves. Government can now progressively vacate some areas of activity to the private, cooperative and non-government sectors. Black money in the parallel economy has become the plague of our economic and political system. This endangers the social and moral fabric of our nation. Artificial price controls, excessive licensing, capacity restrictions, outmoded laws on rent control and urban ceiling, and many other outdated rules and regulations have contributed to pushing many honest citizens into dishonest practices. The Congress will tackle the problem of black money at its roots by attacking all outmoded and retrograde controls, and simplifying procedures in all economic spheres. At the same time, the tax-base of the economy must be increased via simplification and rationalization of tax-rates and coverage, user-fees for public goods, and reduction of taxes wherever possible to improve incentives and stimulate growth. 3. Panchayati Raj India’s farmers and khet mazdoors are the backbone of our economy. Economic development is meaningless until their villages provide them a wholesome rural life. The Congress will revitalize Panchayat Raj institutions to decentralize decision-making, so development can truly benefit local people most effectively. 4. Rural Development Basic economic infrastructure like roads, communications, fresh drinking water, and primary health and education for our children must reach all our villages. The Congress believes such a policy will also relieve pressures from migration on our towns and cities…… Through the Green Revolution which the Congress pioneered over 25 years, our farmers have prospered. Now our larger farmers must volunteer to contribute more to the national endeavour, and hence to greater equity and overall economic development. Equity demands land revenue should be mildly graduated so that small farmers holding less than one acre pay less land revenue per acre…. 9. Education and Health The long-run prosperity of our nation depends on the general state of education, health and well-being of our people. Small families give themselves more choice and control over their own lives. Improving female literacy, promoting the welfare of nursing mothers and reducing infant mortality will have a direct bearing on reducing the birth-rate and improving the health and quality of all our people. Primary and secondary education has high social returns and is the best way in the long-run for achievement of real equality. Efforts will be made to reduce the cost of education for the needy through concessional supply of books and other study materials, scholarships and assistance for transportation and residential facilities. The Congress Party pledges to dedicate itself to promoting education, especially in rural areas and especially for girls and the weaker sections of society. The next Congress Government will prepare and launch a 10-year programme for introduction of free and compulsory primary education for all children of school age. It will continue to emphasize vocational bias in education, integrating it closely with employment opportunities…. 11. Industrial Efficiency Our industrial base in the private and public sectors are the core of our economy. What we have achieved until today has been creditable, and we are self-reliant in many areas. Now the time has come for industry to provide more efficiency and better service and product-quality for the Indian consumer. The public sector has helped the Indian economy since Independence and many national goals have been achieved. Now it has become imperative that the management of public sector units is made effective, and their productivity increased. Major steps must be taken for greater accountability and market-orientation. Failure to do this will make our country lose more and more in the international economy. Budgetary support will be given only for public sector units in the core and infrastructure sectors. Emphasis will be on improving performance and productivity of existing investments, not on creating added organizations or over manning. Units not in the core sector will be privatised gradually. Even in core sectors like Telecommunications, Power, Steel and Coal, incremental needs can be taken care of by the private sector. The Government-Enterprise interface must be properly defined in a White Paper. The Congress believes privatisation must distribute the profits equitably among the people of India. In order to make our public enterprises truly public, it is essential that the shares of many such enterprises are widely held by the members of the general public and workers. Congress pledges to allot a proportion of such shares to the rural Panchayats and Nagarpalikas. This will enhance their asset-base and yield income for their development activities, as well as improve income-distribution. 12. Investment and Trade Indian industry, Government and professional managers are now experienced enough to deal with foreign companies on an equal footing, and channel direct foreign investment in desired directions. Foreign companies often bring access to advanced technological know-how, without which the nation cannot advance. The Congress Government will formulate a pragmatic policy channelling foreign investment into areas important to the national interest. Every effort must be made also to encourage Indians who are outside India to invest in the industry, trade and real estate of their homeland. Because of the protected and inflationary domestic market, Indian industry has become complacent and the incentive for industrial exports has been weakened. When all production is comfortably absorbed at home, Indian industry makes the effort to venture into exports only as a last resort. This must change. A Congress Government will liberalize and deregulate industry to make it competitive and export-oriented, keeping in mind always the interests of the Indian consumer in commercial policy. Export-oriented and predictable commercial policies will be encouraged. Existing procedural constraints and bottlenecks will be removed. Quotas and tariffs will be rationalized. Thrust areas for export-development will be identified and monitored. Efforts will be made to develop a South Asian Community. Trade and economic cooperation among South Asian countries must be increased and simplified.”

This March 22 1991 draft of the Congress’s intended economic policies got circulated and discussed, and from it rumours and opinions appeared that Congress was planning to launch a major economic reform in India. Economic Times said the manifesto “is especially notable for its economic agenda” and Business Standard said “if party manifestos decide election battles” Congress must be “considered home and dry”. A senior IMF official told me three years later the manifesto had indeed seemed a radical and bold move in the direction of progress, which had been exactly our intended effect. When I met Manmohan Singh at the residence of S. S. Ray in September 1993 in Washington, Ray told him and his senior aides the Congress manifesto had been written on my computer. Manmohan Singh smiled and said that when Arjun Singh and other senior members of the Congress had challenged him in the cabinet, he had pointed to the manifesto. Yet, oddly enough, while the March 22 draft got discussed and circulated, and the Indian economic reform since July 1991 corresponded in fundamental ways to its contents as reproduced above, the actual published Congress manifesto in April 1991 was as tepid and rhetorical as usual, as if some party hack had before publication put in the usual nonsense about e.g. bringing down inflation via price-controls. Certainly the published manifesto was wholly undistinguished in its economic aspects, and had nothing in it to correspond to the bold change of attitude towards economic policy that actually came to be signalled by the 1991 Government.

On March 23, our group was to meet Rajiv at noon. There was to be an event in the inner lawns of Rajiv’s residence in the morning, where he would launch Krishna Rao’s book on India’s security. Krishna Rao had expressly asked me to come but I had to wait outside the building patiently, not knowing if it was a mistake or if it was deliberate. This was politics after all, and I had ruffled feathers during my short time there. While I waited, Rajiv was speaking to a farmers’ rally being held at grounds adjoining his residence, and there appeared to be thousands of country folk who had gathered to hear him. When it was over, Rajiv, smiling nervously and looking extremely uncomfortable, was hoisted atop people’s shoulders and carried back to the residence by his audience. As I watched, my spine ran cold at the thought that any killer could have assassinated him with ease in that boisterous crowd, right there in the middle of Delhi outside his own residence. It was as if plans for his security had been drawn up without any strategic thinking underlying them.

Krishna Rao arrived and graciously took me inside for his book launch. The event was attended by the Congress’s top brass, including Narasimha Rao whom I met for the first time, as well as foreign military attaches and officers of the Indian armed forces. The attaché of one great power went about shaking hands and handing out his business card to everyone. I stood aside and watched. Delhi felt to me that day like a sieve, as if little could be done without knowledge of the embassies. One side wanted to sell arms, aircraft or ships, while the other wanted trips abroad or jobs or green cards or whatever for their children. And I thought Islamabad would be worse — could India and Pakistan make peace in this fetid ether?

Proceedings began when Rajiv arrived. This elite audience mobbed him just as the farmers had mobbed him earlier. He saw me and beamed a smile in recognition, and I smiled back but made no attempt to draw near him in the crush. He gave a short very apt speech on the role the United Nations might have in the new post-Gulf War world. Then he launched the book, and left for an investiture at Rashtrapati Bhavan. We waited for our meeting with him, which finally happened in the afternoon. Rajiv was plainly at the point of exhaustion and still hard-pressed for time. He seemed pleased to see me and apologized for not talking in the morning. Regarding the March 22 draft, he said he had not read it but that he would be doing so. He said he expected the central focus of the manifesto to be on economic reform, and an economic point of view in foreign policy, and in addition an emphasis on justice and the law courts. I remembered our September 18 conversation and had tried to put in justice and the courts into our draft but had been over-ruled by others. I now said the social returns of investment in the judiciary were high but was drowned out again. Rajiv was clearly agitated that day by the BJP and blurted out he did not really feel he understood what on earth they were on about. He said about his own family, “We’re not religious or anything like that, we don’t pray every day.” I felt again what I had felt before, that here was a tragic hero of India who had not really wished to be more than a happy family man until he reluctantly was made into a national leader against his will. We were with him for an hour or so. As we were leaving, he said quickly at the end of the meeting he wished to see me on my own and would be arranging a meeting. One of our group was staying back to ask him a favour. Just before we left, I managed to say to him what I felt was imperative: “The Iraq situation isn’t as it seems, it’s a lot deeper than it’s been made out to be.” He looked at me with a serious look and said “Yes I know, I know.” It was decided Pitroda would be in touch with each of us in the next 24 hours. During this time Narasimha Rao’s manifesto committee would read the draft and any questions they had would be sent to us. We were supposed to be on call for 24 hours. The call never came. Given the near total lack of system and organization I had seen over the months, I was not surprised. Krishna Rao and I waited another 48 hours, and then each of us left Delhi. Before going I dropped by to see Krishnamurty, and we talked at length. He talked especially about the lack of the idea of teamwork in India. Krishnamurty said he had read everything I had written for the group and learned a lot. I said that managing the economic reform would be a critical job and the difference between success and failure was thin.

I got the afternoon train to Calcutta and before long left for America to bring my son home for his summer holidays with me. In Singapore, the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi. Eleven years later, on 25 May 2002, press reports said “P. V. Narasimha Rao and Manmohan Singh lost their place in Congress history as architects of economic reforms as the Congress High command sponsored an amendment to a resolution that had laid credit at the duo’s door. The motion was moved by…. Digvijay Singh asserting that the reforms were a brainchild of the late Rajiv Gandhi and that the Rao-Singh combine had simply nudged the process forward.” Rajiv’s years in Government, like those of Indira Gandhi, were in fact marked by profligacy and the resource cost of poor macroeconomic policy since bank-nationalisation may be as high as Rs. 125 trillion measured in 1994 rupees. Certainly though it was Rajiv Gandhi as Leader of the Opposition in his last months who was the principal architect of the economic reform that came to begin after his passing.

My response to The Times’ editorial of May 29 1984

In August 1980, I went to Blacksburg in Virginia from Cambridge to work with James M. Buchanan’s Center for Study of Public Choice and to be Visiting Assistant Professor and later Assistant Professor at the Economics Department. When The Times editorial appeared in London on May 29 1984, I did not come to know of it for several days until foreign newspapers reached the Virginia Tech library and a friend phoned me with having seen it there. The Times (then under the editorship of Charles Douglas-Home) had been laudatory but also inaccurate as to what I did or did not have to say. My letter dated June 16 1984 corrected what was said about my work. The editorial is republished elsewhere here.

Pricing, Planning & Politics: A Study of Economic Distortions in India (1984)

Pricing, Planning & Politics: A Study of Economic Distortions in India Subroto Roy

First published on May 29 1984 as Occasional Paper No. 69 of the Institute of Economic Affairs, London

Preface March 2007

A quarter century has passed since my 1982 doctoral thesis at Cambridge University under Frank Hahn, examined by Christopher Bliss and Terence Hutchison, and titled “On liberty and economic growth: preface to a philosophy for India.” I wrote what follows shortly afterwards in Blacksburg, Virginia, and Ithaca, New York, and it was published on May 29 1984 in London by the Institute of Economic Affairs as Occasional Paper No. 69, ISBN: 0-255 36169-6. The day it was published it turned out to be the subject of the main editorial of The Times, then London’s leading newspaper. (I learnt later this had been due to Peter Bauer, and also that 700 copies sold in the first month, a record for the publisher.) The Times editorial though laudatory was misleading, and I had to clarify the contents of the monograph in a letter published on June 16 1984; both documents are available elsewhere at this site.

This work was the first explicit critique of post-Mahalanobis Indian economic thought from a classical liberal perspective since B. R. Shenoy’s initial criticism decades previously. I was 29 when it was published, I am 52 now. I do not agree with everything I wrote back then and find the tone a little puffed up as young men tend to be; it was five years before publication of my main “theoretical” work Philosophy of Economics: On the Scope of Reason in Economic Inquiry (Routledge: London & New York, 1989, also now republished here). My experience of life in the years since has also made me far less sanguine both about human nature and about America than I was then. But I am glad to find I am not embarrassed by what I said as a young man, indeed I am pleased I said what I did in favour of classical liberalism and against statism and totalitarianism well before it became popular to do so after the Berlin Wall fell. (In India as elsewhere, former communist apparatchiks and fellow-travellers became pseudo-liberals overnight.)

The famous November 1955 Milton Friedman memorandum is referred to herein for the first time as “unpublished” in note 1; I was to meet Milton and Rose Friedman at the Mont Pelerin Society meetings held at Cambridge later that year, where I gave them a copy of this monograph; when Milton returned to Stanford he sent to me in Blacksburg his original 1955-56 documents on Indian planning. I published the 1955 document for the first time in May 1989 during the University of Hawaii perestroika-for-India project that I was then leading, it appeared later in the 1992 volume Foundations of India’s Political Economy: Towards an Agenda for the 1990s, edited by myself and WE James. The results of the Hawaii project reached Rajiv Gandhi through my hand in September 1990, as told elsewhere in “Rajiv Gandhi and the Origins of India’s 1991 Economic Reform”. The 1956 document was published in November 2006 on the front page of The Statesman, on the same day my obituary of Milton appeared in the inside pages (both are republished here too).

It is apparent from this monograph that I knew almost nothing then about Pakistan or Islam; that has changed as may be seen especially from the other book I created with WE James at the University of Hawaii, Foundations of Pakistan’s Political Economy: Towards an Agenda for the 1990s, as well as my more recent work on Pakistan and Islam. It is of course impossible to understand India without understanding Pakistan and vice versa.

In general, this monograph had to do with India’s microeconomics and theory of value and resource allocation while my latest work – “India’s Macroeconomics”, “Fiscal Instability”, “India’s Trade and Payments”, “Our Policy Process”, “Fallacious Finance”, “The Dream Team: A Critique” . “Against Quackery”, “Growth & Government Delusion” etc – has to do with India’s macroeconomics and monetary and fiscal theory and policy. Part of the criticism of “distorted incentives” prevailing in Indira Gandhi’s India may still be relevant to India today, while the discussion of ethnic problems, agriculture, the “public choice” factors that stymie Indian progress, misgovernance etc will almost certainly be found so.

