Bibek Debroy: A sense of deja vu

India's concerns, and triumphs, haven't changed much over the years, as successive Economic Surveys show.

The overall rate of growth was not, however, commensurate with earlier expectations, and attention was sharply focused on this in the review that was made in the middle of the year of the progress of the Plan as a whole. Considerable thought was, therefore, given to the problem of accelerating the rate of economic growth. It was recognised that improvements had to be effected in the implementation of the agricultural programme and in the execution and working of many public sector undertakings. The fiscal and monetary situation was also reviewed and a number of measures were taken in the latter part of the year to revive the capital market, to stimulate investment and output, to extend social security and to provide such relief to the consumer as was consistent with the claims of defence and development."

The more things change, the more they remain the same. Had it not been for use of the word defence, this entire paragraph might have been written today. But this quote is actually from Economic Survey 1963-64. Several people have documented evolution of economic policy-making in India. To the best of my knowledge, no one has used the Survey to document these mindset changes, probably because most people regard the Survey as irrelevant.

With the present government's penchant for control, I think one should go back and read the Survey, particularly those from the late 1960s and early 1970s. There is much that will find resonance. For instance, Survey 1965-66 said, "In short, increased use of fiscal and monetary measures, promotion of competition on the basis of price and quality to the maximum extent possible, a greater degree of mobilisation of resources for investment and the expansion of public investment and savings, and selective application of controls at points at which they can be applied effectively in the pursuit of specific social objectives, are all essential ingredients of a policy designed to promote rapid economic growth while furthering the social objective of reducing inequalities of income and wealth."

Can you find a better articulation of what is perceived to be the spirit of the NCMP (National Common Minimum Programme)? From Survey 1968-69 we have, "There is greater awareness now of the need for increased and diversified exports, particularly in view of the uncertain aid climate, and at the same time there is a keener realisation of the necessity to remove certain structural disadvantages which Indian industry has developed because it was more or less wholly oriented towards import substitution." Replace the uncertain aid climate by an uncertain capital inflow climate.

In Survey 1969-70, "It is clear, for example, that the spread of new technology which is well advanced in the case of wheat and promising in the case of rice, cannot be sustained unless greater attention is paid to coarse grains, pulses and commercial crops in general and to dry farming areas in particular. This requires co-ordinated action regarding research, land consolidation, land reforms as well as the spread of ancillary activities and credit and marketing facilities. The effort to spread the benefits of better agricultural techniques is thus necessary not only for avoiding social tensions and ensuring social justice but also for sustained increases in production." Notwithstanding the Green Revolution, this statement hasn't changed much.

From Survey 1970-71, "Corporate performance has been good, and the stock market has displayed greater confidence. The capital market has shown a vitality which it had lacked for some time. The balance of payments continues to display strength.... The reorientation of the nationalised banking system towards meeting the credit needs of the hitherto neglected sectors was pursued vigorously during the year; there was an impressive increase in the funds advanced to these sectors. The task of extending banking facilities to unbanked areas, particularly in the rural sector, was carried forward.... The question of the appropriate level of procurement and issue prices for foodgrains channeled through the public distribution will also demand increasing attention."

Towards the end of the first or overview chapter, the Survey now has an issues section, going beyond statistical descriptions. This started in 1971-72, and that year's Survey had, "The situation with prices however never quite went out of hand, even though it evoked continuous concern throughout the year. This was partly because of the basically satisfactory position with respect to foodgrains. Also, the various policy instruments at the disposal of the Government were deployed with aptitude and timeliness. Credit policy was strictly geared to the prevention of speculative inventory building; at the same time, credit flowed freely for genuinely productive activities. Price control was enforced at the appropriate points and forward trading, which might have triggered off an inflationary spiral, was banned for several sensitive commodities." Finally, from Survey 1972-73, "The multilateral trade negotiations which are expected to begin in September 1973 under the auspices of GATT provide another opportunity for the world community to redress some of the inequities of the present trading arrangements between developed and developing countries. However, unless developing countries act in concert, there is a real danger that their problems may not receive due attention in these negotiations."

The sense of déjà vu is complete.