HVK Archives: Why is Swadeshi suddenly in vogue?
Why is Swadeshi suddenly in vogue? - The Sunday Observer
Jay Dubashi
()
January 18-24, 1998
Title: Why is Swadeshi suddenly in vogue?
Author: Jay Dubashi
Publication: The Sunday Observer
Date: January 18-24, 1998
What is the latest fashion In development? It is Swadeshi. All
kinds of people and organisations are suddenly getting
enthusiastic about Swadeshi, a word they could not even spell a
few weeks ago.
The latest Swadeshi enthusiast is Assocham, essentially a chamber
of commerce of foreign companies, but now controlled by Indians.
Last week, Assocham asked for protection to Indian industry In
the name of Swadeshi!
Even Finance Minister P Chidambaram has gone Swadeshi. He is
going around saying that the bulk of Indian business should be
owned and managed by Indians. And the people should have a stake
In the country's business. This from a man who until yesterday
used to tell foreigners that his ministry did not discriminate
between local and foreign companies and they, meaning foreigners,
were welcome everywhere.
I had once criticised the Tatas in this column for going to a
foreign company for setting up an airline here. I had said that
it was totally unnecessary for the Tatas to do so, for they had
enough expertise of their own to do the job themselves without
any outside help.
I see from the papers that the Tatas have now decided to launch
the airline project on their own, without foreign collaboration.
That is economic nationalism at work, and good luck to the
Tatas.'
There are all kinds of misconceptions about Swadeshi, or economic
nationalism, the expression I prefer. It does not mean
protection to local industry or business. It also does not mean
that you do without foreign investment altogether. All it means
is using their resources to supplement your own efforts, not
giving them preference or special treatment, which is what
Manmohan Singh & Co have been doing in the name of reforms.
Such reforms never succeed.
Look at what happened to the Asian Tigers. They relied too much
on foreign capital for their growth, despite the fact that their
own savings were ample enough. Savings in East Asian countries
are of the order of 35 to 40 per cent of GDP, against 25 per cent
in India. That should have been enough, but these countries and
their rulers got too greedy and started borrowing money right and
left from the West.
When you have too much capital, you tend to waste it. You think
you can keep borrowing, even though you don't really need It.
These countries thought they were really very rich, so rich that
they acquired all the bad habits of the rich.
South Korea is in trouble now, but only a year ago, it had become
a member of OECD, the rich man's club based in Paris. Huge
buildings started going up not only in Seoul but also In Malaysia
and Thailand. Kuala Lumpur has the world's tallest building,
put up almost entirely-with foreign money, though Malaysia is
hardly the world's richest country.
But foreigners do not lend money for fun. They want good returns
on it, better returns than they can get in their own countries.
When they discovered that their funds were going into useless
projects, they panicked. They started withdrawing their funds,
and when they found they could not, they started attacking the
currency.
The idea that you can have quick and painless growth through
foreign investment is absolutely bogus. The first thing to
remember is that there are limits to how much foreign capital you
can absorb. I would say that you should not borrow more than 2
per cent of your GDP from abroad. If you do, you are bound to
get into trouble sooner or later.
In the case of India, this is equivalent to about $ 6 billion a
year. This is about the maximum India can absorb at its present
state of development. Most of the funds should be on a long-term
basis. and should be used in areas like Infrastructure, not
consumer goods.
The argument that all foreign investment is good and the more you
have the better it is, is not only stupid, it is also dangerous.
No country should take In more foreign Investment than it can
absorb usefully.
What do you mean by absorb? It means that you can pay It back
without hurting yourself and without having to devalue your
currency.
It is no use saying that capital has no colour and all capital is
the same. Nothing could be more misleading. Capital definitely
has colour. The colour of Indian capital is Indian. The colour
of foreign capital is foreign. They have their own rules and
their own interests. And these rules do not necessarily benefit
Indians.
I want India to remain India, run by Indians for their own good.
I do not want foreigners to come here to run things for us. This
is what the East India Company did. Let us not have an East
India Company again under the fancy name of globalisation.
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