Pricing, Planning and Politics:

A Study of Economic Distortions in India

First published on May 29 1984 as Occasional Paper No. 69 of the Institute of Economic Affairs, London

“The economic laws which operate in India are the same as in other countries of the world; the causes which lead to wealth among other nations lead to prosperity in India; the causes which impoverish other nations impoverish the people of India. Therefore, the line of enquiry which the economist will pursue in respect of India is the same which he adopts in inquiring into the wealth or poverty of other nations.” Romesh Chunder Dutt, 1906, The Economic History of India

“Satyameva Jayathe” (“Let truth be victorious”), Motto of the Indian Republic

I. INTRODUCTION

IN THE last 15 years, considerable evidence has accumulated to suggest that the most important policies pursued by successive governments of independent India have not been conducive to economic development, and have indeed gone against some of the most basic lessons that political economy has to offer. Forewarnings of the present predicament of India had come from a few economists in the late 1950s and early 1960s, but their arguments were either ignored or maligned as dogmatic and motivated by`ideology’.[1] My thesis in this Occasional Paper will be that, if the basic and commonsensical lessons of political economy had been acknowledged early on in the history of the Indian Republic, we might have found today a much more prosperous economy and a much healthier body politic than is the case.

To argue this, it is first necessary to describe an economy where the pursuit of the individual good by rational agents is conducted within some set of orderly political institutions which is conducive to both civil peace and sustained mass prosperity. Accordingly, Part I of this short Paper begins by describing the broad and familiar features of what may be called a neo-classical or liberal model, and then proceeds briefly to contrast it with a model in which individual incentives and public institutions have been distorted from their efficient characterizations.

The practical question that arises is: Where in practice have independent India’s policies led most conspicuously to distorted incentives and institutions? This will be the subject of Part III. Part II places the discussion in context by briefly describing a few relevant aspects of the political history of the Indian Republic.

I have argued elsewhere that every normative proposal for action is, in principle, open to question and criticism on the logical and factual grounds upon which it is founded. Whenever two people disagree about what ought to be done, it will be found either that at least one of them has made a mistake of logic or that they are also in disagreement about the facts of the case.[2] In Part IV, a tentative manifesto for political and economic reform in India is proposed, and I hope these proposals too will be subjected to critical scrutiny on the positive grounds upon which I shall seek to establish them.

Part I: Theory

2. EFFICIENT INCENTIVES AND INSTITUTIONS

A `FACT’ may be understood as the opposite of that which could have been the case but is not. A basic fact of the study of men and society – one which was acknowledged first by Aristotle and then, very importantly, by Adam Smith, and which has been emphasized in modern times by Friedrich Hayek – is that, while we are able to study and speak of the nature of human decision and action in general terms, we do not and cannot have a knowledge of how particular actions are moved by particular causes and circumstances.[3]

We might certainly know, for instance, that every household in an economy views some horizons, wants to fulfill some aspirations, and faces some constraints. But if we were asked to specify what all these characteristics happened to be as a matter of fact at any one moment, we would certainly not be able to do so. Men are concerned almost wholly with (and are experts at) living their own lives as best they can – foraging for food, shelter and work, celebrating weddings and births, rearing children, and mourning deaths. For the most part, they are neither interested in, nor competent at judging, what others happen to be doing in their private lives. Neither benevolence nor envy extends much beyond a man’s immediate vicinity, and, certainly, neither can extend to people he does not know or come to know of in the course of a lifetime.

This fact is also acknowledged in modern microeconomics, when it is said that, for the individual agent to be able to make decisions and act upon them, it is sufficient for him to know (besides his own desires, abilities and constraints) only of the relative prices prevailing locally of the goods and skills he wishes to trade.`Efficient incentive’ defined We might then provisionally define an `efficient incentive’ as a set of relative prices and wages such that, when economic agents act upon them, three conditions are fulfilled:(i) the difference between the total demand for and the total supply of every good and skill is zero; (ii) every consumer succeeds in trading the amounts of different goods that he desires, and so obtains the highest utility he can within the constraint of his budget; (iii) every private enterprise maximizes the difference between its total revenues and total costs, that is, its profits. [4]

Rational action, however, occurs within a particular institutional context. Which action is rational and which is not will depend on what institutions there are and how well or poorly they function. As both classical liberals and Marxists argue, the neo-Walrasian tradition in modern economics – as exemplified by the Arrow-Debreu model – is practically devoid of any explicit institutional description, and so may best be regarded as a useful but grossly incomplete metaphor in the economist’s inquiry.

The institutions most relevant to economic activity are those of government. We might therefore add a fourth condition to characterize an efficient economy, namely, that government institutions work in such a way as to allocate tax revenues towards providing public goods in the amounts desired by citizens. This must be an institutional assumption implicit in the general equilibrium construction, without which it would be impossible to see the sense of that model.

The question that follows is how we are to ascertain the composition of the set of public goods to be provided. As is commonly known, this seems to confront the economist with numerous conceptual and practical problems. I propose here to circumvent all the typical difficulties of how to discover and combine individual preferences for public goods, or how to prevent free-riders, and to take a somewhat different route.

Functions of civil government: protection, public goods, education

To answer the question `What should be public goods first and foremost? I suggest we look for the kind of answer Adam Smith or Jeremy Bentham or J. S. Mill might have given to a related but different question : `What should be the functions of government in a large civil society, regardless of whether or not it is constituted democratically?’ This was the relevant question before the modern era of mass democracy. And it is still interesting because, first, it probably remains the appropriate question for the many countries today which either do not have democratic governments or do not have long histories of democracy, and, secondly, because the kinds of answer given by classical authors were very similar to those we might expect from individual citizens in modern democracies as well.

The most important practical functions of civil government include defence against external aggression, the dispensing of civil and criminal justice, the protection of life, property and trade – broadly, the Rule of Law – and the pursuit of a judicious foreign policy. All are different aspects of the same broad objective of ensuring the survival of the community and the security of individual life.

Yet no pretext has been more common than that an imminent danger to the security of the community requires the government to take despotic measures. The guarantee by a civil government of the freedom of inquiry, discourse, criticism, and historical research should take precedence, therefore, even over ensuring security and survival, for it is probably the only final check there can be on whether what a government says is or is not in fact the case. Where this freedom is forcibly denied, or where it exists but people are too apathetic, ignorant or busy with their daily lives to exercise it, public life soon becomes self deceptive and absurd, with propaganda taking the place of discourse, and pretensions and appearances diverging more and more from attainments and reality. Wherever the questions `What is true?’ or `What is the case?’ are not asked frequently enough, there will be fewer and fewer correct answers as to what the case happens to be.[5]
After collective and individual security, the functions of government include the building of dams, embankments, bridges and canals, the provision of roads and fresh water, and so on – activities which, as Adam Smith put it, “. . . though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expence to any individual or small number of individuals, and which it, therefore, cannot be expected that any individual or small number of individuals should erect or maintain.” [6]

Each may be more or less a “pure” public good in the modern sense :“that each individual’s consumption of such a good leads to no subtraction from any other individual’s consumption of that good”.[7]

Such a list could be extended to include activities as diverse as: the prevention of soil erosion; the public finance of school education, and’ of measures of basic public health such as vaccinations against contagious diseases; the issuing of currency; sewage disposal; population censuses; the standardization of weights and measures; and so on. It is unnecessary to be more specific here since some people will find even this list controversial. Dogmatists will deny the need for free inquiry; pacifists will dispute that defence is a public good; communists will protest against the public protection of private property; `anarcho-capitalists’ will contest the public dispensation of justice; and so on. To these critics, I would offer merely the following short and incomplete reply.

First, a sound argument can be made that what functions civil government should have can be ascertained, without prejudice, by reasonable citizens, though which particular functions these are may well vary according to circumstances. Secondly, if we could spend time in thoughtful and leisured conversation with every citizen of a large community, it might be predicted – as a matter of cold, empirical fact – that practically everyone would agree with the suggestion that the first destinations of tax revenues should indeed be activities like defence, civil protection and the Rule of Law, the provision of roads, and so on. If such a prediction is correct, my thesis is plainly much more democratic than it might appear to modern economists, though I shall later claim that an objective defence of democratic institutions can be made on quite different grounds as well.

If there is a clear family resemblance between classical liberal authors – from Smith and Mill through to Hayek, Robbins, Friedman, Buchanan, Bauer and many others – it has to do, not so much with the denunciation of government activity in the market-place, as with the recognition of the existence of certain duties of government outside it, the fulfillment of which are indispensable to civil life, let alone the pursuit of economic prosperity. Their protest is at the high opportunity cost of the alternatives foregone.

This raises the question of how we might tell whether government is working well or badly in a particular country at a particular time, or, generally, how we might tell whether different public goods are provided in too small or large amounts. For present purposes it will again be sufficient to suggest a very rough and common sense way of proceeding: let us look first, and think second.

For example, the Iran-Iraq war has clearly been a perfect public bad as far as the ordinary citizenry in either country are concerned. Similarly, if there happen to be millions of cases queuing outside the courts waiting to be heard, or if crime is rampant and police protection ineffective, that may constitute prima facie evidence that too few public resources have been devoted to civil order and justice. Or, if heavy rainfall annually causes landslides in the hills and floods in the plains, devastating crops and leaving innumerable citizens destitute, that also might prompt us to ask whether sufficient public resources have gone towards precautions against such havoc. And so on.[8]

Which goods happen to be public goods depends on the circumstances and the level of government being discussed. For similar circumstances and levels, similar goods will most likely be public goods in different countries. The state ordinarily consists not only of the national government but also of several provincial governments and a myriad of local governments. In particular, a premise of the liberal state would be that public goods should in fact be provided by various levels of government, financed through taxes paid respectively at those levels. The citizen is a taxpayer at a variety of levels, and accordingly public goods are due to be provided at a variety of levels. Just as the national government may not usurp the power to tax for, or spend money on, a public good which is best provided by a provincial government to the citizens of a province, so a provincial government may not tax for, or spend on, a public good best provided by a local government to the citizens of a locality.

The broad principle involved has two aspects: first, a recognition that knowledge of particular circumstances – and hence the ability to act – is infinitesimally dispersed within a population; and, secondly, as direct and visible a matching as possible of the benefits a citizen receives from a particular public good with the taxes he pays towards it, thereby perhaps reducing his incentive to be a free rider on the contributions of others.8Uncertainty and ignoranceProvisionally, therefore, efficient incentives may be thought to consist of a set of market-clearing relative prices and wages, occurring within an institutional context in which the basic and indispensable functions of government have been adequately performed at a variety of appropriate levels.

Such a definition would still be seriously incomplete in one major respect. For we must now recognise: (i) that history is unique and irretrievable, that the present consists only of the fleeting moment, and that the future, by its very nature, cannot be fully known; (ii) that such a thing as human freedom exists; and (iii) that, as a consequence, uncertainty and ignorance are ubiquitous.

Some of the uncertainty derives from the unfolding of natural events (like the rains) over which man has little or no control. The rest derives from the fact that the individual is a free agent who is affected by the actions of others but who cannot predict those actions completely because they too are free agents like himself. Game theory would have had no appeal for the economist if the existence of human freedom had not been a fact. It is this which makes it impossible to read everything in another person’s mind and thus makes it impossible to predict everything he might do. The lasting contribution of Keynesian economics could be its emphasis that such uncertainty and ignorance are important to the economist’s inquiry.

Mathematical economists have been saying for several years that what is required if we are to be realistic are models which reflect the sequential character of actual decision-making and account for the past being immutable and the future uncertain.[9] However, they have proceeded to write even more complex mathematics than we already have – disregarding Aristotle’s advice not to seek more precision from the subject of an inquiry than it may be capable of yielding.[10] My question is the more mundane one of what becomes of the classical liberals’ concept of efficient incentives and institutions in a dynamic world. I shall answer it too in a pedestrian way.

The single overwhelming reason why uncertainty and ignorance are relevant to the economist’s descriptions is that they make real the possibility of mistakes by economic agents. To extend the previous discussion to a dynamic context, what we can do is to ask which institutions are most likely to reduce or mitigate the social consequences of mistaken decisions, whether made by private agents or by those in public office. And it is here that the classical liberals advocate two important institutional features: competition and the decentralisation of decision-making.

The major value of democratic institutions over authoritarian ones is that they encourage these two principles to be put into effect. Because, in a large economy, particular knowledge is infinitesimally dispersed, it may be better for adjustments to a multitude of variables to be made continuously in response to changing circumstances by a vast number of small economic agents, rather than for adjustments to a few variables to be made at political intervals by a small group of very powerful agents. The concentration of power to make major decisions among a few fallible men is a much more ominous prospect than the distribution of power in small amounts among a large number of fallible men. It is much more dangerous for a monopoly of ideas to be claimed about where the political good of a country lies than for there to be free and open competition among such ideas at the bar of reason.

D. H. Robertson put it well when he warned “that all the eggs should not be in the same basket – that in this highly uncertain world the fortunes of a whole trade, or a whole area, should not depend on the foresight and judgement of a single centre of decision”.[11] The presumption in favour of democratic institutions is that they reduce the potential damage from wrong political decisions damage which can be rationally expected in an uncertain world.[12] Elections, in the liberal understanding, are then not so much the means to promote the interests of one’s confederates as to remove from office without bloodshed rulers who fail to do what they are entrusted with, and to replace them by those from whom better is expected. Economic efficiency in an uncertain worldThe economic notion of efficient incentives is also modified by uncertainty and ignorance. In the theory, a set of prices is market clearing only relative to unchanging preferences, resources and technologies. In a dynamic world, however, demand and supply functions are themselves changing and the notion of efficient incentives must accordingly be adapted to one in which relative prices move in the direction of the excess demand: that is, if the parameters change so that the total demand for a good or skill comes to exceed the total supply, we should want to see its relative price rising (and, conversely, if total supply exceeds total demand, we should want to see its relative price falling). During such a process of adjustment, many people may suffer very considerable hardship – something which reasonable Keynesians do well to emphasise.

If changing preferences, resources or technologies cause the demand for a product to diminish, we should want to see the firms which manufacture it either entering different markets, or improving its quality by technological innovation, or lowering prices. Similarly, we should want to see workers in these firms whether blue- or white-collar – who have skills specific to a product whose price is falling either increasing their productivity or retraining themselves in different skills more specific to the manufacture of goods whose prices are rising. Numerous enterprises can go bankrupt, and numerous workers can find themselves unable to sell the skills they possess, if they fail to adapt quickly enough to changing market conditions. The more specialised the product and the more specific the skill, the more hardship there may be. There could well be orthodox Keynesian consequences whereby laid-off workers reduce their consumption expenditures and firms on the verge of bankruptcy reduce their investment expenditures, leading to lower incomes for others, and thus to lower expenditures by them too, and so on. An anti-Keynesian who denied the existence of such hardship would be closed to the facts. He might also not be doing his own theory justice: for it is not unreasonable to argue that, while adjustments are inevitable in an uncertain world, the classical response of prices moving in the direction of excess demand probably minimises the hardship in the transition from one equilibrium to the next.

