Despite all its talk of the danger of a “Fascist-type rightist” takeover, it appears that the CPI leadership is in reality not fully cognisant of the crisis facing the country and the present political system. Else it would not have mounted a fierce anti-American campaign just at this point when the Nixon administration is about to initiate moves to resume bilateral economic assistance to this country and be helpful to it in a variety of other ways.
It would doubtless have been a different matter if the CPI leadership had good reasons to believe that the ruling party is capable of surmounting the current grave economic difficulties without a large dose of external assistance, that the Soviet Union and its East European allies could and would provide the necessary aid and that the turmoil provoked by rising prices and grave shortages in urban areas could be utilised to give the country another big leftward push. But it has no reasons to think so.
Not Clueless
It would not be quite fair to say that the Congress leadership is completely clueless. For, it has recently taken steps like the reversal of monopoly procurement in wheat, marginal reduction in taxation on personal incomes and elimination of bottlenecks in the grant of industrial licences which it hopes will ease the pressure on it. But it needs quick results in order to survive the onslaught on it and that may not be possible without substantial external assistance, a large part of which must unavoidably come from Western sources.
The CPI and its supporters argue that Mrs Gandhi has gone in for these soft options because she is surrounded by colleagues who do not believe in the party’s radical programme and are not prepared to mobilise the people. But this is not a serious argument or even an honest one because privately these very critics express as many reservations about the Prime Minister as about her leading ministers. And if they did not, they would be hard put to it to explain how Mrs Gandhi not only appoints to key jobs men who do not believe in her policies but also allows them to make major decisions.
In theory one can argue that if China can be self-reliant so can India. But the Congress does not possess the discipline of the Chinese Communist Party and the Indian society that of its Chinese counterpart. Indeed, it will not be much of an exaggeration to say that in case the pressures increase because of an inadequate monsoon, the prices rise further on account of the farmer’s reluctance to part with his stocks and there is industrial stagnation for want of power, raw materials and labour discipline, the ruling party may simply go under and Indian society drift into anarchy.
The pro-Moscow left could have been indifferent to such a prospect if it was in a position to take advantage of the likely vacuum. But on its own testimony, it is not. Irrespective of whether or not the students in Gujarat and Bihar are serving as the storm troopers of the Jana Sangh and other anti-Congress parties, they are certainly not prepared to follow the CPI. It can endlessly analyse their class character and recall that the Nazis in Germany and the Fascists in Italy, too, came from a similar lower middle class background. But that would be an irrelevance. To condemn a majority of students in Gujarat, Bihar and elsewhere as dupes or reactionaries is one thing and to raise a countervailing power is quite another.
How then is one to explain the CPI’s campaign against the United States which indirectly amounts to a campaign against the government’s policy of seeking assistance from that country?
It is doubtless possible that, knowingly or unknowingly, the CPI leadership is so obsessed with the likelihood of a pro-US shift in the balance of power in West Asia and its possible impact on the sub-continent that it is prepared to ignore the country’s own compulsions. In that case it is being less than fair to the Congress leadership because it implies that the latter is so stupid as to forget the self-evident fact that friendship with the Soviet Union is a long-term Indian need. It also glosses over another equally well-established proposition that relations between the two countries have been durable and stable precisely because India has not at any time become unduly dependent on the Soviet Union, and because it has continued to receive aid from the West and expand its trade ties with it.
No Choice
Odd though it may seem on a superficial view, the “right reactionaries” have stronger reasons to be opposed to resumption of US aid than the pro-Mrs. Gandhi left. Unlike the latter, the former can legitimately take the view that as the pressures on her government mount it will either crack up and make way for them or adopt policies which they have been advocating.
The first inference is justified at least to some extent by what has happened in Gujarat and by what is happening in Bihar and the second by the economic policy decisions the government has taken in recent months. And this is not all because a powerful case can be made to show that only US assistance in the ‘fifties and the ‘sixties made rapid expansion of the public sector under Mr. Nehru possible.
Irrespective of one’s assessment of the correctness or otherwise of Mr. Nehru’s priorities, it cannot be seriously disputed that the Soviet assistance, however valuable, could not have enabled him to establish heavy and basic industries on the scale he did unless PL 480 and other forms of Western, particularly US, assistance were available to prevent inflation and rise in prices which would otherwise have been unavoidable. Whatever his convictions, he would have had no choice but to give top priority to agriculture in order to make food available to the urban population at reasonable prices and to consumer industries for the simple reason that the gestation period is not long in their case.
In terms of ideological preference the United States has doubtless been better disposed towards the private sector than towards the public sector. But out of its total aid of $10 billion, only 10 per cent has been used to assist the private sector and 90 per cent has gone to the public sector. Even the much talked about Cooley loans to the private sector amount to only Rs 125 crores out of the sale proceeds of PL 480 supplies totalling Rs 2,930 crores. All in all the United States has provided 21 per cent of the total investment in the public sector during the ‘sixties. Even so the more pertinent point is that without these cushions in the form of food supplies and credits which met a good part of the country’s import needs, it would have been out of the question for the government to invest large sums on projects which by their nature take many years to go into production.
Mrs. Gandhi’s experiment in nationalisation has not been equally dependent on Western aid. In her case the increase in wheat output as a result of excellent monsoon, new seeds and higher input provided the cushion between 1969 and 1971. Since 1972 it has steadily been eroded and the consequences are there for all to see.
There are, of course, some negative aspects of foreign aid which deserve attention. It is, for instance, indisputable that PL 480 is responsible in no small measure for the near absence of fiscal discipline in the country today. Since large funds were available from the sale of these supplies for balancing the budget year after year the Indian establishment virtually lost the habit of putting any limit on its non-development expenditure, so much so that it persisted in its ways even after the PL 480 programme was terminated in 1971. Since then it has resorted to deficit financing on a frightening scale.
Distorted
Similarly, it would be fair to say that the availability of aid has distorted the pattern of development not only because it has reduced the compulsion to make the best use of large investment in the public sector but also because it has encouraged the growth of industries which cater to the needs of a small elite. But what guarantee is there that the upper classes would not have been able to look after their interests in the absence of external aid? They seem to have done pretty well for themselves in the era of Indian radicalism.
Today, at any rate, only an improvement in the management of the country’s resources cannot enable it either to meet the increased import bill due to the sharp rise in the prices of oil, fertiliser, food and almost everything else or to tide over the crisis at home. Non-availability of aid will place strains on the system which in the present situation can prove unbearable.
The Times of India, 24 April 1974