Swadeshi for the illiterate

(For the record, Malay Chaudhuri is the founder of the IIPM and his son Arindam who runs management consultancy firm Planman Consulting is the author of the 'record-breaking best-seller' Count Your Chickens Before They Hatch.)

The book, it must be said, begins well and is imaginatively produced, with thought blurbs called 'What an Indian must never forget' placed all over the copy to give the reader some sense of how the economy has been mismanaged.

One blurb, for instance, reads: "If all the foodgrain lying unused in our warehouses were to be packed in gunny bags and placed one after the other, it would make a path to the moon and back. Yet this country bears the cross of over 200 million starving Indians."

In another place, the authors talk of the largesse given to bureaucrats through the fifth Pay Commission and compare this with the lack of funds for irrigation. Using the examples of the late Ashok Jain of The Times of India, and Tarun Tejpal as victims of the repressive Indian state is also smart as it assures a level of friendly reviews.

Beyond this, however, there is little to redeem the book. 1973, the authors tell us, is a landmark year since this is when the US started bringing down its tariffs and trading with the rest of the world. So far, so good.

But this, you're told, is when the decline of the US began, as cheaper Japanese goods flooded its markets "" the author's then conclude "the bottom line is: a country has to do all it can to protect its manufacturing sector." Never mind all you've learnt about trade being about global competitiveness, the authors' contend international trade is not just a waste of time, it is an international conspiracy.

Through some curious computation, the reader is warned, "we also need to realise that cross-border trade is the worst polluter among all economic activities, as it uses more than twice the amount of energy used by equivalent local production . Importing products when they can be manufactured locally makes little business sense."

And, just in case you feel there could be, just maybe, an economic rationale for trade, the authors point out that "we need to realise that there is a limit to material growth. Growth and greed are not synonymous." Among other assertions that don't make sense is the one on how India's bulging forex reserves are hurting the economy "" most recognise this, but the authors contend, incredibly, that this money, if used elsewhere, could earn a 33 per cent return.

The underlying logic of the Chaudhuris' argument, of course, is nothing but the traditional swadeshi economics touted by the Swadeshi Jagran Manch and its cohorts. So, the private sector is bad, and the public sector is good. While that's okay in theory, how do you explain the huge losses PSUs traditionally run up? The father-son duo do this by blaming the government for not allowing PSUs to function independently "" but isn't this precisely why PSUs are being privatised the world over?

It gets worse. The Chaudhuris, whom the East Asian crisis clearly bypassed, argue that not only should PSUs be encouraged, they should be backed by the keiretsu and chaebol kind of models followed by Japan and Korea.

In this model, China's success is not one driven by foreign investment in its special economic zones, it is "due to planning and a functional public sector wherever required" (the private sector initiatives are dismissed in a line which says "of course, it is also important to understand when not to plan and when to allow market forces to sidestep government initiatives"!)

It is, in fact, this state-driven definition of the Chinese model that, according to the authors, is the answer to the current Indian problem of companies that are sitting on piles of cash instead of investing. "The state alone has the ability to play the dual role of a supplier and a generator of demand, facilitating a coordinated supply and demand chain", and the best living example of this, you guessed correctly, is China!

The book is right in pointing out that it is important, even from the selfish capitalists' point of view, to increase the purchasing power of the common man (they call this "trickle up" and "happy capitalism" to convey the feeling of originality), but the solutions suggested are as ideal as they are unworkable.

To remove unemployment as well as to "train rural youth in entrepreneurship", groups of five people are to be put under the guidance of an "experienced entrepreneurial manager, preferably an MBA "" paid at least Rs 15,000 a month". Where've you heard this before? At the time of Independence, that's when, when India headed towards socialism and the planned economy.

THE GREAT INDIAN DREAM

Malay Chaudhuri and Arindam Chaudhuri

Macmillan India Limited

Pages: 250

Price: Rs 295