In a dynamic world, therefore, in which supply and demand functions are shifting continually and unpredictably (though probably incrementally, and not drastically), efficient incentives are better thought of as relative prices which are not stagnant but which are moving – and moving quickly – in the direction of excess demand. It should, in general, be continually profitable at the margin for firms and workers to be innovating technologically and improving productivity. As everyone knows from experience, the principle goad to such activity is fair and free competition. If a job or contract is sought badly enough, and if better quality or lower price are known to be the only criteria of selection, the expected outcome is a differentiation and improvement by competitors of the individual quality or price of what is sold.

In broad summary, the liberal understanding of how material well-being can be improved rests on the assumption that the basic functions of civil government are performed satisfactorily. Government provides the backdrop of civil order and protection necessary for private citizens freely and fairly to conduct their own lives and their transactions with one another. It is a theory which acknowledges a fundamental fact in the study of society, namely, that the individual household : (a) most commonly defines its own horizons; (b) knows the particular opportunities available to it to produce, trade and consume; (c) recognises the particular constraints which prevent it from doing all that it may desire; and(d) perceives how these opportunities and constraints may be changing. Where, as in the liberal picture, there are large numbers of producers and consumers, sellers and buyers – each family acting more or less independently – the efforts of one family do not directly make for other than its own success, while at the same time the repercussions of its mistakes are felt by itself and do not reverberate throughout the whole community. Such has been, as I see it, the American secret to mass prosperity.

3. DISTORTED INCENTIVES AND INSTITUTIONS

DISTORTED INCENTIVES are the logical opposites of efficient ones. Relative prices and wages send distorted signals to individual economic agents when they do not move in the direction of excess demand, so that there is no general tendency for markets to clear. A long-run or endemic excess demand for a good reveals itself in rationing, queueing and black markets. The price at which trade nominally takes place is too low and shows no tendency to move upwards.

Conversely, in a product market, a long-run or endemic excess supply reveals itself in surpluses and spoilages. In a labour market, it reveals itself, on the one hand, in armies of tenured employees who have no incentive to improve productivity, and, on the other hand, in lines of involuntarily or disguised unemployed who cannot sell all the skill they possess and have to settle for selling their less-specialised ones. The price at which trade nominally takes place is too high and shows no tendency to move downwards. In practical terms, firms do not find it profitable to be continually entering new markets or improving quality or enhancing technology or reducing price in order to attract and retain customers. Farmers in particular may face output and input prices which make technological improvements unprofitable.

In politics, distorted incentives are ones which make it profitable for politicians and government officials to be corruptible and taxpayers to be evasive. Because corruption is not penalised and honesty not rewarded, the pursuit of private interest may make it rational to be corrupt and irrational to be honest.

Individualism and statism

A neo-classical economic model like the one outlined above presupposes among citizens a political attitude of individualism. This may be defined as a condition in which citizens have the idea (a) that it is the individual household itself which is principally responsible for improvements in its own well-being, and (b) that government merely “is, or ought to be, instituted for the common benefit, protection and security of the people …”, and that government officials are merely the citizens’ “trustees and servants, and at all times amenable to them.” [13]

Its logical opposite may be called an attitude of statism – defined as prevailing when various classes of citizens have the idea that it is government which is and should be principally responsible for improvements in individual and public well-being. A good sense in which `power’ can be defined in political and economic contexts is as “the capacity to restrict the choices open to other men”.[14] An attitude of statism entails a willingness, or at least an acquiescence, on the part of citizens to relinquish to those in government, with little or no questioning, the power to make decisions which may affect their lives intimately. At the same time, responsibility for relapses or lack of progress in individual well-being is also thought to be the consequence of governmental and not private decision-making. Whereas individualism is a self-assertive attitude, statism is a self abnegating one. For those in government to have a statist mentality is the same as saying they are paternalistic, that is, making the presumption that the citizen is often incapable of judging for himself what is for his own good.

The suggestion that government should have the principal responsibility for improvements in individual and collective economic well-being – in the sense that the collectivity can and should satisfy the material aspirations of every individual – appears straightaway to be self contradictory. An individual can have enough difficulty trying to articulate his own horizons, aspirations and constraints, let alone trying to do the same for others. For a politician (or economist) to claim (or imply) not only that he knows(or can know) the relevant characteristics of everyone at once, but also that he knows how to ameliorate the condition of humanity at a stroke, as if by magic, would have been considered ridiculous in more candid times than ours. If we understand `collective effort’ to mean the sum of individual labours engaged in a common pursuit or endeavour, then for the collectivity to try materially to satisfy every individual would amount to imposing a duty on everyone to try materially to satisfy everyone else – an absurd state of affairs, flying in the face of the fact that most people most of the time do not wish to, or cannot, cope with much else except their private lives.

Exhorting government directly to improve the material wellbeing of `the people’ cannot mean what it seems to because it cannot refer to literally all the people but only to some of them perhaps only a majority, or only the well-organised. That the state is endogenous to the polity implies that no government has resources of its own out of which to disburse the amounts a politician may promise or an economist recommend. To fulfil new promises, given an initial condition of budgetary equilibrium, a government is only able either to print more fiat money or to tax the resources of individual citizens more heavily. Leaving aside the first alternative, fulfillment of the exhortation amounts to using public institutions to transfer resources from some people in order to keep promises made to others.

When the attitude spreads that, in politics, one man’s gain is another man’s loss, and where political control is to be had by winning majorities in elections, the citizen comes to face a perverse incentive to try to coalesce with more and more others in the hope of capturing the public revenues in his favour – instead of thinking critically about the nature of the political good as the institutions of democracy require him to. Political power becomes less dispersed, and the size of the polity diminishes in the sense that it comes to have fewer and fewer constituent agents, each of which is a larger and larger coalition of like-minded confederates intent on acquiring control for its own benefit.

Perhaps the worst consequence of a general attitude of statism, however, is that the basic, commonsensical functions of government are obscured, ignored, and neglected. Instead of requiring politicians and government officials to fulfill these functions, a citizenry allows its public agents to become brokers and entrepreneurs – trading not only in the products of government controlled industries but also in an array of positions of power and privilege, all in the name of directing a common endeavour to help the poor. The state places itself at every profitable opportunity between private citizens who might otherwise have conducted their transactions themselves perfectly well. The result is that governments do, or try to do, what either does not need to be done or ought not to be done by government, while they neglect that which only governments can do and which therefore they ought to be doing.

Part II: History

4. INDIVIDUALISM AND STATISM IN INDIA

AN ATTITUDE of statism has probably been present in India since Mughal times at least. If anything, it spread during the British period since the raison d’être of British rule in India would have vanished without paternalism (as in the course of time it did) and the existence of British rule was the raison d’être of the nationalist movement. Paternalism towards India was espoused even by those Englishmen known for their liberal views at home. Thomas Macaulay, for instance, declared to the House of Commons in 1833: “It may be that the public mind of India may expand under our system till it has outgrown that system; that by good government we may educate our subjects into a capacity for better government; that having become instructed in European knowledge, they may, in some future stage, demand European institutions. Whether such a day will ever come I know not. But never will I attempt to avert or retard it. Whenever it comes, it will be the proudest day in English history.”[15]

Less than a hundred years later, in 1930-31, the Indian National Congress – to the considerable chagrin of the British Government – resolved to bring about an independent India in which every citizen would have the right to free speech, to profess and practise his faith freely, and to move and practise his profession anywhere in the country. There would be universal adult suffrage and no-one would be unjustly deprived of his liberty or have his property entered, sequestered or confiscated. In particular, all citizens in the future republic would be `equal before the law, irrespective of religion, caste, creed or sex’, and no disability would attach`to any citizen by reason of his or her religion, caste, creed or sex, in regard to public employment, office of power or honour, and in the exercise of any trade or calling’.[16]

These resolutions were made in the thick of the battle for independence, and underscored the fundamental argument of the nationalists that, in spite of the infinitely diverse characteristics of the inhabitants of the sub-continent, a free and secular India was possible in which all would be ruled by a common law. That argument had been in contradistinction to the frequent taunt from British Conservatives that an
India without Britain would disintegrate in internecine bloodshed, and also to the later `two nations’ theory of the Muslim League which led eventually to the creation of
Pakistan. With the departure of the British and the Pakistanis, in 1950 the Constitution of the first Indian Republic was finally able to bring into force the idea of secularity which had inspired the nationalist cause. Thus, among the Fundamental Rights established by the Constitution, Article 14 provided that the state `shall not deny to any person equality before the law or the equal protection of the laws within the territory of
India’. Articles 15.1, 15.2, 16.1, 16.2 and 29.2 went on to prohibit discrimination on the arbitrary grounds of religion, race, caste, sex or place of birth in matters of public employment or access to publicly-funded education.

The century between Macaulay and the resolutions for independence was by far the most important to the country’s intellectual history since earliest antiquity. While it took its turbulent course, long severed since the time of the early Greeks – came to be re-established. The common interest and the common contribution became one of admiring and learning from Europe and from India’s own past what there was to be admired and learnt, whilst forsaking and resisting what was self contradictory or base. The maxim for a century might have been : learn the good and let the evil be buried in history. As Tagore wrote :`The lamp of Europe is still burning; we must rekindle our old and extinguished lamp at that flame and start again on the road of time. We must fulfill the purpose of our connection with the English. This is the task we face in the building up of a great India.’[17]

The ideal aspired to was swaraj, or `self rule’. It literally meant not only a government of India by Indians accountable to Indians, but also the governance of the individual by himself. Not only was the country to be sovereign vis-à-vis other states; its individual citizens were to be free vis-à-vis each other and equal before its laws. Swaraj meant, in other words, a condition of political autonomy where the citizen constrained his own free actions so as not to harm others, and where the Rule of Law would protect him when he acted autonomously and resist him when he did not. Given a backdrop of civil order, the infinite number of ways to individual happiness and prosperity in an infinitely diverse sub-continent could then be pursued. Statism all pervading

An attitude of statism, however, has pervaded all public discourse in independent India, and has been reinforced by the social and economic policies pursued by successive governments.

In the first place, a ghost from earlier controversies with the British was to remain in the 1950 Constitution. Immediately after the provisions establishing equality before the law and equality of opportunity in public employment and publicly funded education, the following caveats appeared. Article 15.3 said that the state could make “any special provision for women and children”; and then, of more significance, Article 15.4 allowed the state to make “any special provisions for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes”.

Article 16.4 allowed it to make “any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State, is not adequately represented in the services under the State.” Lastly, Article 335 said that “the claims of the members of the Scheduled Castes and the Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts [under the State] . . .” Who was to decide who was `backward’ and who was not, or which group was to be `scheduled’ and which not? Article 341.1 said that `The President may . . . by public notification specify the castes, races or tribes which shall for the purposes of this Constitution be deemed to be Scheduled Castes’, and Article 341.2 added that `Parliament may by law include in or exclude from the list of Scheduled Castes specified under 341.1 any caste, race or tribe or part of or any group within any caste, race or tribe . . .’ Articles 342.1 and 342.2 said the same for the Scheduled Tribes.

Subsequently, two Presidential Orders named no fewer than 1,181 different groups in the country as `Scheduled Castes’ and more than 583 other groups as `Scheduled Tribes’. Roughly a sixth of the population thus came to be termed `backward’ by executive decree and were segregated by statute from the rest of the citizenry.

The direct precursor of these provisions was the `Communal Award’ by the British Government in 1932, who had taken it to be their duty “to safeguard what we believe to be the right of Depressed Classes to a fair proportion in Legislatures ”.[18] (`Depressed Classes’ was the official name for those misleadingly called `untouchables’ outside the Hindu fold.)

The complex customs of the Hindus call for endogamy and commensality among members of the same caste, thus making anyone outside a caste somewhat `untouchable’ for its members. In marriage and dining habits, many orthodox Hindus would hold foreigners, Muslims, and even Hindus of other castes at the same distance as those formally classified as `Depressed Classes’. Indeed, non-Hindus in India -including the British often maintained social protocols that were equally as strict.

No serious Indian historian would doubt that members of the `Depressed Classes’ had been oppressed and had suffered countless indignities throughout Indian history at the hands of so-called`caste Hindus’. At various times, persecution had led to mass conversions to the more secular faiths. But the ancient wrongs of the Hindu practices had to do not so much with the lack of physical contact in personal life which the word `untouchability’ connotes for Indian society has always consisted of a myriad of voluntarily segregated groups – but rather with open and obvious inequities such as the denial of equal access to temples, public wells, baths and schools.

Gandhi, who by his personal example probably did more for the cause of the `Depressed Classes’ than anyone else, protested against the Communal Award with one of his most famous fasts. Privately, he suspected that `…the communal question [was] being brought deliberately to the forefront and magnified by the government because they did not intend to part with power’.[19] Publicly, he argued that the pernicious consequence would be a further exacerbation of the apartheid under which the `Depressed Classes’ had suffered for so long, when the important thing was for their right to be within the Hindu fold to be acknowledged by `caste’ Hindus.[20]

The Fundamental Rights in the 1950 Constitution establishing the equality of all citizens before the law evidently had the 1930-31 resolutions as their precursors; while Article17 – which specifically declared `untouchability’ to be `abolished’ and its practice `forbidden’ – was part of Gandhi’s legacy, placing those who had for centuries been denigrated and persecuted on exactly the same footing in the eyes of the laws of the Republic as their denigrators and persecutors. The subsequent clauses authorizing the state to discriminate in favour of `Scheduled Castes’, and allowing it to define by executive decree who was to be so called, were evidently the remnants of the Communal Award of 1932. Discrimination by the state was initially to last for a period of 10 years only. It has, however, been extended three times -for another 10 years on each occasion – and so continues to the present day. We shall examine a few of the consequences in Part III.‘A socialistic pattern of society’As for economic policy, while the original 1950 Constitution had ambiguously stated certain ends – such as that government was `to strive to promote the welfare of the people’ – it made no mention at all of any specific economic institutions, statist or liberal, which the new Republic was to nurture as means towards those ends. In spite of this omission, successive governments have explicitly avowed their espousal of` socialism’ as the means to the good and prosperous society.

For instance, a “socialistic pattern of society where the principal means of production are under social ownership or control” was declared to be a national objective at the ruling Congress Party’s convention in 1955; and, in 1976, the notorious 42nd Amendment purported to change the very description of the country in the preamble to the original Constitution from the sober `Sovereign, Democratic Republic’ to the awkward `Sovereign, Secular, Socialist Democratic Republic’. It is an open and important issue of constitutional practice whether a temporary majoritarian government can change the legal description of a republic so fundamentally that it necessarily begs every question now and in the future about the efficacy of socialism as the route to mass prosperity.[21]

Even so, `socialism’ is a vague and equivocal word, meaning different things to different people. Briefly, what happened in the Indian context seems to have been that the Nationalist Government explicitly took upon itself the responsibility of becoming the prime mover of the economic growth of the country. This was in addition to its other fundamental and urgent political responsibilities at the time, namely, to establish peace and civil order in the aftermath of a bloody partition, re-settle several million destitute refugees, integrate into the Republic the numerous principalities and fiefdoms run by the princes and potentates, re-draw provincial boundaries on a sensible linguistic criterion, and generally educate people about their rights and responsibilities as individual citizens in a new and democratic republic.

