Calcutta Diary

IN Hindu epistemology, a category ofindividuals are designated as the knowingsinners, jnancipapi. There is not onesin that they will not commit, but theydo so in full awareness of the gravityof what they arc doing. Dependingupon one's point of view, you candescribe them as the great or nobleones, for they wade through the experienceof sinning despite the fact thatit would bring them eternal damnation Or, again, you are perfectly atliberty to treat them with infinite contempt,since these individuals, despitepossessing knowledge of the heinousnature of the lollies they are about toembark upon, do not nonetheless tryto garner the strength of mind to stayaway from the temptation: for them,the flesh is always weaker than thespirit 

The Government of India obviouslybelongs to this species of knowing sinners This year's Economic Survey is,almost to a fault, replete with economicwisdom and awareness. It says allthe Tight things that need to be said Not one heroics is missed, not onecliche is left unchurned. Here are twopassages which one can pick in random:

If exports arc to rise faster thanoutput and incomes, sales abroad mustbecome more lucrative than sales inthe domestic market. As such, onecan expect entrepreneurs to developexport markets vigorously, and toundertake the investment needed foradapting production to the more exactingrequirements of foreign buyers,only if the pull exercised by a shelteredhome market is resolutely restrained For, it is not only highproduction costs but also internaldemand and high prices which inhibitthe growth of exports. Accordingly,adequately strong measures will needto be deployed to dampen the growthof domestic absorption, particularlythe high income demand for nontraditionalmanufactures, (page 79)

... a well integrated policy approachis essential for reducing persistentinequalities in consumption levels formobilising resources on a scale adequateenough to attain more rapideconomic growth envisaged duringthe Fifth Plan period. The industriallicensing and other policy weaponswill henceforth need to be wieldedmore purposively and effectively todiscourage the demand and the expansionof capacity for manufactureswhich serve to meet the luxury requirementsof a thin upper crust ofour society. Industries producingluxury goods involve a wasteful useof the available savings and foreignexchange. Obviouly, scrapping of existingcapacities in luxury industrieswill involve needless waste of scarceresources and avoidable unemployment Accordingly, they must bespeedily and progressively reorientedtowards production for the exportmarket, (page 87)

One can make gentle fun of theplethora of the particular suffix whichtries to convert the inert adjectives intoroaring adverbs, but there is nothingper se unexceptionable in the two statements;they converge towards a commonset of conclusions, namely, thatthere can be no salvation for the economywithout a restraint on domesticconsumption, particularly on luxuryconsumption. The catch is, however, inthe operational measure which is recommended,so as to ensure that, whilethe domestic consumption of luxurygoods might be subdued, the units producingthese goods do not go to thewall. It is almost as if the economicproblem has a moral facet, and onewhich can be reduced to a Khrushchevianparable: If a blister comes up witha head on the tip of the nose, sinceit has taken all this effort to come upwith a head, it may conceivably bepleaded, it would not be quite politeto try to get rid of it through the applicationof specific drugs. Similarly, theEconomic Survey almost appears toargue, the luxury industries having takenall this time and spent all these resourcesto sprout their capacity in thebody economic, it would be the heightof rudeness to liquidate them at onestroke. Hence the apologia of not lettingresources go to waste, along withthe urging that the capacity of theseindustries be earmarked for the exportsector

Have we not been here before ?Since export is a matter of high priority,once the point about earmarkinghas been conceded, at the subsequentstage, a particular luxury industry willperhaps demand, and be granted, additionalimport licence for certain balancinginvestments. And, in this dynamicworld, one could stumble upon theconvenient discovery that industries,curse their luck, are condemned to astate of perpetual imbalance. Since notwo pieces of equipment are likely tobalance perfectly, it might not thenbe possible to hold in leash the clamourfor continuous imports. Further,once you have allowed the luxury industriesto stay in business for the exclusivepurpose of export promotion, theywould be within their rights to comeback and demand special cash incentivesand other forms of subsidy. Theprocess need not quite slop here. If,after a point, it is found that exportsare not progressing satisfactorily becauseof the products being pricedrather high, the argument could be advancedthat the unit cost can he broughtdown if only production is enlargedto exploit the economies of scale, andthe latter would be possible only incase demand could be expanded byallowing the affluent in the country topurchase a part of the total output Thus hig h consumption standards of therich would come to be justified on theallegedly patriotic, allegedly economicargument that otherwise it would beimpossible to lower unit costs and expandexports. To clinch the issue, itwould then be maintained, the governmenttoo would gain from such a risein luxury consumption; by levying aheavy excise on the luxury commodities,the national exchequer would beso much the richer. If there were norich to be taxed on their high consumption,so appears to be the purport ofthe argument, what would the poorgovernment do, reminding one of theMaurice Chevalier song which plaintivelyasks: if there were no little girls,what will little boys do?

Some of the socialist countries hadthe answer to the conundrum long ago They knew that whatever the degreeof freedom which foreign trade offers,once a nation begins to produce luxuryconsumption goods, pressures will begenerated all over the system to allowsome consumption from out of thesegoods. They decided to take care ofthe problem at the source: do not producesuch consumption goods, produceonly capital goods, and that too, as faras is possible, for raising the outputof further capital goods. Pieces ofmachinery cannot, after all, be eithereaten up or smoked away: if you wantto raise the level of savings, you thereforedo not produce consumer goods,you produce machinery and equipment The knowing sinners hero seem tohave no use for such wisdom. If onewere so minded, it should not be difficultto do a kind of project analysisfor comparing the relative costbenefits497 of shutting down summarily the moreobvious cases of luxury industries, andof allowing them to continue purportedlyfor catering to the export market In working out these calculations, whatshould be brought in, and in an explicitway, is the impact of having a networkof luxury industries on the domesticrate of savings. The units producethe goods; some are exported, the restleak into the internal market for therich to consume; the level of consumptionof the rich thus moves up; butsince they are pacesetters, higher consumptionon their part forces up theconsumption expenditure of abouteverybody down the line of the socialhierarchy; Jones second class gets ideasfrom Jones first class, Jones third classgets ideas from Jones second class, andso on till you reach the very end. Ifthe sahib is going to go for a refrigeratorexceeding 165 litres, little blamewill attach to the Class IV employeeif he demands a rise in his wages whichwill allow him the luxury of acquiringa pair of gold bangles for his wife No amount of adverbsviasuffixingofadjectiveswill, in such circumstances,be of any avail. We are back to theissue of the foreign cars which thePresident and the Union ministers ride,the expensive foreign cigarettes which some of them smoke, the gaudy cufflinks some of them flaunt. The EconomicSurvey cannot help them unlessthey help themselves. Or, should it bebecause they help themselves?