Nation or kirana shops?

The first ten years after independence, India lived off its sterling balances which had accumulated during the war. These were £1 billion, equivalent of £100 billion in today's money. In the words of C D Deshmukh, India spent the money 'like there was no tomorrow'. Then began a hand-to-mouth existence on foreign aid from USA,USSR and anyone else who had money to give. Being non-aligned meant we could receive aid from anywhere. Lyndon Johnson tried to humiliate India by withholding PL 480 shipments but then the Green Revolution came just in time to save the country. The oil shock of 1973 led to hyper inflation and Emergency.

Thus it was that when she came back to power, Indira Gandhi abandoned self sufficiency and took a large loan from IMF. Her erstwhile Left wing friends denounced her for this but she knew India needed cover against the second oil shock. Rajiv Gandhi continued this policy by borrowing from NRIs. The only problem was that the money was not used to restructure the economy but to liberalise imports. When the first Gulf War came and remittances dried up, India could not service the borrowing and we crashed out in 1991.

Manmohan Singh then changed the equation for ever more. India became an open economy which welcomed foreign investment and after a while even exported capital abroad. Dire warnings were issued by Somnath Chatterjee, then CPM leader in Lok Sabha (how things change!) that India would be enslaved again. When it came to signing the WTO, there were similar scare stories of Indians being deprived of their neem trees. Nothing happened.

India prospered for the next twenty years. By any measure—NSS, Tendulkar, World Bank dollar-a-day—poverty levels came down. The BJP continued and indeed quickened the pace of liberalisation under Vajpayee's leadership. India became a prominent member of G20. Mobile telephony grew till we now have nearly a billion mobile telephones. India is the second largest foreign investor in UK and Tata the largest manufacturing employer. There are foreign companies begging to come to India and foreign leaders wooing India to come and invest in their countries (Why else would UK be so kind to Narendra Modi?).

... contd.

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