In a poor country which had just ended a long period of alien rule, it was understandable, if in advisable, that a nationalist government led by cultured, educated men among unlettered masses should take upon itself the responsibility for economic growth. Part of the nationalists’ critique of British rule had been precisely that it had worked to the considerable detriment of the Indian economy. And, certainly, whatever the exact calculation of the benefits and costs of the British presence in India, while there had been obvious benefits, there had also been obvious costs such as iniquitous taxes and overt racial discrimination in employment. [22]Thus, when the nationalists practically swore themselves to provide better government for the economy, it was certainly a very praiseworthy aim; 1947 would indeed be the year of India’s `tryst with destiny’.

Better government not necessarily more government
What the Nehru Government came to believe, however, was that better government for the economy necessarily meant more government activity in the economy. A similar nationalist government led by cultured, educated men among an unlettered public had chosen differently in 1776 at Philadelphia, but the times and circumstances were very different. The Indian nationalists, and most especially Prime Minister Nehru, had just witnessed what they took to be, on the one hand, the collapse of the market economy in the Great Depression and, on the other, the rapid growth to greatness of Bolshevik Russia. In his presidential address to the Congress in 1936, for instance, Nehru spoke of the immediate past in these terms: `Everywhere conflicts grew, and a great depression overwhelmed the world and there was a progressive deterioration, everywhere except in the wide flung Soviet territories of the USSR, where, in marked contrast with the rest of the world, astonishing progress was made in every direction . . .’ Thus, it seemed to him, there was`. . . no way of ending the poverty, the vast unemployment, the degradation, and the subjection of the Indian people except through Socialism”. Socialism meant, inter alia, ` the ending of private property, except in a restricted sense, and ttte repla emenr of the ,private profit system by a higher ideal of co-operative service. It means ultimately a change in our instincts and habits and desires. In short, it means a new civilisation, radically different from the present capitalist order. Some glimpse we can have of this new civilisation in the territories of the USSR. Much has happened there which has pained me greatly and with which I disagree, but I look upon that great and fascinating unfolding of anew order and a new civilisation as the most promising feature of our dismal age. If the future is full of hope it is largely because of Soviet Russia and what it has done, and I am convinced that, if some world catastrophe does not intervene, this new civilisation will spread to other lands and put an end to the wars and conflicts on which capitalism feeds’.[23]
Equally as certain and deep as his admiration for the liberal values of the West was Nehru’s evident misunderstanding of the causes and consequences of Stalin’s Russia. The political and economic history of India in the past 30 years cannot be understood without regard to her most powerful leader’s ambivalence about the nature of the political and economic good.
By the mid-1950s, many of India’s other prominent statesmen had died or retired from public life, and there was hardly a public figure of’ stature left (with the exception of Rajagopalachari) to challenge Nehru’s socialist vision of the country’s future. Moreover, men who were ostensibly `expert economists’, but whose writings revealed no knowledge of prices or markets or the concept of feasibility, were encouraged to endorse and embellish this vision, which they did without hesitation in the secure knowledge that they were shielded from critics by the intellectual patronage of a charismatic and elected leader.[24]
The choice between alternative models of mass economic prosperity must have seemed quite clear at the time. The cold fact did not, however, vanish that one of the oldest objective lessons of political economy has been that more government is not necessarily better government. It is to the consequences of ignoring this lesson that we now turn.

Part III: Practice
ECONOMIC POLICIES IN INDEPENDENT INDIA

INDIA TODAY is a bizarre maze of distorted incentives, which I (and no doubt others) have found very difficult to untangle and understand. I shall, however, list and discuss the most significant of them as methodically as I can.

(i) Industry
The Indian Government has declared a large `public sector’ in commerce and industry to be a national objective. Towards this end, it has therefore progressively acquired numerous enterprises, large and small, so that it now has either a full monopoly in an industry or is one of a few oligopolists. These industries range from banking, insurance, railways, airlines, cement, steel, chemicals, fertilisers and ship-building to making beer, soft drinks, telephones and wrist-watches. There are no explicit penalties for indefinite loss-making; indeed, bankrupt private enterprises have often been nationalised to serve politicians’ ends. And, certainly, there has been no general rule of marginal-cost pricing. In public utilities, like electricity generation and distribution or city buses and trams, prices appear to be well below marginal cost, leading to severe rationing and queueing. Sudden stoppages of electricity for hours at a time and monumental congestion on buses and trams have become endemic facts of life for millions of urban Indians.
At the same time, private industry in India has been made to face labyrinthine controls. The government has continually exhorted private firms to work in the `national interest’ – which means accepting the constraints of centralised planning. It has left no doubt that, while there is a `role’ for the min the growth of the economy, they exist at the sufferance of government and had better realise it, otherwise the dark forces of revolution which have so far been kept at bay will inevitably sweep them away altogether, as happened in Russia and China.
The constraints imposed on the operation of a private business are legion, and would make a businessman from the West or Far East reach for a psychiatrist or a pistol. An entrepreneur may not enter numerous industries without government approval of the `technical’ viability of his project; once it is approved, he cannot find credit except from a government bank; and he cannot buy raw materials and machinery of the highest quality at the lowest price since, if they are produced in India, he will be denied a licence to import better and/or cheaper foreign substitutes. The onus is on him to satisfy the government that no production occurs within India of the input he requires; only then will an import licence conceivably be granted, subject to periodic review by the government. He may be compelled to export a specified proportion of his output as a condition for the renewal of his import licence, which therefore places him at a disadvantage with foreign buyers who, of course, are aware of this restraint. He may be unable to compete internationally because the rupee is priced above its likely equilibrium and some of the inputs he uses are high-cost, low-quality domestic substitutes. As a result, he may be compelled practically to dump his output abroad at whatever price it will fetch.

The entrepreneur’s factory may be subject to random cuts in electricity for hours at a time. He may require government approval before he can increase his fixed capacity, modernise his plant, change a product-line, or even change the number of labour shifts. He may face minimum-wage and stringent unfair dismissal laws on the one hand, and price controls on the other. If he fails to meet credit obligations to the nationalised banks, he may be penalised by the appointment of one or more government directors to his board – a form of `creeping’ nationalisation. Further, he may be subjected to a constant threat of full nationalisation as and when the government decides that his industry should be in the public sector in the interests of national planning.[25]

The consequence of all these controls has been a monumental distortion of incentives away from encouraging private firms to try to attract customers by improving technology and quality or reducing prices towards encouraging them to concentrate on `rent-seeking’, in the term made familiar by Professors Gordon Tullock and James Buchanan.[26]

As Anne Krueger says in her excellent study of the automobile ancillary industry, the very notion of entrepreneurial efficiency changes in such circumstances: `Under conditions in India, the most important problem confronting entrepreneurs is that of assuring that production will continue. The combined effects of import licensing and investment licensing give virtually every firm a monopoly or quasi-monopoly position. The entrepreneur who is most successful in getting licences of greater value and/or in getting licences more quickly than his fellow producers will have higher profits. `The producer who does not compete successfully for licences cannot produce at all, no matter how skilled he is in achieving engineering efficiency, unless he enters the “open market” and pays a premium to the successful licence applicant for some materials . . . Successful entrepreneurs are therefore those who are best at obtaining the greatest number of licences most expeditiously . . .’ [27]

Moreover, firms which are low-cost and efficient (in the free market sense) and which are successful at rent-seeking as high-cost, inefficient firms may still not be able to compete the latter out of business because government will not usually allow a particular firm to expand – regardless of its efficiency – if there is excess capacity in the industry of which it is a part. High-cost firms can thereby rationally count on staying in business simply by maintaining significant excess capacity.

(ii) Foreign trade
The Government of India has always claimed that foreign exchange is a `scarce’ resource which must be rationed by fiat in the national interest. The total foreign-exchange revenue (at an exchange rate which was fixed until 1971 and has since been on a managed `peg’) has been allocated in the following order of priorities: first, to meet foreign debt repayments and government expenditures in the conduct of foreign policy, such as the maintenance of embassies (G1); secondly, to pay for imports of defence equipment, food, fertilisers and petroleum (G2); thirdly, to meet ear-marked payments for the imported inputs of public sector industries so that they may achieve projected production targets (G3); fourthly, to pay for the imported inputs of private sector firms which are
successful in obtaining import licences (P1); and, lastly, to satisfy the demands of the public at large for purposes such as travel abroad (P2).
Foreign exchange is `scarce’ in India, or elsewhere, in precisely the same sense that rice or petrol or cloth is scarce. Just as there exists some positive price for rice, petrol or cloth which, at any moment, will match total supplies with total demands, so there exists some positive price for rupees relative to dollars which, at any moment, will match the transaction and asset demands of Indians for dollars with the transaction and asset demands of foreigners for rupees. Underlying that market-clearing price would be (a) the demands of Indians for foreign goods whose f.o.b. prices were lower than those of domestic substitutes, and, similarly, the demands of foreigners for goods in which India has had a comparative advantage; and (b) the expectations of Indians and foreigners about the future purchasing power of the rupee relative to the dollar, using as a proxy, say, the difference between interest rates in India and abroad.

A free market in foreign exchange would first have encouraged India’s traditional exports, like jute manufactures and textiles, and then (if the positive theory of international trade is broadly correct)progressively encouraged the export of other non traditional goods which used India’s relatively inexpensive labour relatively intensively and thereby enabled Indian entrepreneurs to compete successfully in foreign markets. At the same time, capital flows into and out of India would have given the monetary authorities an incentive to keep domestic interest rates in line with the real opportunity cost of forgoing consumption in favour of savings.

Thus, the case against a free market in foreign exchange has always been, to say the least, far from obvious.[28] But even if, for the sake of argument, we accept the presumed superiority of rationing, the elementary theory of optimisation which underlies the so-called theory of `planning’ dictates that the government should allocate dollars between alternative uses such that the marginal dollar yields the same increase in social utility in any use. The Indian Government, however, appears to have allocated foreign exchange simply on the basis of giving a higher priority to its own foreign expenditures (categories Gl, G2 and G3) than to private foreign expenditures (categories Pl and P2). That is to say, regardless of how much social utility might have been derived from a particular increase in private-sector imports, it would not be considered until after the government had met all its own expenditures abroad.[29]
Jagdish Bhagwati and T. N. Srinivasan put it as follows : `The allocation of foreign exchange among alternative claimants and users in a direct control system . . .would presumably be with reference to a well-defined set of principles and criteria based on a system of priorities. In point of fact, however, there seem to have been few such criteria, if any, followed in practice.’[30]
With respect to imported inputs for private- and public-sector industries, a rule of `essentiality’ (that is, the input must be technically `essential’ to the production process) and a rule of `indigenous availability’(that is, there must be absolutely no domestically-produced physical substitutes, regardless of cost and quality)seem to have been followed. But, as Bhagwati and Srinivasan report, `. . . the sheer weight of numbers made any meaningful listing of priorities extremely difficult. The problem was Orwellian: all industries had priority and how was each sponsoring authority to argue that some industries had more priority than others? It is not surprising, therefore, that the agencies involved in determining allocations by industry fell back on vague notions of “fairness”, implying pro rata allocations with reference to capacity installed or employment, or shares defined by past import allocations or similar rules of thumb’. [31]

Clearly, in abjuring the free market and claiming a monopoly over foreign-exchange transactions, government planners have accepted certain premises as unquestionable: (a) that government sponsored industrialisation is the best means to mass prosperity; (b) that a policy of indefinite import-substitution is the best means to industrialisation; and (c) that such a policy requires all foreign expenditures by government to take precedence over all private foreign expenditures. The trade and foreign-exchange policies pursued cannot be understood except by reference to domestic economic policies and, in particular, to the view held about the proper functions of government in and out of the market-place.

In addition to a plethora of controls, tariffs and outright bans on imports, there have been erratic policies, subsidising the export of `new’, non-traditional manufactures like engineering goods, and taxing- and even banning – the export of goods in which India has traditionally enjoyed a comparative advantage.[32]

Moreover, the rupee has been continuously over-valued. From 1949 to 1959, the official exchange rate of Rs. 4.76 to the US dollar was, on average, 12..3 percent above the black-market rate, a figure which rose to 61 per cent between 1960 and 1965. From 1966 to 1970, the devalued official rate of Rs. 7.50 to the dollar was above the black-market rate by an average of 47.6 per cent, while from 1971 onwards the managed-peg rate has been above the black-market rate by an average of 24.3 per cent.[33]

Simple economics suggests that a free-market equilibrium rate would be somewhere between the black-market and official rates. An official exchange rate for the rupee fixed above that warranted by underlying relative demands for Indian and foreign goods, as well as by relative degrees of confidence in the rupee and the dollar, subsidises imports at the expense of exports. By discriminating in favour of its own foreign expenditures and against those of the private sector, the government has been the principal beneficiary of an over-valued rupee. If capital-intensive goods are the main imports and labour-intensive ones the main exports, an over-valued rupee further distorts incentives so as to favour the use of capital-intensive production processes over labour intensive ones – in a country with a demonstrable abundance of relatively inexpensive labour!
With an eye to India, Krueger has argued the general issue in these terms:`Subsidies can make any industry an export industry, even one that would not produce at all in an efficient allocation. Similarly, taxes can be levied on an industry that has comparative advantage which will penalize it enough to render domestic production entirely unprofitable. When taxes and subsidies are used, therefore, it is possible not only to distort the structure of production, but to distort it so much that the “wrong” commodities are exported.”[34]

The Indian Government’s planners have had the idea of forcibly effecting a reversal in the comparative advantage of the country, as if by magic overnight. The hope might have been that a forced pace of industrialisation would somehow allow economies of scale to be reaped and thus soon make Indian industrial goods competitive enough in international markets to be the country’s principal source of foreign exchange, displacing traditional manufactures like jute and textiles. In practice, however, as the evidence given by Bela Balassa
and other economists demonstrates, such a policy has not succeeded to date and is most unlikely ever to do so.
India’s import bill has risen continuously, most drastically after the 1973-74 quadrupling of petroleum prices; non-traditional manufactures have hardly been able to compete successfully in foreign markets; and the traditional exports of jute and textiles have suffered very severe setbacks. Balassa contrasts the consequences of the freer, outward-looking trade policies of South Korea, Singapore and Taiwan with those of the inward-looking, controlled regime of India as part of a study of 11 countries(including Argentina, Brazil, Colombia, Mexico, Chile, Israel and Yugoslavia) which, along with Hong Kong, account for most of the manufactured exports of developing countries. India’s share of the total manufactured exports of these countries has fallen steadily from 65.4 per cent in 1953 to 50.7 per cent in1960, to 31.2 per
cent in 1966 and to a mere 10.3 per cent in 1973. The proportion exported of India’s total manufactured output fell from 9.7 per cent in 1960 to 9.4 per cent in 1966 and to 8.6 per cent in1973. In contrast, during the same two periods, the proportion of manufactured output exported rose from1 to 14 to 41 per cent in South Korea, from 11 to 20 to 43 per cent in Singapore, and from 9 to 19 to 50 per cent in Taiwan.[35]
Balassa cogently argues that the adverse effects of a sudden change in external factors, such as the quadrupling of petroleum prices in 1973-74 or the 1974-75 Western recession, were absorbed much more easily by developing countries with large foreign-trade sectors than by those like India with relatively small ones: `Outward orientation is associated with high export and import shares that permit reduction in non-essential imports without serious adverse effects on the functioning of the economy. By contrast, continued inward orientation involves limiting imports to an unavoidable minimum, so that any further reduction will impose a considerable cost in terms of growth. Furthermore, the greater flexibility of the national economies of countries pursuing an outward-oriented strategy, under which firms learn to live with foreign competition, makes it possible to change the product composition of exports in response to changes in world market conditions, whereas inward orientation entails establishing a more rigid economic structure.’[36]
In other words, if imports are both high in total value and diverse in composition, a rise in the relative price of a particular import for which home demand is relatively inelastic (like petroleum and its products) can be accommodated by a substitution of expenditure towards it and away from inessential imports for which demand is relatively elastic. A similar argument had typically been advanced by advocates of import-substitution when they maintained that the exports of a small country should be diverse and not concentrated on only a few goods since a decline in world prices would otherwise lead to serious falls in export revenues. This suggests that both critics and advocates of import substitution might agree that, for a country which is a price-taker in world markets, the encouragement of a large foreign-trade sector is a way of diversifying the risk of adverse effects from changes in world prices. The question remains as to whether the positive theory of trade is correct in saying that the encouragement of comparative advantage is superior to import-substitution as a means of achieving a large foreign sector. From the contrasting experiences of, say, South Korea on the one hand and India on the other, the answer seems overwhelmingly to be that it is.

