Response to COVID: Self-Dependence or Interdependence
The announcement by the Prime Minister to build “Atmanirbhar Bharat” (self reliant or self dependent India) has generated a lot of debate. In a strict literal sense an economy is self reliant when it is can produce everything that it needs. That is possible, if a community needs only food, shelter and clothing at the subsistence level. As soon as the economy moves forward, there has to be a shift towards inter-dependence rather than self dependence in this dynamic world. No country can produce everything that it needs, so it produces those items that it can easily produce at comparatively lower cost, export them against those it cannot produce efficiently. For me, a country is self reliant when it is able to export enough to pay for its imports.
Is Self reliance a new idea for India?
It certainly is not. When Planning Commission was set up and first Five Year plan began in 1951, one of the major objectives was self reliance. In 1960s, Green Revolution was introduced to make India self-sufficient in food grains. Introduction of Co-operative marketing of milk at Anand (Gujarat) in 1970s, brought in white revolution. To become self sufficient in power generation, many hydro, thermal and nuclear projects were introduced. Atomic energy bill was introduced in Parliament, as early as in 1948. To become self dependent in defence research and development, DRDO was set up in 1958. The second and third five year plans saw setting up of four steel plants in the Public Sector to make India self reliant in the most crucial sector. There are many more examples of India becoming self sufficient in science, technology, communication health sector etc since independence. This dynamic process of becoming self dependent in possible identified sectors and continue with interdependence to achieve our goals, has been going on and has to go on even if there was no COVID.
Prime Minister Modi’s call for self reliance seems to originate from crisis of acute shortage of PPE kit and N95 mask at the beginning of COVID pandemic. It is indeed commendable that the concerned manufacturers managed to realign their production line to achieve self reliance in these products.
Prime Minister listed five pillars on which self reliance will depend-Economy, Infrastructure, System, Demography and Demand. There is nothing new in it, they are some of the factors on which development process depends at any point of time, with or without a crisis. The announcement of Rs 20 trillion package, to bring about self reliance was new and exciting. The Finance Minister took many days and many press announcements to unravel the secret of Rs 20 trillion package. A large number of people have already analysed this package. They have worked out the actual cost of this package to the government to be between 1 trillion to 2.5 trillion.
The philosophy behind Self reliant nation is “Vocal on Local”. Consumers should buy domestic rather than imported goods. This is perfectly logical for achieving self reliance. Before 1991, the trade policy of the government restricted imports so that people consume domestic rather than imported goods. From time to time, trade policy was tweaked using terms like “Import Substitution”, “Export Promotion” etc to suit changing needs of economy.
But after 1991, introduction of globalisation / liberalisation changed all that. All the successive governments followed the same liberal policy towards trade, though it was strongly opposed by opposition parties, right in the beginning. Is the government proposing to go back to pre-globalisation / liberal era to achieve self reliance? The answer is no. The Prime Minister explained briefly that the new meaning of self reliance is based on the philosophy of the whole world being one family, India becoming self reliant leading to welfare of the whole world.
Mr Sanjeev Sanyal, the Principal Economic Adviser in the Ministry of Finance, further clarified that (quote),“this idea of self-reliance is not about a return to Nehruvian import substitution or autarkic isolationism. It is not a return to licence-permit raj and inspector raj of the socialist era. This is about decentralised localism that takes pride in local brands, and encourages local capacity-building and indigenisation, participating in global supply chain, attracting foreign investment. In this context, the idea of self-reliance is about resilience, leveraging internal strengths, personal responsibility, and a sense of national mission.”
A very noble philosophy, impressive words, what do they mean and how it operates at the practical level is anybody’s guess.
In our search for self reliance, let us not forget about the real world of interdependencies that COVID taught us:
An individual’s health is dependent on health of other members of community. An affluent person could afford healthy food, medicines etc to remain healthy without worrying about health of his driver, servant etc. COVID has changed this, now individuals and the nation as a whole need to worry about health of all.
Economic activity in many sectors depend on migrant workers. In the past no one noticed that many sectors like agriculture, construction, manufacturing and hospitality sectors in states like Gujarat, Maharashtra, Kerala, Delhi etc depended on millions of migrant workers from U.P. Bihar, Orissa, and Bengal.
Many sectors with potential of self reliance are dependent on imported inputs. India is a huge market for mobile phone, computers and many electronic /electrical equipments. Manufacturers of these items depend heavily on imports of components, mostly from China. For example, 88% of components in mobile handsets produced in India are imported from China. Same is the case with medical equipments, cells and modules used by solar power industry. Indian pharmaceutical industry is known to be strong with domestic manufacturing capacity and presence in many countries. But they also depend on import of some key ingredients for antibiotics and vitamins. Same is the story of manufacturing of medical equipments, dyestuff, speciality chemical etc.
Growth of an industry depends on demand for its produce. Textile, automobile are examples of industries that have matured into somewhat self dependent sectors. At the moment they are stagnant because of low demand. Revival of these industries depends on domestic as well as foreign demand.
The way forward:
The situation is so grave that there are no easy readymade solutions, and new labels on old ideas will definitely not do. Massive investment in health sector including basic research should be the top priority. By the second week of June, ten cities in India accounted for 60% of COVID cases. It means drastic steps are needed in the metro cities for the decongestion. Housing has always been a serious issue in metros. A broader approach is required that includes slum dwellers. Focus in Atmanirbhar Bharat Abhiyan is supposed to be on “land, labour, liquidity and laws”. In this regard three States — UP, MP and Gujarat have already announced significant changes in laws. Rajasthan, Punjab and Odisha, too made some changes, although smaller in scope. UP, the most populous State, has made the boldest changes as it summarily suspended the application of almost all labour laws in the state for the next three years. Labour laws for self reliance should not lead to exploitation of labour. Laws need to include labour in the organized as well as unorganized sectors, with special consideration for migrant workers. Before converting the whole world as one family, let us begin by making our whole nation as one interdependent family, where health services, dwelling places and jobs are available to all family members, laws are favourable to employers as well as workers, farmers and small artisans are actually as important as large corporate business houses.