We cannot wait for the trickle down

Former prime minister P V Narasimha Rao delivered the second JRD Tata Memorial Lecture, organised by the Associated Chambers of Commerce and Industry of India, New Delhi, on November 1, 1999. The article is based on his speech.

In this long stretch of national endeavour, we have had a varied experience, now stumbling, now sprinting. After a stretch of a home-made socialist phase, which I think served us well on the whole, the latest in our repertoire of policy strokes has been economic liberalisation which we embarked upon in 1991, though anticipated and planned, at least in part, earlier. It was only liberalisation, not substitution, since we had had an ongoing, well-entrenched market system for ages. So it has been possible for us to fashion our liberalisation as a well thought-out programme.

Now the dynamism of globalisation will overtake it; but what is disconcerting is that it promises to benefit only one of the two economies. The other will not even be left unaffected; it may in fact be affected adversely. At some point, therefore, the growing distance between the two can suddenly go beyond endurance and create tremendous internal social and economic strains, throwing the whole liberalisation programme itself into disarray and delay. Therefore, here is the need of a strong bridge -- a challenge for the expert architects and engineers of economy.

This is why it is important to ensure sizeable and simultaneous benefits to the lower layers. We cannot wait for the trickle down; we need to engineer a by-pass by investing massive resources for the benefit of the poorer sections, particularly in the rural areas, directly from the State's resources. Smooth assimilation is the crux. I consider this to be the correct and lasting way to globalisation whose bottomline is partnership, not annexation. Speaking for India, I submit that we have to find equilibrium among three factors:

• The level of material benefit necessary for a human being to attain his full creative potential.
• The level of exploitation of Nature consistent with its own needs to replenish itself.
• The need to ensure comparable benefit to the vast masses of people and lift the social pyramid as a whole.

This approach is not a mechanical compromise or an idealistic package. It is a responsible approach, which accepts the realities of the present day world, the values of liberal democracy and the limits which different processes of globalisation will inexorably impose on the hitherto overarching position of the state.

India has never been unaware of the position of the market for the simple reason that in our age-old assignment of social duties, a very important section of the society is ordained to specialise on the market, trade and economic aspects of life. So we accept the necessity and the efficiency of the market.

However, the roles of the state and the market are pretty distinct and any usurpation of roles between the two, or subordination of one to the other, can lead to disaster. Neither will wither away, nor should be made to wither away. We also insist on an appropriate balance among the ends of economic development that a country can and should pursue.

In our hoary tradition of the four-pillar society, artha or the economy occupies an important place. Yet it is one of the four, and does not try to destroy the other three. So we have to redefine today, to the extent possible, what the word "good" means, when we are seeking to achieve the greatest "good" of the greatest number.

Consumer satisfaction undoubtedly gives pleasure, and pleasure is an essential ingredient of "good", but pleasure and "good" cannot be taken as identical. There must surely be a social, psychological and perhaps spiritual content of the "good," which is highly intangible but equally an experienceable phenomenon, though it is not purely market-determined. And I believe there is.

When we take employment as an economic activity, the conundrum of the right technology confronts us.

• If we take to gigantism to obtain economies of scale, we accept large congregations of human beings mostly living in sub-human conditions, particularly in poor countries. This imposes heavy social costs that are hardly taken into account in any assessment of costs and benefits.
• On the other hand, if we inevitably accept the route of large-scale employment, with old technology and low wages, the large mass of people, as well as their economic activity, including the product thereof, remain at a primitive level in quality.

Obviously, both these positions are unacceptable. There are six factors involved here: size, environmental acceptability, cost, quality, technology and employment potential. The sometimes derided idea of appropriate technologies is now to be replaced by sustainable technologies, which, I think is all to the good.

Moreover, developed countries themselves would have to jettison their polluting technologies and the culture of gigantism earlier than later, for compelling environmental reasons. That would make the interests of all mankind coincide, regardless of developed or developing. The rich and the poor of the whole world are thus locked in a three-legged race and simply cannot break free from each other.

If the objective is to maximize employment potential and minimize the per unit size at more or less the same cost, the only imponderable that remains to be determined is technology. One may call them the "Laptop" models, which possess all the six attributes I have just mentioned. Please note that I am not talking about small scale industries here. I am talking about new and very sophisticated technologies that are size-neutral and wholesome for human existence. If I may cite a parallel, may I remind you that after the green revolution in the sixties, one miraculous thing that occurred was that per-acre yields of land in those areas became size-neutral as regards farm extents?