Atmanirbhar Bharat needs revisit to Gandhian Model

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By Dr Gautam Naresh

New Delhi, August 22: After the assassination of Mahatma Gandhi on January 30, 1948, his economic philosophy was also put aside.

On December 8, 1951, the Prime Minister Jawaharlal Nehru presented the First Five-Year Plan (I-FYP) to the Parliament of India. It had the objectives of rehabilitating refugees, agricultural development, and self-sufficiency in food along with controlling inflation.

This Plan stressed investment for capital accumulation in the spirit of the one-sector Harrod-Domar model prepared by Professor PC Mahalanobis. He subsequently, introduced his celebrated two-sector model, which he later expanded into a four-sector version.

He adopted the economic development on the basis of large scale, socialized State-owned enterprises. His focus was rapid industrialization, especially the development of heavy industries and capital goods, like iron, steel, chemicals, etc., and the machine building industries.

All of this was contrary to what Gandhi used to advocate during his life time.

Mahalanobis realised that the basic heavy industries being capital-intensive would not ensure rapid expansion of employment opportunities and to bring the employment aspect into sharp focus he put forward a four-sector growth model in which he kept heavy industry sector (i.e. K-sector) intact but divided the C-sector (i.e. consumption goods sector) into three sub-sectors: C1, C2, and C3 (sector C1 represented factory enterprises using mechanized techniques and producing consumer goods; sector C2 represented the household and small-scale enterprises also producing consumer goods, and sector C3 represented provision of services).

It was sector C2 representing households and small-scale industries which in Mahalanobis’ four sector model was visualized to ensure the increased supply of consumer goods to meet the rising demand for them and also to ensure, being labour-intensive, expansion of employment opportunities.

In keeping with this approach, II-FYP put restrictions on the growth of capacity in factory enterprises engaged in commodity production.

However, since for these household or cottage enterprises, adequate resources were not provided, nor any effort was made to improve their productivity, they could neither fulfill their targets of production of consumer goods nor of generating enough employment opportunities.

Worsening economic situation and growing concerns for national security highlighted the two shortcomings of the development strategy adopted in the II-FYP and III-FYPs –Relative neglect of agriculture resulting in the acute food problem for the country; and Crucial dependence on foreign aid which could not be relied upon for accelerating growth in the future plans.

The model adopted aimed at “greatest good for the greatest number”, but in Gandhi’s model it was Sarvodaya with the aim at the “greatest good for all”.

Gandhi believed that the best economic system not only cared to lift the “poor, less skilled, of impoverished background” but also empowered to lift the “rich, highly skilled, of capital means and landlords”.

Further, the mandate theory of majoritarian democracy should not be pushed to absurd extremes; individual freedoms should never be denied, and no person should ever be made a social or economic slave to the “resolutions of majorities” (Singh 1997).

Gandhi contradicted and challenged Nehru for rapid industrialization on the Soviet model.

He denounced it as dehumanizing and contrary to the needs of the villages where the great majority of the people lived opined (Chakrabvarty, 1992).

Nehru rejected his arguments and adopted personal socialist economic convictions (Desai and Bhagwati 1975).

Historian Kuruvilla Pandikattu (2001) says “it was Nehru’s vision, not Gandhi’s that was eventually preferred by the Indian State too as all the States were under the Congress-led governments.”

The explanation for India’s continuing backwardness, apart from centuries of exploitation, lies in the import substituting, capital intensive plan-based development path selected and policy choices made at independence – again a Nehruvian legacy.

Gandhi was in favour of ending poverty through improved agriculture and small-scale cottage rural industries (Rivett, 1959).

Gandhi’s economic thinking disagreed with Marx, according to the political theory scholar and economist Bhikhu Parekh.

Gandhi refused to endorse the view that economic forces are best understood as “antagonistic class interests” (Bhikku, 2001). He argued that no man can degrade or brutalize the other without degrading and brutalizing himself and that sustainable economic growth comes from service, not from exploitation.

While disagreeing with Nehru about the socialist economic model, Gandhi was also critical to capitalism that was driven by endless wants and a materialistic view of man.

This, he believed, created a vicious vested system of materialism at the cost of other human needs such as spirituality and social relationships (Bhikku, 2001).

To Gandhi, states Parekh, both communism and capitalism were wrong, in part because both focused exclusively on materialistic view of man, and because the former deified the State with unlimited power of violence, while the latter deified capital.

He believed that a better economic system is one which does not impoverish one’s culture and spiritual pursuits (Bhikku, 1991).

The Gandhian Economic Model, by adopting which India may solve these primary issues to some extent provide stronger foundations for economic development leading to economic growth. Inter alia, there are critical issues of handling unemployment, income-distribution and development with growth of the economy.

Issue of unemployment and resultant income inequality are paramount among all. If it is handled successfully, several other national economic issues would also be solved. This would lead to the foundation for sustainable economic development, not to be shaken easily.

Subsequently, the economy would lead to sustainable and confident path of economic growth. The roots of socio-economic prosperity in India lies in the development of its age-old base on agriculture and agriculture-based cottage industries.

It provides a sound base for providing priority in India’s Economic Renaissance as a viable alternative policy as a support to other priority sectors for development.

But, agriculture and allied sectors like animal husbandry, forestry and fisheries agriculture and agriculture-based cottage industries not only give economic boost, recovery and move forward on growth trajectory but also social upgradation and income equality.

Ethics as a conceptual framework and the relevance of Gandhian thoughts for dealing with current issues like environmental crisis, social justice, and equity and harmony in society.

The issues of economic development, environment, humanism, and religion in relation to modern ethical inquiries and argues for the need to adopt a holistic approach in resolving everyday moral questions. Gandhi’s ideas of swadeshi and non-cooperation were mainly for economic self-sufficiency. These are relevant today to make India Atmanirbhar.

Gandhi sought to target European-made clothing and other products as not only a symbol of British colonialism but also the source of mass unemployment and poverty, as European industrial goods had left many millions of India’s workers, craftsmen and women without a livelihood. It is similar to boycotting and banning goods and services of China-made.

A few following major economy-related problems of the day are:

1) Extreme economic inter-dependence between different countries, the crisis spread from economy to economy, like a contagious disease.

2) The issue of environmental degradation due to pollution and global warming.

3) The crisis due to excessive use of resources for example use of crude oil would destroy much more than merely our transport facilities.

4) Heavy dependence on modern chemical fertilizers today in production of food grains leading to infertility.

Depending on the amount of fertilizer consumed, it may cause disturbances of the kidneys, lungs and liver and even cause cancer. This is due to the toxic metals that fertilizers have. Fertilizers remove the nutrients of the soil, damaging the soil and the local environment.

5) The economic crisis arose out of the selfishness of profits. Concepts like limitation of wants, the trusteeship principle and swadeshi would have prevented this crisis from arising.

6) According to Gandhi even the very process of living is impossible without a certain amount of violence.

(Author is currently an Honorary Professor of Economics with the Foundation of Public Economics and Policy Research (FPEPR), Delhi. He has earlier worked in various capacities with Lucknow University, Lucknow, Panjab University, Chandigarh, National Institute of Public Finance and Policy (NIPFP), New Delhi)