Interview

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with Adi Godrej, industrialist by Ashok Upadhyay

What are your thoughts on swadeshi as it is being propounded by the BJP and the Swadeshi Jagran Manch?

One cannot find fault with a concept that purports to serve national interest; in this sense the concept is essentially, by which one means definitionally, good. The point is how relevant is it to this country’s needs at this point of time in its history. To my mind at least the concerns are vastly different than they were when the concept was first invoked. Swadeshi had a deep relevance at the time of our struggle for Independence as a strategic weapon. It united the entire country against an enemy and gave the country’s fight a focus. I believe it served its purpose, limited as it was. Intrinsically the concept may still have relevance if you define it as a means to serve the country’s interests, to benefit the people as a whole and not some section of Indians. But its application, as it has been historically understood, has grave problems attached to it. This country today needs foreign investment, capital and technology if the country has to benefit as a whole. We should not hinder foreign investment but allow it to come in. But only so long as it helps India grow economically. Of course, the Jagran Manch would say that it is not possible to reconcile the two, that foreign investments would impede growth.

 

And would they not be right?

I would say that they are blinkered to the ways of the world as we see it today. Globalization is not a phenomenon that you can wish away; the world is far too integrated in terms of capital flows to permit one country to isolate itself from the trend. There is no need for us to believe that we can close our borders to the globalization that has bestowed such immense benefits on so many developing countries which have prospered as a result. This is what the Jagran Manch people should understand.

 

But with foreign investment there is also a threat of domination?

True and why not I say; if a more efficient company is going to pose a threat to a less efficient one then why stop the inevitable or cry foul so long as the rules of the takeover game are observed. That is not my worry. My concern is that this country has not provided Indian capital with a level playing field to fight the threat on an equal footing. We are handicapped from the start and that is why the threat of takeover has such ominous overtones. Let me give you an example. Indian companies either in the public or private sector are not allowed to retrench labour. As a result we are burdened with a historical disadvantage when competing with a foreign firm. On this score the latter romps home because it carries a lower cost; at least one component of its operation is already very efficient. As for us, we can do nothing to reduce our costs by introducing new technology if it means replacing labour. Then, of course, there is the issue of buy back of shares; foreign companies are allowed to do that to buttress their position and stake, but not Indian companies. Then again the case of the textile mills in Mumbai, for instance, is particularly bad because they cannot get rid of their debts by selling the surplus land, a factor that burdens them with assets of no use to anyone.

 

But aren’t you making a case for swadeshi to keep them out?

No, no I am not asking that the Indian industrialist be protected. It’s not protection that one wants, like we had in this country for 40 years. What I am asking for are the enabling provisions, the removal of the fetters that tie our hands behind our backs. Then we will compete on an equal footing. It is possible that some may die but that is part of the competitive game.

 

It all sounds very simple.

That is the problem; the most simple tasks appear difficult for political parties in power to perceive in terms of a solution. I am not pointing a finger at the present government alone. No previous government since 1991 has looked at the problems facing the Indian industrialist in terms of solutions. To be sure, Manmohan Singh started the process of liberalization, laying the grounds for the globalization of the Indian economy. The talk of industrial restructuring began then and continued down to Chidambaram’s time and still echoes across the land. But how do you restructure with all the problems that Indian industry faces? Can you restructure your operations without taking a view about surplus manpower?

 

Do you think that the BJP with its swadeshi plank can do it?

I am not sure it can. This government is also a coalition one like the previous ones and I believe that it is as weak in its formation as the earlier ones. The Congress lasted five years, the UF much less. Chidambaram gave us a dream budget but the coalition did not last long enough for him to follow up on the policies he had announced in his first and only budget. If those governments could not make the necessary changes, can this one? I wonder.

 

Why not? After all it purports to protect the interests of Indian industry.

That is the point I am making. The Swadeshi Jagran Manch uses the concept, but it is just that – a concept devoid of any context. It is far removed from the concerns of modern India, concerns that have to do with the need for foreign capital, competition and a level playing field for Indian industrialists. Also, remember, as a coalition it is not entirely its own master. 

 

You sound cynical or pessimistic.

Not a cynic but a pessimist yes, but for the short term – not for the medium to long term. The country’s fundamentals are strong and our macro management has been very good. We do not face the kind of problems that the South East Asian countries are facing. But you can’t expect GDP to grow if the biggest sectors of the economy lie untapped, if the largest assets in this country lie undiscovered of their potential. Take housing. Countries as diverse as Nazi Germany and the USA under the New Deal in the 1930s engaged in housing projects and the attendant infrastructure like roads even though the demand did not precede the development. In China, the basis of the country’s phenomenal growth has its roots in the massive inflow of funds into the housing sector. Development there generated demand for other essentials like cement and steel and therefore justified capacities. Surely the Jagran Manch cannot deny the utility of such a development when there are so many of our citizens sleeping on pavements in the metros around the country?

Second, we should open up the insurance sector to foreigners. There is a mistaken notion that they cream away our capital. No, in fact they will help mobilise our savings and therefore boost overall savings and investment in the country.

 

But the swadeshi brigade would only want Indian capital.

Well, you can’t dictate things like that; which Indian company would have the resources needed for the sector? You have to allow foreign capital into the country for the housing sector. China did and no one is accusing that country of having bartered away its freedom or sovereignty. We have to be clear that by swadeshi we mean a system or set of policies that are good for the GDP of the country, not for some section of society, be it labour or capital.

 

So how do you see 2001?

That is a decade from 1991. I do not see the country enjoying the fruits of that process begun a decade ago because the transition is not yet over; it has suffered a few setbacks and the current slowdown will take its toll because the upswing may stretch into that year. But, by the same token, I do not think the country will face the kind of crisis it did in 1991 when it came close to being declared bankrupt. So that is all to the good; but the excitement of those early years of this decade is missing and that is a pity because it would be a bad start to a new century.

 

Do you think that by then ideology will be dead?

Well I can’t answer that in philosophical terms but I think that concepts like socialism and swadeshi will never die. It seems like just yesterday that the BJP was in opposition as the most vocal and ardent representative of the far right as against the strident socialism of the ruling Congress. Now the tables have turned and the right is in power talks left, a.k.a. swadeshi, and we have the Congress in the opposition as the right with its most vocal factions talking free market. Yesterday, more people in this party swore by socialism; the free marketers were the isolated few. Today it is the reverse. Both have their constituencies even though their numbers tend to fluctuate.

 

So what is good governance?

I am not sure that I can answer that in universal terms. Let me put the issue in terms of economic governance. I think that the sound management of the economy first requires an open mind so as to comprehend the changing world in a more comprehensive way. Global changes transform the definition of national interests and at no time is this change more noticeable than at the present. This is what the Jagran Manch and the BJP must realize, that the nature of national interests has changed and that, in any case, it never meant the protection of sectional interests, be they labour or capital.

 

  Seminar 469, ‘Swadeshi’, September 1998, pp.38-39.

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