(iii) Agriculture
The Indian Government has instituted a multiple-pricing system for the major food-grains, especially rice and wheat. Farmers are compelled to sell a specified fraction of their output to the government, at a price fixed by the government which is significantly lower than that warranted by underlying supply and demand conditions. Farmers may sell the remainder of their output freely. The quantities the government acquires in this way, plus any it imports (imports being subsidised by the over-valuation of the exchange rate), are sold by ration at lower than free-market prices in the so-called `fair-price’ shops – which happen to be mainly in urban areas. Urban consumers may purchase part of their requirements from such shops and the remainder on the open market at higher prices. Astute middle-class urban housewives know that rationed grain is often of poorer quality than that sold on the open market. Accordingly, the former often constitutes part of the wages of the domestic servants of the urban household, while the family consumes the latter. Insofar as this is true, it suggests that farmers distinguish quality much better than do government officials, and that they use this advantage somewhat to partition their output into low- and high-quality, selling the first under compulsion to the government and the second on the open market.
While such is the general food policy of India, the compulsory procurement of grains and their distribution to the ration-shops is implemented by individual State governments and not by the Union Government. There have usually been numerous restrictions on inter-State movements of grain, so the States do not form a full customs union; instead, the Union Government tries to be a central clearing-house, matching the desired imports of one State with the desired exports of another.[37]

Economic effects of ban on futures contracts
Furthermore, futures contracts in grains have been banned by law, in the belief that futures trading is conducive to speculation and that speculation is undesirable. A futures contract in grain consists simply of a promise by a seller to deliver an amount of grain to a buyer at some specified date in the future in return for payment at a price agreed today. The seller’s incentive to enter into the contract is the guarantee of a certain sale, and the availability of funds now; the buyer’s incentive is the guarantee of a certain price for future deliveries. The contract may be entered into because buyer and seller have different expectations about what the spot price will be in the future. The buyer minimises his expected costs and the seller maximises his expected revenues; both are able to balance their budgets inter-temporally. Even if they have the same expectations about future spot prices, buyer and seller may still find it mutually profitable to enter into a futures contract as a way of insuring against risk. Forbidding such contracts by decree thus forces more risk onto both buyer and seller than they would normally be prepared to carry, and also induces them to balance their accounts in each period rather than it inter-temporally. Alternative kinds of credit markets become it relatively more lucrative, with the potential seller and buyer of futures wheat respectively borrowing and lending more than they would otherwise have done.[38]
The government has also expressed its determination to keep prices in ration-shops low. It has accordingly stockpiled large inventories of grain, apparently regardless of the costs of storage and spoilage or the alternative of holding larger foreign-exchange reserves to permit increased imports when necessary.

The ostensible, declared objective of all such policies has been to ensure that the poor do not suffer severe adverse income effects from sudden rises in the price of food resulting (it has been thought) from the contingencies of rainfall and the actions of speculative traders. It is, however, an open secret that the policies have really been a means of (a) taxing farmers, who pay a smaller percentage of their income in direct and indirect taxes than do urban dwellers, and (b) subsidising urban consumers, who broadly comprise the industrial working class and the middle in classes.
At the same time, however, the government and its advisers — after the considerable hesitation recorded by David Hopper [39]- have also accepted that the best long-run prospects for increasing agricultural productivity lie in modernising traditional farming techniques. Given the outstanding results of the Green Revolution in wheat, they could hardly have arrived at any other conclusion. The problem from the government’s point of view has been, as a sympathetic economist puts it “…how to procure a sufficient quantity of food grains at reasonable prices without jeopardising the farmers’ incentives to produce more”.[40]

Thus, while taxing farmers de facto on their output, on the one hand, the government has tried, on the other, to promote the use of modern inputs by subsidizing them both directly and through low-interest loans from the banks for such investment.
Distortions of incentives in agriculture
The distortions of efficient incentives caused by such policies are not difficult to see. First, the low output prices of wheat and rice have, in effect, been discriminatory taxes on wheat. As Edward Schuh remarks, these discourage the production of `. . . the very crops that policy-makers believe the vulnerable groups should have greater access to . . .’[41]

Vasant Sukhatme and Theodore Schultz have argued that, even between wheat and rice, there has been severe discrimination in favour of the former. At the official over-valued exchange rate, the price of domestic wheat has been significantly higher than imported, while at open-market rates for the rupee, the domestic price approximated the import price. For rice, however, the domestic price has been consistently below the import price. Sukhatme estimated that the dead weight loss in welfare from the under pricing of rice amounted to 8.5 per cent of total agricultural income in 1967-68 and to 2.2 per cent in 1970-71. He also calculated effective rates of protection, which were strongly negative for rice whether at official or open-market exchange rates and positive for wheat at the official exchange rate. Both he and Schultz conclude that the discrimination against rice has been a major factor in explaining the absence of a Green Revolution in rice on the scale of that in wheat.[42]
Secondly, the main beneficiaries of government subsidies for modern inputs have evidently been not the many small farmers but the fewer relatively large ones. As Gilbert Brown reports :`Large-scale farmers buy most subsidised inputs. Poorer farmers usually lack the money to buy adequate amounts of fertiliser and pesticides, and are commonly unable to get credit except at near-prohibitive rates of often 60% to 100% per year. Even in countries with subsidised bank credit for agriculture, rich farmers get most of the credit because of legal or administrative restrictions and/ or through open or disguised bribery. Credit and subsidy programmes for tractors, tube wells and other fixed investments also go mostly to the largest and richest farmers . . .Water is also a subsidised input . . . The farmers who receive this subsidised water generally have substantially higher incomes (because of the water) than farmers without access to public irrigation. Thus, claims that water should be subsidised to help small farmers misses the point that most farmers with irrigation have higher incomes than those who do not.’[43]
Brown argues that subsidies for inputs have been made necessary only to offset the forced depression of output prices. Moreover, the social benefit from subsidising inputs is limited to when the input is first introduced: ‘Once the benefits and technique of using the input are widely known, however, the continuation of such subsidies serves largely to increase the benefit-cost ratio of using the input . . .’.
Whether it is better to continue with artificially low input and output prices or to adjust towards a free market in both must take into account that the subsidies have encouraged more capital-intensity in production, and also that the `. . . low prices of certain inputs, particularly water, are often associated with widespread waste and inefficient use of the resource’.[44]
Thirdly, the farmer who is too small to find investment in storage facilities profitable may also consider it not worth his while to hold any of his output for sale on the open market. He will then sell it all to the government – at a below-market price.
A general conclusion would seem to be that, if the combined effect of input subsidies and forced grain sales to government has been a net subsidy to agriculture, then it has been a progressive subsidy; whereas if the combined effect has been a net tax on agriculture, then it has been a regressive tax. The Marxists may be quite right to protest that what gains there have been in agriculture have accrued to the relatively larger farmers, while smaller peasants and farmers are becoming landless labourers in growing numbers as a result of bankruptcy (that is, there has been increasing `rural proletarianisation’, to use the Marxists’ picturesque phrase). But if this is true, the cause can be traced unambiguously to the Indian Government’s belief – vociferously shared by the Marxists – that the way towards the declared objective of helping the poor is by extensive interference in the price system. Besides, the industrial working class demonstrably benefits from low food prices, so the honest Marxist must face up to being torn by divided loyalties between the rural and the urban proletariats.

Srinivasan put it as follows in a 1974 survey article :`The public distribution system with respect to foodgrains . . . operated to the benefit of all those living in metropolitan cities and other large urban concentrations while all others, including rich and poor in relatively small urban and almost all rural areas, did not benefit at all. When one recalls that the rural population includes the most abject among the poor, namely landless workers, the inequity of the system becomes glaring. And in urban areas, the existence of the system and the fact that the ration is often inadequate provides incentives for a household to falsify the data on its size and age composition given to the rationing authorities, as well as to create bogus or ghost ration-cards, not to speak of the corruption of the personnel manning the rationing administration.’[45]

The history of the extensive control of agriculture – which has included a partial government monopsony, forcibly-depressed output prices, inter-State restrictions on grain movements, and urban ration-shops – can be traced to the last years of British rule, as an attempt to bolster the popularity of the imperial regime. [46] The continuation and reinforcement of statism in agriculture in independent India has evidently rested on certain premises, namely, that the private market would be grossly inefficient and would be dominated by a few traders continually reaping large speculative profits, with both the small farmer and the ordinary consumer suffering in consequence.

Uma Lele’s fine study of the private grain trade, however, shows the real picture to be quite different. She found that the trade was highly competitive, that individual traders were rational agents (given the constraints of technology and government policy), that location price differences closely reflected transport costs, and that temporal price differences closely reflected storage costs. She argued that, while there was considerable scope for government activity, it should be in the form, not of interfering in the competitive market, but rather of encouraging the market to work – by, for example, disseminating relevant information such as crop forecasts, standardising weights and measures, constructing or improving roads and encouraging efficiency in the market for the transport of grain, etc.[47]

The evident neglect of such findings as these, and the continued application of policies inimical to competition and the free market, suggest that successive governments of independent India have been hardly more concerned for the rural poor – whether as farmer or consumer – and hardly less concerned with bolstering their popularity in the urban areas than were the British.

(iv) Employment
An obvious consequence of the economic policies described above has been the distortion of the individual citizen’s calculation of the expected benefits and costs of living and working in urban areas compared with the rural countryside. The forced depression of output prices in agriculture and the plethora of foreign-trade policies which discriminate against agriculture certainly seem to have artificially depressed the expected incomes of farmers. At the same time, a large `public sector’ in industry, plus the array of foreign-trade policies which have protected private industry, plus the indirect subsidisation of food sold in urban ration-shops certainly seem to have artificially raised expected urban incomes. Predictably, the reaction has been a vast and continuing net migration from the villages to the towns and cities, even after adjusting for the seasonal nature of agriculture. This drift has been the subject of much inquiry and discussion by development economists.[48] I propose to set it aside and examine instead a different aspect of employment policy which has not received nearly as much attention, namely, the consequences of putting into effect the clauses in the 1950 Indian Constitution mentioned above which authorised discrimination in employment and public education in favour of the `Scheduled’ castes and tribes, as well as other policies which discriminate on grounds of ethnic origin.

The consequences have been similar in several respects to those in America of `affirmative action’ towards so-called `racial minorities’, and it will be useful to draw out the analogy a little. As Thomas Sowell has cogently argued in recent years, the racial composition of contemporary American society is a complex mosaic, and no-one can say with certainty how it has come to be what it is today. In such circumstances, for the government to try to isolate a single contingent characteristic like `race’, partition society on the basis of census data according to this characteristic, and then construct public policies accordingly, is to introduce an enormous arbitrariness into economic life. By merely defining a group by reference to a single contingent characteristic, which all its members seem to possess, the intrinsic complexity of the individual person is lost or overlooked. Two members of the same race may be very different from each other in every relevant characteristic (income, education, political preference, and so on), and indeed resemble members of other races more closely in them. A policy which introduces a citizen’s race as a relevant factor in the assignment of jobs or college places partitions the citizenry into vague groups : members of groups who are very different from members of other groups in characteristics other than race rarely competing with each other anyway, while the burden and beneficence of the state’s policies fall on members of groups who are not very different from members of other groups in characteristics other than race: `. . . costs are borne disproportionately by those members of the general population who meet those standards with the least margin and are therefore most likely to be the ones displaced to make room for minority applicants. Those who meet the standards by the widest margin are not directly affected – that is, pay no costs. They are hired, admitted or promoted as if blacks did not exist. People from families with the most general ability to pay also have the most ability to pay for the kind of education and training that makes such performance possible. The costs of special standards are paid by those who do not. Among the black population, those most likely to benefit from the lower standards are those closest to meeting the normal standards. It is essentially an implicit transfer of wealth among people least different in non-racial characteristics. For the white population it is a regressively graduated tax in kind, imposed on those who are rising but not on those already on top.’[49]
At the same time, there is, in effect, a progressively graduated subsidy for members of the `minority’ group in favour of those who are already closest to meeting the general standards. Those in the mainstream of each group are largely unaffected; it is at the margins of competition that the bitterness caused by such policies will be felt and will manifest itself. It would seem that the situation in India – where the racial mosaic is if anything more complex than in America – is somewhat analogous. In recent years there has been civil tension and violence in the streets as poor Muslims, `caste’ Hindus, Sikhs and others have protested at being edged out of jobs and promotions by equally poor, or wealthier, members of the `Scheduled Castes’. In March-April 1981, for instance, there was widespread civil tension and violence in Gujarat over the reservation of places in the State’s medical colleges. A quarter of these places were statutorily reserved for members of the `Scheduled Castes’, with any not taken up by qualified candidates from these groups accruing to them in the future, thereby rapidly excluding from general competition as many as half the total number of places.[50]

