The temptation of 'self-reliance'

'Self-reliance' has come to India. However, in its current avatar, it looks less like a confident country aspiring for a great future but rather like this staged street-corner bonfire of foreign (chinese) products.  

In a volte face par excellence, many Indian commentators, who snigger at 'Nehruvian Socialism' and the strategy of 'import substitution' followed by post-Independence India, are suddenly champions of 'Atmanirvar' Bharat. This, of course, doesn't mean that they have belatedly realised Nehru as a genius. They, and various Trump-loving American commentators after them, believe that this time, self-reliance is different. It is not about North Korea style autarky; instead, some kind of magical open closedness (or closed openness as it may be) that would let India have its cake and eat it too. "We can import anything as long as it's made in India", the Prime Minister is reported to have told a group of businessmen recently.

This may sound familiar: This is not unlike the America First peddled by Donald Trump, or for that matter, the core claim of Brexit. But it's special in India: The country was one of the chief beneficiaries of globalisation, rather than its victim. The Indian government has not distinguished itself for economic thinking, but the assumption that India can shut its doors and its companies can have open access to global markets is naive even by its standards.

Of course, in India, politics precedes economics. The call for self-reliance is more a political strategy than economic common sense. COVID19 is hitting India hard and exposing its structural problems in financial system, supply chain and labour and the government needs to be seen doing something. Unfurling the flag of self-reliance, something that is more positive than boycott of Chinese goods and more intuitively appealing, was found attractive. What could really be wrong in arguing to buy local?

However, Indians should know better. In fact, on this, they should know better than the English and the Americans, who have never really experimented with such indulgence. The Nehruvian ideal made India a heaven for crony capitalist, who ran their little monopolies as inefficiently as possible. For all the talk, that legacy isn't dead and gone: India is still one of the world's most protected markets and its economy is dominated by vested interests. These businesses, apart from those in handful of export-driven sectors, are inefficient and badly run - one of the reasons why India can't compete with China not just in price, but also in quality and innovation. These businesses often lack critical capabilities and will have to rely on foreign suppliers for design, parts and software. Hence, the PM's comment - made to a group of businessmen who are looking to benefit from this policy - is not as idiosyncratic as it appears.

Indeed, I am no free-market globaliser. In fact, I come from that part of India which was a net loser, rather than a beneficiary, of liberalisation of Indian economy. But my enthusiasm for the latest call of self-reliance - poorly thought out as it is -  is limited because I see no prospect that this would mean expanding the opportunities for local or smaller businesses. In fact, my hopes of such regeneration is pinned upon a sensible trade strategy, wherein India develops its trade with its neighbours, builds road, rail and shipping routes through its pariah Eastern region. Closing all of that out - and handing over the markets on a platter to businessmen who pay - is a recipe for disaster for everyone outside that charmed circle.

I am actually a big supporter of self-reliance and I say this without any hint of irony. Self-reliance can indeed be a worthy goal for an emerging nation, when it's not about pandering special interests. That type of self-reliance can not be achieved cheaply or easily, not with an 8pm television address. That type of self-reliance, the type with Japan achieved in the late nineteenth century, needed sacrifices, hard work and intelligent policy. It required being more open, not closed. It required trusting its common people and unleashing their energies through education. I am indeed all for that kind of self-reliance. But that will be about sweeping away all the vested interests that dominate all aspects of Indian policy and starting fresh. It will mean shaking up India's broken education system, sorting out public health and engaging with the world with intent and intelligence.

Of course, all that is too difficult. The object of government policy in India is cornering as big a share of political funding as possible; and prime time visibility. The cheap rhetoric of self-reliance serves that goal well. Indeed, this sets back the worthy objective of self-reliance of the difficult kind. But in the here-and-now world of Delhi, the future may not matter.