The contradictions of swadeshi

Print edition : May 23, 1998

The ideal of any coherent swadeshi programme is to make domestic capitalists emerge as autonomous players in the global arena with state support, and this cannot possibly happen unless certain structural changes are made in the economy. These changes are unacceptable to the existing classes.

ECONOMIC discussions are dominated at present by the so-called sanctions being imposed by some advanced capitalist countries in retaliation against India's nuclear explosions. These, however, are not of great consequence, since the magnitude of "aid", which is mainly what will be affected by the sanctions, is quite minuscule anyway. But the Bharatiya Janata Party-led Government would strike some heroic poses before making compromises with the West at an appropriate time. And, from the point of view of the West, this Government, like Boris Yetsin's in Russia, is no threat, no matter how many bombs it possesses, precisely because it would not dare to depart from the "neo-liberal" economic agenda laid down by the West.

This assertion may appear strange at first sight since the BJP has come to power on a slogan of swadeshi. But swadeshi, whether of the BJP variety or even in its most "ideal" form imaginable, represents an untenable programme.

The BJP's version of swadeshi, of course, is fairly incoherent, which is hardly surprising. Any communal formation has only one essential agenda, namely the subjugation of the "other" community. All its professed social, economic and political programmes are meant either as aids or as mere packaging for this one agenda. The Jan Sangh-BJP is no exception to this. It has changed its professed basic ideology with a frequency which only underscores the inessentiality of it: from "integral humanism", this ideology changed to "Gandhian socialism" and then to the current "cultural nationalism".

Likewise, its economic programme has made major and frequent somersaults: from opposition to Nehruvian policies, it suddenly switched to an advocacy of a mixed economy based on planning and with a public sector occupying the "commanding heights". It supported the introduction of "neo-liberal" economic policies in 1991, ensuring crucial parliamentary support to the minority Government of the time, and expressed commitment to such policies during its 13-day Government in 1996. But before the 1998 elections, it turned a critic of "neo-liberalism" and adopted a programme of swadeshi.

There are no doubt persons within the BJP, and more particularly its parent organisation, the Rashtriya Swayamsevak Sangh (RSS), who seriously believe in something called swadeshi, though what exactly it means in its totality has never been clearly spelt out. But the fact of the BJP as a whole accepting it is indicative not just of RSS clout but, more importantly, of the disillusionment of the people with the "neo-liberal" economic policies, which the BJP with its sensitive political antennae picked up and sought to cash in on. Indeed, critics of neo-liberalism can derive some satisfaction from the BJP's espousal of swadeshi since its opportunism in matters of economic policy makes it a good barometer of popular moods.

But how seriously the BJP takes its own slogan of swadeshi can be gauged from the fact that within days of its coming to power, the Government led by it announced an Exim policy, which shifted 340 items to the list of Open General Licence (OGL) imports, and that too at a time when the economy is afflicted by an industrial stagnation, which is at least partly attributable to liberal imports. The items so shifted include not only a range of manufactured products, but even agricultual commodities such as green pepper, onions, vegetables preserved in brine, mushrooms, cassava, apricots, cherries, peaches, strawberries, grapes, apples, guava, juices like apple juice and mango juice, and cotton.

It may be argued that the domestic producers of the items that have been shifted to OGL would be protected through tariffs, which presumably would figure in the coming Budget. But, for many commodities shifted to the OGL, there are no "tariff bindings", so the appropriate tariff would have to be negotiated with the World Trade Organisation (WTO) ab ovo. And the same considerations, namely, appeasing the WTO, which underlie the new Exim policy, would also ensure that overall market access for these liberalised imports cannot be any less under a new tariff regime than it was earlier, in which case the net effect of the new Exim policy would be both unambiguously deindustrialising and detrimental to the interests of the peasantry, especially in States such as Kerala, which depend on cash crop production.

Clearly then, swadeshi, notwithstanding all the lip-service paid to it, is not going to be the guiding policy of the BJP-led Government, although, because of its being ill-defined, all sorts of things can be claimed as representing the implementation of swadeshi. But there is a deeper issue that merits discussion, and it is the following.

Let us forget what the BJP actually means by swadeshi and also how faithful it would be to this slogan. The point is that no programme aimed at making domestic capitalists emerge as autonomous players in the global arena with the support of the state (in the manner, for instance, of the Japanese, or South Korean, or Taiwanese capitalists), which constitutes the ideal of a swadeshi programme at its coherent best, can possibly work unless certain structural changes are made in the economy. However, these changes, for political reasons, are unacceptable to the existing ruling classes. A real alternative to "neo-liberalism" requires a shift of the political centre of gravity in terms of the balance of class forces. Such a shift, however, would be associated with a programme far more radical than swadeshi. Even an ideal swadeshi programme in other words is simultaneously both too much and too little.