The cruel paradox is that, while the position of many members (perhaps the vast majority) of the `Scheduled Castes’ vis-à-vis `caste’ Hindus remains one of degradation and persecution – quite regardless of the constitutional guarantees of equality in the eyes of the law – the relatively few who have succeeded in taking advantage of the discriminatory statutes have aroused the indignation of those who have not -causing even more animosity towards the `Scheduled Castes’ in general. One commentator observes the emergence of a `new elite’ among the `Scheduled Castes’ which `ceases to identify with its caste brethren’; while, at the same time, the law on equality `is so widely flouted precisely because the Scheduled Castes have not the means or courage to seek its protection . . .’ He concludes :`Contrived gestures such as are now popular will either not benefit [the Scheduled Castes] . . . or will do so only by further lowering already deplorable academic and administrative standards’. [51]
Moreover, when all government posts are advertised with a caveat that 10 or 15 per cent of themare reserved for members of the `Scheduled Castes’ and `Scheduled Tribes’, there is a considerable incentive for people to persuade Parliament to declare them as being such. And that also has happened. Discrimination in employment on the ground of caste has not been the only kind of discrimination practised by the Indian state. In what may be the most thorough study currently available on the origins, consequences and legal history of official discrimination in India, Weiner, Katzenstein and Rao have described the plethora of policies pursued by the central and state governments which have used not caste but ethnic origin as a criterion for public employment (with the private sector also often being `encouraged’ to follow suit) :`Preferences are given to those who belong to the “local” community, with “local” understood as referring to the numerically dominant linguistic group in the locality.’ [52] The authors conclude that what is emerging in India is`. . . a government-regulated labour market in which various ethnic groups are given a reserved share of that market. Competition for employment is thus not among all Indians, but within specified linguistic, caste, and tribal groups.`. . . various ethnic groups, therefore, fight politically for a share of that labour market. The major political struggles are often over who should get reservations, how the boundaries of the ethnic groups should be defined, and how large their share should be. There are also political struggles over whether there should be reservations in both education and employment, in private as well as in public employment, and in promotions as well as hiring. The preferential policies themselves have thus stimulated various ethnic groups to assert their “rights” to reservations.’[53]

It is not difficult to understand the general economic argument against discrimination on grounds such as caste or ethnic origin. If a private employer indulges a personal preference to hire only people of an kind A when there are more able or better qualified candidates of other ethnic kinds B, C, D, . . . ,available, and if the product of his firm is subject to competition in the market from other enterprises which do not discriminate on criteria which are irrelevant to economic efficiency, we may confidently expect the discriminating employer’s product to become uncompetitive and his profits to fall. The best and most obvious example of this would be in the professional sports industry in the USA : a `whites-only’ basketball or football team would be immediately vanquished on the games-field into bankruptcy. If government pursues employment policies which discriminate according to economically irrational criteria such as caste or ethnic origin, or if it forces all private firms to do likewise, there will certainly be inefficiency resulting in a loss of real aggregate output in the economy. In the terms of modern economics, a vector of total outputs which would be feasible given the parameters of the economy, and which would leave everyone either better off or at least no worse off, would not be achieved. In sum, the consequence of direct and widespread government interference in the labour market in India appears to have been, not only a disregard for the principle of equality before the law for every citizen (in a nascent republic of immensely diverse peoples), but also a loss of real output and an enormous `politicisation’ of economic life whereby individual success becomes increasingly tied to political power and increasingly removed from personal merit, enterprise and effort. In addition, the composition of occupations in the economy has been indirectly distorted by the set of industrial, agricultural and foreign-trade policies pursued by successive governments.

6. THE MALFUNCTIONING OF GOVERNMENT

IT MIGHT be thought that a large and flabby `public sector’ in industry and commerce, labyrinthine controls on private industry, a government monopoly of foreign-exchange dealings, the overvaluation of the currency, indefinite import-substitution, forcibly depressed output and input prices in agriculture, enormous politicization of the labour market, disregard for equality before the law, and distortion of the composition of occupations would constitute a sufficient catalogue of symptoms of grave illness in the political economy of a nation. Sadly, however, there are in modern India other symptoms too which I can mention only briefly here.
An opinion frequently encountered among urban Indians (as well as among the majority of Western development economists) is that government control over the size of the population is a necessary condition for economic development, and indeed that it is the failure of government to do this that has dissipated the economic growth that would otherwise have resulted from the economic policies pursued. The urban Indian witnesses the hovels and shanty-towns inhabited by migrant families from the countryside attracted by the policies discussed previously, and he experiences the resulting congestion. So does the Western development economist when he ventures out of his hotel into the city streets. Very often, that is his only personal experience of the legendary `poor masses’ of India. It is understandable that such princely discomfiture should lead him to the opinion that the poor are mindless in their breeding habits and that they must be persuaded, bullied or compelled to change. If this opinion were true, it would seem to point to a neat and simple solution to many of the woes of poor countries, and India in particular. But if the opinion is false and yet widely believed, it would cause governments to be, as it were, barking up the wrong tree.
It is, however, far from established, and certainly not at all obvious, that demographic control is either necessary or desirable in India or elsewhere. In the first place, when the rate of infant mortality is known and experienced by rural people to be high, there will be mare births than there would have been otherwise. Secondly, it is perfectly clear that children are an investment good in traditional societies such as those of rural India. Even young children are a source of family income, either directly by working outside the home or indirectly by working at domestic chores and thereby releasing adult members of the family for outside work. For a child to be absent from primary school or to drop out within a few years is not necessarily truancy; it may be the outcome of a rational economic calculation about where his time may be better spent towards increasing the household’s income. Furthermore, in traditional societies adult children are the principal source of support for elderly and retired parents.
To know of the existence of artificial measures of contraception certainly enlarges the alternatives open to a couple. Assuming that such knowledge is not in itself a cause of unhappiness (as it can be if there are conflicting religious commitments), a couple may certainly be better off with that knowledge because of their ability to control the number and timing of their children. The couple might also have fewer children – though there is no necessary or causal connection between a knowledge of contraception and the number of children born to a couple. Rational calculation may produce the same number of children as the caprice of nature, the implication being that in general there is no causal connection between the availability of contraceptives and the rate of growth of the population. The value of a public policy which encourages the use of artificial contraception is not so much that it reduces the number of births as that it may allow couples more control over their own lives. Whether or not artificial contraception should be publicly subsidised is quite another question.
The Indian Government has expended considerable resources in propagating and subsidizing artificial birth control. The results appear to have been, at best, indifferent (coupled as birth control has been with indirect incentives for large families and, at worst, cruel – as when frenetic zeal spilled over into demands for, and the implementation of, compulsory sterilisation. For this author, however, the important consideration would seem to be not so much the exact costs and benefits of the demographic policies pursued as the critical acknowledgement that they have little or nothing to do with the fundamental causes of mass economic development.[54]
It remains a stark paradox that, with a general literacy rate of perhaps 30 per cent [NB: In 2007, this has grown to 73% for males and 48% for females] India still produces the third largest absolute number of science and engineering graduates in the world. This reflects the lopsidedness of the educational system, continued from British times, in which higher education is enormously subsidised relative to primary education. In addition, entry into the civil services requires a college or university education, which in turn requires a good private secondary school education, which in turn requires a good preparatory school education. Strenuously competing to enter prep. school, with the help of outside tutoring, is the unhappy fate of many a five- or six-year-old in the towns and cities, followed by strenuous competition in secondary school, college and university, and finally at the doorstep of government (or a foreign university).
A job in government – any job in government – has carried prestige since Mughal times. In addition to the prestige and the obvious benefits of tenure where ether `decent’ jobs are scarce, there has been in recent times the inner satisfaction from a belief that a person can truly do his best for his country only by being in government. Tens of thousands of youths spend significant personal resources (such as whole years in cramming schools) to compete for a few annual openings in government. It is only to be expected that the competent, ambitious, patriotic youth who succeeds will mature into a respected mandarin with an unshakeable conviction in the good his government has done for the masses, and in the further good yet in prospect.
Failure to anticipate monsoon damage and disarray of the judicial system
The most serious examples of the malfunctioning of civil government in India are probably the failure to take feasible public precautions against the monsoons and the disarray of the judicial system. Official estimates, for instance, of the damage caused by flooding to homes, crops and public utilities in a few weeks of July-August 1981 alone amounted to over Rs 1 billion, with 10.8 million people `affected’, 35,000 head of cattle lost, and 195,000 homes damaged. The full magnitude of the devastation which annually visits vast areas can be understood perhaps only by those in rural India, although the towns and cities also regularly suffer considerable chaos. [55] [NB 2007: Monsoon prediction appears far better today than it was when these words were written.]
As for the disarray of the judicial system, The Statesman lamented in July 1980:`The simplest matter takes an inordinate amount of time, remedies seldom being available to those without means or influence. Of the more than 16,000 cases pending in the Supreme Court, about 5,000 were introduced more than five years ago; while nearly 16,000 of the backlog of more than 600,000 cases in our high courts have been hanging fire for over a decade. Allahabad is the worst offender but there are about 75,000 uncleared cases in the Calcutta High Court in addition to well over a million in West Bengal’s lower courts.”[56] Such a state of affairs has been caused not only by lazy and corrupt policemen, court clerks and lawyers, but also by the paucity of judges and magistrates. In addition, however,`. . . a vast volume of laws provokes endless litigation as much because of poor drafting which leads to disputes over interpretation as because they appear to violate particular rights and privileges. Land legislation offers an example of radical zeal running away with legal good sense, giving rise to thousands of suits against the Government . . .’ [57] When governments determinedly do what they need not or should not do, it may be expected that they will fail to do what civil government positively should be doing. In a sentence, that has been the tragedy of modern India.

Part IV : Reform
A LIBERAL AGENDA

IT WILL by now have become evident to the reader from the descriptions and arguments given above that, in the judgement of the present author, only a set of radical changes in policy can put the Indian economy on a path to higher mass prosperity within a free and healthy body politic. I shall therefore put forward a tentative manifesto for reform, adding some predictions about which classes of citizens would be most likely to support or oppose a particular proposal. The scope and intention of such a manifesto should be made clear at the outset. As Aristotle taught, a set of actions which are the means towards certain ends may themselves be the ends towards which other prior means have to be taken.[58]
The ultimate ends of economic advice in India are to seek to bring about mass prosperity under conditions of individual freedom. The proposals I which follow are to be construed as means towards those ultimate ends. But they also constitute a set of intermediate ends, and their implementation would require further judgement about the best means towards achieving them. In economic policy, for instance, a firm but gradual phasing-in over a period of three or four years may be the best way to minimise the hardships entailed by the adjustment. For reasons which will become clear, however, I shall not here try to answer the question as to how the proposals might best be implemented.

(a) Effects of foreign policy on the domestic economy
It will be useful to begin with a short and very incomplete consideration of foreign policy insofar as it may bear upon domestic economic policies. It is a settled fact of international politics that, while there is no obvious connection between a nation’s economic and political institutions and the choice of strategic allies it faces, people’s subjective perceptions and opinions of the social arrangements in a foreign country can be deeply influenced by whether that country is seen as a potential ally or adversary. A related and equally settled fact is that war, or the fear of war, can make for the most incongruous of bed-fellows. In contemporary India, it is quite evident that the antipathy and pessimism towards market institutions found among the urban public, and the sympathy and optimism to be found for collectivist or statist ones, has been caused to a very significant extent by the perception that the United States is relatively hostile towards India while the Soviet Union is relatively friendly. This was not always so. The official affection between the United States and India in the early years of the Republic was grounded in sincerity and goodwill. The roots of its demise are probably to be found in the split between the Soviet Union and China in the late 1950s which, in a short period of time, made the latter a valuable strategically for the United States against the former. By the early 1970s, the spectre of a joint military threat to India from a totalitarian China and a militarist Pakistan – and especially a threat which it was perceived democratic America would do little or nothing to thwart – made it prudent for democratic India to become the virtual ally of totalitarian Russia.
Such a configuration on the international chess-board need not have been detrimental to India’s economic development. It is possible to imagine a liberal state allied to a totalitarian one for strategic reasons, yet maintaining liberal economic policies domestically and internationally. In practice[58], however, the extent of `economic collaboration’, bilateral trading arrangements, `joint ventures’, barter agreements, `cultural exchanges’, and the like into which the Indian Government has entered with the Soviet bloc, appears significantly to exceed what it has achieved with the Western powers. In particular, Soviet arms have in recent years been purchased more often and then manufactured under licence. This too need not have been economically detrimental if the Soviet products had in practice been competitive on international markets in terms of price and quality. As is common knowledge, however, this is often not so. It therefore appears that part of the price India has had to pay for the strategic support of the Soviet Union has been the foisting on her of low-quality, high-priced Soviet goods, whether arms or steel mills or technical know-how. At the same time, for reasons which are partly historical and partly related to these considerations, direct foreign investment by private Western firms has been treated with, at best, coolness and, at worst, open hostility.

A change in India’s foreign policy
If the economic liberalisation that will be proposed here for India is to be effective, a truly independent yet prudent foreign policy may be required to accompany it. A change in the present strategic configuration – in which the United States is perceived in India to be virtually the ally of both China and Pakistan, while India is perceived in the United States to be virtually the ally of the Soviet Union – is unlikely until and unless the United States finds it in her best interests in the region to distance herself from China and Pakistan, which is unlikely to happen without a rapprochement between the Soviet Union and China. A drastic alternative way for India to reduce her dependence upon the Soviet Union would be the kind of divorce Egypt effected some years ago, followed by an alliance with the Western powers. This might, however, undermine once more the independence of foreign policy and be perceived in India as a move from the devil to the deep sea. The prudent remaining alternative would appear to be an earnest and vigorous pursuit of serious no-war pacts with Pakistan and China, combined with an appropriately small independent nuclear deterrent. It seems to the author that the reasons which commend this course are closely analogous to those offered by the present American and British governments for pursuing serious no-war negotiations with the Soviet bloc whilst simultaneously improving the Western nuclear deterrent.
(b) Liberalisation of foreign trade
Not only would the truly independent foreign policy proposed in the preceding paragraph allow India to distance herself from the Soviet Union; it would probably also prompt the Western powers to end the intergovernmental transfers which go by the name of `foreign aid’. For reasons that Peter Bauer has emphasised over many years, an end to such transfers might be a boon in disguise for India.[59] In particular, it would require the government to seek to balance the foreign-exchange accounts without becoming obligated to the Western powers, and this in turn would require a major economic transformation from a closed and protectionist economy to an open one which harnessed India’s comparative advantages.
An initial liberalisation of foreign trade, involving a transition from quotas to tariffs, would probably be supported by private industry as a whole. It would, however, be opposed by incumbent politicians and government officials since it would dissipate the rents they receive under the closed regime. A subsequent reduction in tariffs, a withdrawal of export subsidies, and the free floating of the rupee would be opposed by those private firms (and their labour unions) which would be uncompetitive internationally – probably those in `non-traditional’ industries. The measures would, however, be supported by ordinary consumers, by private firms in traditional industries like jute manufactures and textiles, and particularly by farmers.
Once private industry became subject to the strict discipline of international competition again, there would be no reason whatsoever for government-imposed internal controls which were not conducive to free and fair competition among firms for the consumer’s rupee. The repeal of the plethora of licensing policies would dissipate the large rents attached to the controls under the present regime. Since these rents are paid by private industry and received, directly or indirectly, by incumbent politicians and government officials, the former could be expected to welcome repeal and the latter to oppose it vigorously.