AT least three necessary conditions have to be fulfilled for the success of an ideal swadeshi programme. The first of these is an insulation of the economy from the vortex of international finance capital. If some faraway credit-rating agency for some obscure reason downgrades an economy and this triggers off a capital flight necessitating panic measures to appease international rentier interests, then clearly, any programme of autonomous capitalist development is a non-starter.

Prime Minister A.B. Vajpayee addressing the national conference and annual session of the Confederation of Indian Industry in New Delhi.-

A view is often advanced that as long as the fundamentals of the economy are sound, it can never fall prey to speculative outflows. But this is a complete fudge since nobody quite knows what these so-called fundamentals refer to. In fact, it is usually after an economy has fallen prey to speculative outflows that some flaws in its fundamentals (suitably defined) are discovered. The World Bank and the International Monetary Fund were singing hosannas to the fundamentals of the South-East Asian economies barely a few weeks before their currency crisis, and most commentators followed in their wake. But after the crisis, many of those same economists and economic journalists have been claiming wisdom about the untenability of the South-East Asian miracle.

It is also a mistake to believe that speculative outflows occur solely because of the spontaneous working of the market. Such outflows are often the outcome of some "signals" from the Bretton Woods institutions, for instance, their demand for a currency depreciation, which, through carefully managed leaks, finds its way to the press, triggering destabilising expectations. It follows that any programme which departs from "liberalisation-cum-structural adjustment" has to guard its flank against such speculation-induced destabilisation. And for this, it is necessary not only that the currency remains non-convertible, but also that financial reforms in the form of autonomy to banks, and especially the Reserve Bank, are eschewed. But even current account convertibility, such as India has, can provide ample scope for capital flight, for instance, through non-repatriation of foreign exchange earnings. While institutional safeguards against speculation are necessary, they are not enough; something more is needed.

AND that brings one to the second necessary condition: the Government must be able to impose a degree of discipline upon the domestic capitalists as a quid pro quo for its support to them in finding their global space. In South Korea for instance, even as the government worked closely with the capitalists, to a point where terms like "Korea Incorporated" (like the earlier "Japan Incorporated") found currency, it imposed on the capitalists export quotas that they had to fulfil. By contrast, in India, the capitalists have scarcely ever shown any willingness to submit to any discipline, not even to the laws of the land (especially tax laws), even as they have continuously pressured the government for support. This indiscipline, this obsession with self-serving, which characterise the Indian capitalist class and which are extreme even by the standards of capitalism - even though it is a system based on self-serving values - undermine the prospects of any concerted programme of action that is advanced as an alternative to the neo-liberal agenda.

The close relationship between the Government and the capitalists such as underlay the East Asian example and such as an ideal swadeshi programme would visualise, requires in turn, the abrogation of the political weight of the landlord class, the other major force behind state power. And this in turn requires a modicum of land reforms. Putting it differently, if the capitalists' indisciplined self-serving is combined with ruthless aggrandisement by the landlords and the rural rich, then the socio-economic regime within which this happens cannot conceivably generate either the dynamism or the breadth of social support required for countering the "neo-liberal" agenda.

These necessary conditions for an alternative to the "neo-liberal agenda" require structural changes, which can come about only through a mobilisation of the people. But if the people are to be mobilised, then of course swadeshi alone, even at its most coherent, would not be sufficient for the purpose. They would need a far more radical, a far more democratic, agenda to share the fruits of development.

The BJP's economic agenda, whatever it is, is not this. It has never emphasised land reforms. Indeed, given its feudal support base in the States where it is powerful, it is on the wrong side in the struggle over land reforms. It does not believe in mobilising the people to usher in structural change affecting their economic well-being. The only mobilisation it has ever done is for destroying a historic mosque and building a temple in its place. Its whole politics is based on denying power to the people and concentrating it in the hands of a central authority, which can be more easily manipulated by vested interests: witness for instance its advocacy of a presidential form of government. It seeks to arouse the sense of national pride through exploding some nuclear devices rather than through eliminating hunger, poverty and illiteracy.

That indeed is why its concept of swadeshi is so fuzzy. Any more precise definition of it would make its inner contradictions more palpable. It cannot provide an alternative to the economic agenda being prescribed for this country by the advanced capitalist world through the Bretton Woods institutions. But while working broadly within that agenda, it would show occasional belligerence, as it is showing now, which is unrelated to any economic issues, but which is a fall-out of its nuclear jingoism that it falsely identifes with national pride. The falseness of this identification is evident from the experience of contemporary Russia: the country which today has the world's second largest nuclear arsenal, cuts one of the sorriest figures in the comity of nations owing to the current abysmal state of its economy.

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