(c) Privatisation of `public-sector’ industries
At the same time, for the so-called `public-sector’ industries to face international competition, when they are currently monopolists or oligopolists, would demand such an improvement in economic discipline as probably to require the shares of most of them to be sold on the open market, with marginal-cost pricing imposed on the remainder. There is no economic reason why the Government of India shouldbe engaged in commercial or merchant banking and insurance, or in industries from steel, machine-tools, ship-building and fertilisers to wrist-watches, hotels and beer. Nor is there any cogent reason why it should be a major producer, let alone a monopolist, in the road, rail, air and sea transport industries. Large-scale privatisation would be supported by private citizens in general, and would also draw out the reputedly vast private funds which circulate in the untaxable underground economy. But such measures would probably be opposed vigorously by the government officials who currently manage these industries, aswell as by the public-sector labour unions.

(d) Free-market pricing in agriculture
With the repudiation of the mistaken premise that government sponsored industrialisation is the best means to mass economic development, the free-market pricing of agricultural outputs and the removal of all controls that are not conducive to free competition among farmers should follow. This would be welcomed by all farmers and perhaps by the rural population in general. It could also be expected to provide much encouragement to the technological transformation of traditional agriculture. The abolition of ration-shops in urban areas would be opposed by the industrial working class, by the urban middle classes in general, and by government officials and employees engaged in the present regime of public distribution. Further, farmers, especially relatively large ones, might be expected to oppose the concomitant free-market pricing of agricultural inputs, including credit and fertilisers, as would those government employees presently charged with distributing these inputs.
The ending of the distortions in agricultural output and input prices would establish a conclusive case for uniform systems of taxation in the economy, and especially for income from agriculture to be treated on a par with income from other occupations. These systems could locally include direct subsidies to those (whether in rural or urban areas) who are unable to provide any income for themselves, such as the insane and the severely disabled – all of whom are currently cared for, if at all, by private charity, and none of whom, strangely enough, appears to enter the moral calculations of socialist and Marxist economists.

(e) Tax revenues for public goods
The first and most important destination of tax revenues, whether raised centrally, provincially or locally, must be the provision of public goods – central, provincial and local. In an earlier section, we have seen what kinds of goods these should be. Among the most urgent in India are more effective precautions against the monsoons and improvements in the efficiency of the systems of civil and criminal justice. The former might include measures to prevent soil erosion and the building of better dams, embankments, canals and roads. Such programmes would be likely to command practically unanimous support in the localities in which they were implemented.
Reforms of the judicial system might include raising the salaries of judges and policemen, as well as the penalties for their misconduct; improving the training and morale of the police, with the object of increasing public confidence in them (especially in the villages); and expanding the number of courts, at least temporarily until the monumental backlog of cases has been reduced and brought under control. A general reduction in the political and administrative direction of economic life would lead to fewer lawsuits being brought against the government itself, and thus provide further relief for the judiciary. Widespread prison reform may also be required if the reports are true that a large proportion of those held prisoner for a number of years have yet to be brought to trial, and that potential prosecution witnesses, if they are poor and uneducated, are themselves sometimes kept in jail until a case comes to court. Such reforms would command the support of everyone except criminals, capricious litigants and corrupt or incompetent members of the police and judiciary, none of which groups, it must be supposed, comprises apolitical constituency.

Together with improvements in the system of justice, the principle of equality before the law would have to be taken seriously. This would require the dispensation of justice by the state to be, as it were, a process blind to the infinitely diverse caste and ethnic characteristics of the citizenry, which in turn would imply the repeal of all laws – whether central, provincial or local – permitting governmental authorities to discriminate in favour of a particular politically-specified caste or ethnic group. Merely to have written `equality before the law’ into the Constitution without really believing it either possible or desirable is to allow the mutual caste and ethnic bigotry of private citizens to be exploited for political ends. That innumerable members of a caste, or religious or ethnic community have suffered at the hands of another, and that members of the `Scheduled Castes’ in particular have been victims of enormous cruelty, should not prevent acknowledgement of the sober fact that the past is irretrievable, or that it is similar cruelty in the present and future against any citizen at the hands of any other, or the state, that the declaration of Fundamental Rights was intended to prevent.

(f) Other reforms
Other proposals could also be suggested : the introduction of vouchers for primary and secondary education; a serious assessment of the benefits from and costs of subsidies to higher education; an end to the government monopoly of radio and television; a revision of government pay-scales to make them competitive with the private sector, together with equivalent reductions in non pecuniary benefits; a decentralisation of public spending decisions from New Delhi to the State capitals and from there to the districts; and so on. However, it is hardly necessary to go further, since even a limited liberal agenda would appear doomed to be still-born.
Incumbent politicians, government officials, and the public sector unions in general would vigorously oppose any reduction in government intervention in the economy for fear of losing the rents and sinecures of the status quo. Indeed, professional politicians in general could be expected to be averse to any lessening of the politicisation of economic life.
In other countries, a political party proposing such a reduction in government intervention would usually enjoy the backing of private industry. In India, however, private industry in general would probably see it in its own interest to support only the reduction of internal controls, whilst vigorously opposing reductions in the neo-mercantilist external controls. In July 1981, for example, I asked a prominent industrialist to imagine first a free-market regime at home : `That would be very welcome indeed’, he replied enthusiastically. I then asked him to imagine a policy of free trade : `That would wipe us out’, he replied gravely. His answers indicate very well what is perhaps the single most important feature of the equilibrium that has emerged in India: by accepting without significant protest the constraints and costs imposed upon it by the government and its `planners’, the private corporate sector has traded the freedom of enterprise for mercantilist monopoly profits in the home market.
When Indian Marxists rail about collusion between the `national bourgeoisie’ (that is, the governmental class) and the `comprador bourgeoisie’ (that is, the private sector), they make a cogent point as old as Adam Smith’s critique of mercantilism.[60] But, again, they fail to see that the fortunes of the industrial working-class have also risen with those of the private and public industries that have gained from the present regime. Moreover, a large proportion of industrial workers and blue-collar government employees are migrants with families left behind in rural areas; these rural families might also oppose reductions in the transfers currently received by their migrant relatives. Finally, while joining other farmers in welcoming a free market in grain, the politically influential larger farmers could be expected to oppose the direct taxation of agricultural incomes and the elimination of subsidies for inputs.

Who is left who would gain from the kinds of reforms proposed here? Only the ordinary citizen qua consumer, the rural poor and the residuum of severely disabled citizens unable to create any income for themselves. None of these has been or is likely to become an effective political force.

India’s `unhappy equilibrium’
The economy of the first Indian Republic has tended towards a broad and increasingly unhappy equilibrium. Distortions of efficient relative prices and wages lead to both substitution and income effects. Those who lose from one distortion rationally seek another from which they may gain; those who lose from the second seek a third; and so on ad infinitum until a maze of distorted incentives are in place and a60Adam Smith, host of income transfers are in progress – sometimes offsetting losses, sometimes not. Tullock has emphasised that the problem is not only that there are dead-weight losses in welfare, but also that people are led `. . . to employ resources in attempting to obtain or prevent such transfers.’[61] In modern India, the waste of productive resources put to the pursuit of such transfers has been incalculable. The reforms pro-posed here would cut through the maze of distorted incentives and institutions all at once – for which very reason it seems unlikely they can come to be implemented.

The economic significance of a political attitude of individualism is that it clearly recognises the relationship between individual effort and reward, and the relationship between cause and consequence generally. An attitude of statism obscures or obliterates this relationship. In republican India, statism has pervaded all public discourse and prompted most public policy. Successive groups of politicians and government officials seem never to have recognised the fundamental nature of those functions of government which are the indispensable prerequisites of civil peace and mass prosperity. Nor have they understood that it is no part of government’s agenda to be the driving force to mass prosperity, and that this can come (if it will) only from innumerable individual efforts in the pursuit of private rewards. This is not at all to say that those in government have been ill-intentioned. On the contrary, they may have sincerely sought the public good whilst introducing a Leviathan government into the market-place and neglecting the proper duties of government outside it. As Bauer has remarked in a related context :`Their financial benefits may appear to be fortuitous, as if Adam Smith’s invisible hand were to work in reverse, so that those who sought the public good achieve what was no part of their intention, namely personal prosperity.’[62] It is indeed possible that the basic fact of human nature that individual households every where ordinarily know most about, and are only concerned with, their own well-being has never been acknowledged in modern India. The simple secret of a stable and prosperous polity is to create institutions which harness the universal pursuit of individual self interest, and not ones which pretend that men are selfless saints. A polity where this fact is acknowledged would not have to depend for the viability of its institutions on mere exhortation, as the institutions of the Indian Republic seem perpetually fated to do, even while the competitive pursuit of self interest is everywhere manifest.

The logic of economic reasoning and the adducement of economic evidence have in the past had little effect in India because the distribution of gains and losses from the policies pursued has been closely matched by the distribution of effective political power. This distribution seems most likely to continue, and so the prospects of significant and sustained endogenous reform seem, to this author at least, very small. Changes in external constraints seem to be the only likely source of a major disturbance to the equilibrium, and there can be no guarantee that the results will be for the better. This is a sad and troubling conclusion to come to, for a citizen of India or anyone else who has loved the country. It places this author in the paradoxical position of believing his arguments to be broadly correct – while hoping they are not.

ENDNOTES (The original monograph in 1984 had footnotes, which have had to be transformed since pages, in this new HTML age, no longer have to be linear as in a book nor have to be turned in order to be read).

[1] The early studies notably include: B. R. Shenoy, `A note of dissent’, Papers relating to the formulation of the Second Five-Year Plan, Government of India Planning Commission, Delhi, 1955; Indian Planning and Economic Development, Asia Publishing, Bombay, 1963, especially pp. 17-53; P. T. Bauer, Indian Economic Policy and Development, George Allen & Unwin, London, 1961; M. Friedman, unpublished memorandum to the Government of India, November 1955 (referred to in Bauer, op. cit., p. 59 ff.); and, some years later, Sudha Shenoy, India : Progress or Poverty?, Research Monograph 27, Institute of Economic Affairs, London, 1971. Some of the most relevant contemporary studies are: B. Balassa, `Reforming the system of incentives in World Development, 3 (1975), pp. 365-82; `Export incentives and export performance in developing countries: a comparative analysis’, Weltwirtschaftliches Archiv, 114 (1978), pp. 24-61; The process of industrial development and alternative development strategies, Essays in International Finance No. 141, Princeton University, 1980; J. N. Bhagwati & P. Desai, India: Planning for Industrialisation, OECD, Paris : Oxford University Press, 1970; `Socialism and Indian Economic Policy’, World Development, 3 (1975), pp. 213-21; J. N. Bhagwati & T. N. Srinivasan, Foreign-trade Regimes and Economic Development: India, National Bureau of Economic Research, New York, 1975; Anne O. Krueger, `Indian planning experience’, in T. Morgan et al. (eds.), Readings in Economic Development, Wadsworth, California, 1963, pp. 403-20; `The political economy of the rent-American Economic Review, 64 (June 1974); The Benefits and Costs of Import-Substitution in India : a Microeconomic Study, University of Minnesota Press, Minneapolis, 1975; Growth, distortions and patterns of trade among many countries, Studies in International Finance, Princeton University, 1977; Uma Lele, Food grain marketing in India : private performance and public policy, Cornell University Press, Ithaca, 1971; T. W. Schultz (ed.), Distortions in agricultural incentives, Indiana University Press, Bloomington, 1978; V. Sukhatme, “The utilization of high-yielding rice and wheat varieties in India: an economic assessment”, University of Chicago PhD thesis, 1977.

[2] S. Roy, “On liberty and economic growth: preface to a philosophy for India”, University of Cambridge PhD thesis, 1982a, Chapters I and II; “Knowledge and freedom in economic theory: Parts I and II”, Centre for Study of Public Choice, Virginia Tech, working papers, 1982b. My epistemological arguments have closely followed those of Renford Bambrough, Moral Scepticism and Moral Knowledge, Routledge and Kegan Paul, London, 1979.

[3] Aristotle, Ethica Nicomachea, in Richard McKeon (ed.), The Basic Works of Aristotle, Random House, New York, 1941. We read: `. . . the whole account of matters of conduct must be given in outline and not precisely, as we said at the very beginning that the accounts we demand must be in accordance with the subject matter; matters concerned with conduct and questions of what is good for us have no fixity, any more than matters of health. The general account being of this nature, this account of particular cases is yet more lacking in exactness; for they do not fall under any art or precept but the agents themselves must in each case consider what is appropriate to the occasion, as happens also in the art of medicine or of navigation.’ (1,104a2-a9.)`. . . we do not deliberate even about all human affairs; for instance, no Spartan deliberates about the best constitution for the Scythians. For none of these things can be brought about by our own efforts. We deliberate about things that are in our power and can be done.’ (1,112a28-30.) Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations(1776), eds. R. H. Campbell et al., Liberty Classics, Indianapolis, 1981. We read: `What is the species of domestick industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in hislocal situation, judge much better than any statesman or lawgiver can do for him.’ (Book IV. ii. 10, p. 456.) In modern times, Friedrich Hayek has always kept this fact in the foreground of his thinking. In his Individualism and Economic Order, Routledge and Kegan Paul, London, 1949, we read, for example, of `. . . the constitutional limitation of man’s knowledge and interests, the fact the he cannot know more than a tiny part of the whole of society and that therefore all that can enter into his motives are the immediate effects which his actions will have in the sphere he knows . . .’ (p. 14.) The individual agent has a `special knowledge of circumstances of the; thus `. . . practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active co-operation.’ (p. 80.)

[4] The mathematical economist will recognise these three conditions as the characteristics which define a multi-market general equilibrium in the Arrow-Debreu model: Gerard Debreu, Theory of Value, Yale University Press, New Haven, 1959; K. J. Arrow and F. H. Hahn, General Competitive Analysis, Oliver and Boyd, Edinburgh, 1971.

[5] This argument is discussed further in Roy (1982a), pp. 96-107, pp. 133-43.

[6] Adam Smith, op. cit., Book V. i. c., p. 723.

[7] P. A. Samuelson, `A pure theory of public expenditures’, Review of Economics & Statistics, 36, 1954,reprinted in K. J. Arrow & T. Scitovsky (eds.), Readings in Welfare Economics, R. D. Irwin, Homewood, Ill., 1969.

[8] The idea I have in the background is of some implicit public goods function endorsed more or less unanimously by citizens – but not necessarily by those with political power – with commonsense dictating the elements it should contain. Thus Let U = U (π1, π2 , …, πn) be such a function with δU/δπi > 0, δ2U/δπi2 < 0 i=1,2,…,n, where πi = 1,2,…n, is a lateral index of a public good or service like defence, civil protection, roads, dams, or the finance of basic education. Each of these is “produced” by an expenditure of public resources: πi = πi (τi ), δπi/δτi > 0, δ2πi /δτi2 < 0 i=1,2,…,k, Σ i=1,2,…,n τi = τ* where τ* is the total level of public resources available (whether by taxation or borrowing). An efficient condition, i.e., one in which given public resources are efficiently allocated among alternative public goods or services, would be δU/δπi/ δπi/δτi = δU/δπj / δπj/δτj for every i,j = 1,2,. .,n. So, if the marginal tax-rupee was put towards the production of any public good, the increase in social utility should be the same; otherwise we would find an excess supply of some public goods (e.g. bureaucrats) and an excess demand for others (e.g. courts, dams, police protection, etc.).

[9] Two examples are F. H. Hahn, On the notion of equilibrium in economics : an inaugural lecture, Cambridge University Press, Cambridge, 1973, and J. M. Grandmont, “Temporary general equilibrium theory : a survey”, Econometrica, vol. 46, 1977.

[10] Aristotle, op. cit., 1,094b12-1,094b27

[11] D. H. Robertson, `The Economic Outlook’, in his Utility and All That, Allen & Unwin, London, 1952, pp.51-52.

[12] Karl Popper made a similar point in The Open Society and its Enemies, Princeton University Press, Princeton, 1950, when he suggested that Plato’s question `who should rule?’ should be discarded for the question:`How can we so organise political institutions that bad or incompetent rulers can be prevented from doing too muchdamage?’ (p. 120). There is relevant discussion by Renford Bambrough in `Plato’s modern friends and enemies’, Philosophy, 37, 1962, reprinted in R.Bambrough (ed.), Plato, Popper and Politics : some contributions to a modern controversy, Barnes and Noble, New York, 1967. I have discussed the relationship of expertise to democracy in Roy (1982a), pp 80-95.

[13] Virginia Bill of Rights, 1776, in The Constitution of the United States, ed. E. C. Smith, Barnes & Noble, New York, 1979, p. 21.

[14] P. T. Bauer, Dissent on Development, Harvard University Press, Cambridge, Mass., 1971, p. 72, n. 2. The term `statism’ suggested itself to the author after he read M. R. Masani, “Post-Sanjay outlook: where salvation does not lie” The Statesman, 9 July 1980.

[15]G. M. Young (ed.), Macaulay: Prose and Poetry, London: Macmillan, 1952, p. 718. Some 20 years later, in Considerations on Representative Government, ed. H. B. Acton (London: J. M. Dent), J. S. Mill claimed that rule by`a superior people . . . is often of the greatest advantage to a people, carrying them rapidly through several stages of progress’ (Ch. IV, p. 224). Ironically, a few years ago a distinguished retired member of the Indian civil service (who happens to be a recipient of the Lenin Peace Prize) used very similar words in a newspaper article – in defence of the Soviet occupation of Afghanistan!

[16] Resolution of the Indian National Congress, August 1931, reprinted in B. N. Pandey (ed.), The IndianNationalist Movement : 1885-1947, Macmillan, London, 1979, p. 67.

[17] S. Radhakrishnan, The philosophy of Rabindranath Tagore, Macmillan, London, 1918, p. 232. For an excellent account of the intercourse between ancient India and ancient Greece, H. G. Rawlinson, `Early contacts between India and Europe’, in A. L. Basham (ed.), A Cultural History of India, Clarendon Press, Oxford, 1975. For excellent accounts of the growth of liberalism in India in the l9th and carly 20th centuries : Anil Seal, The Emergence of Indian Nationalism : Competition and Collaboration in the later l9th Century, Cambridge University Press, Cambridge, 1971, Chs. 1, 3-6; J. R. McLane, Indian Nationalism and the Early Congress, Princeton University Press, Princeton, 1977; Gordon Johnson, Provincial Politicsand Indian Nationalism,Cambridge University Press, Cambridge, 1973, Ch. 1.

[18] Ramsay Macdonald’s letter to M. K. Gandhi, 8 September 1932, reprinted in Pandey (ed.), op. cit., p. 74.

[19] Devdas Gandhi’s letter to Jawaharlal Nehru, 2 October 1931, reprinted in Pandey (ed.), op. cit., p. 71

[20] Gandhi’s protest succeeded to the extent that the Award itself was superseded; and in unusual, euphoric displays of fraternity, `caste’ Hindus threw open temples to members of the `Depressed Classes’ and embraced them with
garlands. The compromise Pact which replaced the Communal Award removed separate electorates but still guaranteed special political representation for some years following the agreement. For an account of Gandhi’ s position on the Communal Award, Judith M. Brown, Gandhi and Civil Disobedience, Cambridge University Press, Cambridge, 1977, pp. 313-21.

[21] For an eminent lawyer’s commentary, N. A. Palkhivala, The Light of the Constitution, Forum of Free Enterprise, Bombay, 1976.

[22] There is reason to think the Mughals before the British had done no better and had probably done much worse. T. Raychaudhuri, `The State and the Economy: the Mughal Empire’, in T. Raychaudhuri & I. Habib (eds.), The Cambridge Economic History of India, vol. I, Cambridge University Press, Cambridge, 1982.

[23] V. B. Singh (ed.), Nehru on Socialism, Government of India, Ministry of Information and Broadcasting, Publications Division, Delhi, 1977, pp. 56-57, 67.

[24] `Draft recommendations for the formulation of the Second Five Year Mahalanobis;`The Second Five-Year Plan – A tentative framework’, drafted by the economic ministries; and a `Memorandum’ written by a panel of prominent Indian economists – all contained in Papers relating to the formulation of the SecondFive Year Plan, Government of India: Planning Commission, 1955 – were the principal influences on the actual Second Plan. No significant understanding of markets, prices or the concept of feasibility is evident on the part of any of the authors. Shenoy’s lonely dissent has already been noted (note 1).

[25] The best descriptions of Indian industrial policy are still to be found in Bhagwati and Desai (1970), op. cit. Also C. Wadhwa, `New Industrial Licensing Policy: An Appraisal’, in C. Wadhwa (ed.), Some problems of India’seconomic policy, Tata-McGraw Hill, Delhi, 1977, pp. 290-324.

[26] Gordon Tullock is generally credited with introducing the notion of rent-seeking in `The welfare costs of tariffs, monopolies and theft’, Western Economic, Journal, 5 (June 1967), while Krueger (1974), op. cit., introduced the term itself. The collection edited by J. M. Buchanan et al., Toward a theory of the rent-seeking society, Texas A&M Press, College Station, 1980, contains reprints of both papers as well as other studies.

[27] Krueger (1975), op. cit., p. 108 ff.

[28] The classic argument for a free market is in M. Friedman, `The case for flexible exchange rates’, in his Essays in Positive Economics, University of Chicago Press, Chicago, 1953, pp. 157-203. Also V. S. Vartikar,Commercial policy and economic development in India, Praeger, New York, 1969, based on his PhD at Wayne State University; and D. Lal, A liberal international economic order : the international monetary system and economic development, Essays in International Finance No. 139, Princeton University, October 1980.

[29] An additive sub-utility function might be defined within each set of categories UG= ∑ ai vi (Gi) a1 ≥ a2 ≥ a3, ∑ ai= 1UP= ∑ bj wj (Pj) b1 ≥ b2 ∑ bj= 1where the vi (.) and the wj (.) are further sub-utility functions defined on each category, etc. None of these has ever been spelt out by the Indian Government and certainly no amount of UP has seemed substitutable for an iota of UG.

[30] Bhagwati and Srinivasan, op. cit., p. 38.

[31] Ibid.,p. 38

[32] In 1980, for example, exports of pig-iron and of sheep- and goat-meat were banned; an export duty on jute manufactures was imposed on 18 February and lifted on 8 September. (Annual Report on Exchange Controls, International Monetary Fund, 1981, pp. 205-13.) The Import and Export Policy (April 1982, March 1983)announced by the Commerce Ministry reported the banning of exports of cane, paraffin wax, mustard and rape-seedoil, and `certain
wild-life items’, including lizards and robins. An embargo on the export of CTC (cut, tear and curl) tea was announced by the Ministry of Commerce on 24December 1983. CTC is high-quality tea which accounts for about three-quarters of India’s tea exports. The ban followed a doubling of domestic prices over the previous year, compulsory registration of tea dealers holding more than 1,000 kg. to prevent hoarding, and agreement by manufacturers to reduce their profit margins and cut prices ofpackaged tea by about 20 per cent (Financial Times, 14 December 1983). The Indian Government apparently feared that the supply of tea for the domestic market was going to run out (The Times, 5 January 1984). The effect of thesemeasures is artificially to depress prices in the domestic market whilst raising them overseas (The Economist, 14 January 1984).

[33] Pick’s Currency Year-book, various editions

[34] Krueger (1977), op. cit., pp. 27-28.

[35] Balassa (1978), op. cit., p. 39; Balassa (1980), op. cit., p. 16.

[36] Ibid.,p. 22.

[37] Short surveys of the relevant practices can be found in Lele, op. cit.,Appendix 1, pp. 225-37, and Sukhatme, op. cit., pp. 29-37. Also Gilbert Brown, `Agricultural pricing policies in developing countries’, and G. E.Schuh, `Approaches to “basic needs” and to “equity” that distort incentives in agriculture’, in Schultz (ed.), op. cit.,pp. 84-113 and pp. 307-27 respectively.

[38] Theoretical economists have long recognised that a fundamental flaw in, for example, the Arrow-Debreu model is its assumption that all conceivable futures contracts are practicable. The longest futures price actually quoted at
the Chicago Board of Trade, however, would be for silver, at about two years; for grains, the longest would be only about three months. Since the natural market outcome is a far-cry from the theory, the Indian Government’s fears about the effects of speculation appear to be much exaggerated. To see the risk-dispersing character of a futures contract, let us suppose that both buyer and seller place a probability of one-half on prices being either in 8 or 2; if they are risk-averse, they may prefer to trade at a certain futures price of 5 now, rather than wait for the future to unfold.

[39] David Hopper, `Distortions of agricultural development resulting from Government prohibitions,’ Schultz (ed.), op. cit., p. 69 ff.

[40] K. Prasad, `Foodgrains policy 1966-1976′, in Wadhwa (ed.), op. cit., p.479.

[41] Schultz (ed.), op. cit., p. 309.

[42] Sukhatme, op. cit., pp. 74-86; T. W. Schultz, `On the economics and politics of agriculture’, in Schultz(ed.), op. cit., p. 15 ff.

[43] Schultz (ed.), op. cit., pp. 92-93.

[44] Ibid.,p. 95.

[45] T. N. Srinivasan, `Income Distribution: A survey of policy-aspects’, in Wadhwa (ed.), op. cit., p. 265. That the small farmer may not find it profitable to invest in storage, and that (if it has been taxed) agriculture has been taxed regressively, are also remarked upon by Srinivasan.

[46] Lele, op. cit., p. 2, where reference is made to Sir Henry Knight, Food Administration in India, Stanford University Press, Stanford, 1954.

[47] Lele, op. cit., pp. 214-24

[48] For example, M. Todaro, `A model of labor migration and urban unemployment in less developed countries’, American Economic Review, March 1969, 59, pp. 138-48; J. P. Harris & M. Todaro, `Migration,unemployment and development: a two-sector analysis’, American Economic Review, March 1970 60, pp. 126-42.The best paper known to the author is by Jerome Rothenberg, `On the economics of internal migration’, Working Paper No. 189, Dept. of Economics, MIT, July 1976.

[49] Thomas Sowell, Knowledge and Decisions, Basic Books, New York, 1980, pp. 268-69.

[50] `The logic of protection’, The Statesman, Editorial, 19 March 1981; also the Editorial, `Danger of caste ethnic

[51] S. K. Datta Ray, `Backlash to protection: fancy gifts ignore real reform’, The Statesman Weekly, 21 March 1981.

[52]M. Weiner, M. F. Katzenstein, K.V.N. Rao, India’s preferential policies : migrants, the middle classes and ethnic equality, University of Chicago Press, Chicago, 1981, pp. 16-17.

[53] Ibid. p. 5

[54] P. T. Bauer, `Population explosion: myths and realities’, in Equality, the Third World and Economic Delusion, Harvard University Press, Cambridge, Mass., 1981, pp. 42-65, contains some of the clearest arguments known to the author about this question; also M. Weiner, India at the Polls : the Parliamentary Election of 1977, American Enterprise Institute, Washington DC, 1978, pp. 35-39.

[55] 10 8 million people affected by floods’, The Statesman Weekly, 22 August 1981; also `Down the drain’, Editorial in The Statesman, 8 July 1981.

[56] Justice with speed’, Editorial in The Statesman, Calcutta and New Delhi, 21 July, 1980

[57] Aristotle, op. cit., 1,094a1-1, 094b11.

[58] There are few thorough studies known to the author that are relevant. One such is Asha L. Dattar, India’s Economic Relations with the USSR and Eastern Europe 1953-1969, Cambridge University Press, Cambridge, 1972.

[59] Bauer (1981) op. cit. Chapters 5 & 6.

[60]. Adam Smith op cit Book IV; also B. Baysinger et al.,`Mercantilism as a rent-seeking society’, in Buchanan et al (eds) op. cit. pp. 235-68.

[61] G. Tullock in Buchanan et al. (eds.), op. cit., p. 48.

[62] Bauer (1981), op. cit., p. 144.

FA Hayek’s letter to me when I was 26


Professor Frank Hahn, who supervised my doctoral thesis, was kind enough to once say he considered me “probably the outstanding young Hayekian”.  Certainly throughout my undergraduate days at the London School of Economics and my research work at Cambridge and later in the United States, I was quite an ardent Hayekian in several respects, and I recall being thrilled to receive the enclosed letter from FA Hayek himself in February 1981.fa-hayek-to-roy-1981 My 1989 book Philosophy of Economics: On the Scope of Reason in Economic Inquiry (London & New York: Routledge International Library of Philosophy), now republished here, records both my praise and my criticism of Hayek. My 1984 monograph on India, also republished here, applied the work of Hayek and many others.

 

See also https://independentindian.com/2013/01/31/i-have-a-student-called-suby-roy-reflections-on-frank-hahn-1925-2013-my-master-in-economic-theory/