March 30, 1998

The BJP's earlier economic line was sharp. Now, with confusion in its ranks and under pressure from its partners, the National Agenda delivers a muddled version.

By Sudeep Chakravarti

Swadeshi is an eight letter word. These days, that's about all that is clear. The BJP's economic manifesto bluntly stated that "swadeshi simply means India first". This was widely viewed by industry, both Indian and overseas, as a tough-talking intention to promote India Inc, whatever it took: cleaning up government, cutting its size, restricting and prioritising foreign investment, specifically protecting domestic industry, specifically encouraging small and medium-scale industries, and so on. It had an equal number of champions and critics but they were all unified in reacting to the basic clarity of purpose.

The National Agenda for Governance of the 13 parties, which talks about a "strong swadeshi thrust", has fine-tuned the pitch and coined a new, grand slogan which is eloquently visionary: "India shall be built by Indians."

Seems swadeshi enough, sounds great. There's just one problem. What, exactly, does it mean? "That is really the big question," says Tarun Das, director-general, Confederation of Indian Industry. "And there isn't much time to find out the answers." It could go down as the understatement of the year, with government machinery entering its fourth month in limbo, and immense pressure to get a budget presented by May to score both prudently -- economic guidelines are required to stem the rot -- and politically -- give vote banks something to mull over.

It also underscores the point that by being seemingly clear, this united front has actually muddled the issue; good, questionable or plain silly, the previous United Front had at least spelled everything out in its Common Minimum Programme, time-table thrown in for good measure. Few know what, how and where things will move now. The Congress' criticism that the agenda is a rehash of the BJP manifesto isn't correct. It's more a mantra of mish-mash, a case of unclear indication and -- worse still -- a case of contra-indication.

Consider this. Prime Minister Atal Bihari Vajpayee has Weetabix, an American branded cereal not yet made in India, at his breakfast table. At a recent press conference to discuss policy matters, among other things, alliance partner and Samata Party heavyweight Nitish Kumar sported a natty Pringle sleeveless pullover, while a colleague joked, "Why don't you cover that with a 'Be Indian, buy Indian' patch?" This, when party leader George Fernandes was at Vajpayee's house attending a meeting to draft the national agenda. At least Fernandes has an answer. "Swadeshi means what is produced in this country, produced by our people -- Indian capital and Indian labour."

That, unfortunately, isn't enough. Will foreign product imports be banned outright or partially to suit certain tastes? Where exactly will foreign investment be welcome? Will it be welcome at all? Just what amount of freedom and protection will Indian industry be given? Will import tariffs be raised and excise rates lowered? How will India generate so much funds needed for infrastructure and social development, the 10-year requirement for which amounts to a sum equalling the monetised size of the economy now? "We will continue with farm subsidies but make them more direct, efficient and specific," says the agenda. As far as BJP ideologue K.N. Govindacharya is concerned, that melds with his philosophy too when he says "fertiliser subsidy should be given directly to farmers instead of manufacturers". What about other subsidies, on electricity, water and transport, both in rural and urban zones? Silence.

What adds to the confusion is that while the agenda mentions legitimately that a major thrust is required for the farm sector and the so-called bhagidari or unorganised sector along with Indian industry if the economy is to grow by 7-8 per cent a year, some very pro-business and pro-foreign input elements also find place. While the focus is on Indian capital, the agenda clearly mentions that the Government will "access long-term funds in the national and international markets", and that it will "encourage foreign direct investment in core areas and discourage FDI in non-priority areas". If that partially answers the question of funding, it leaves another question unanswered: what happens to those overseas companies already here? Silence.

What is required, say Indian businessmen, is to strengthen business in India, yet not do it in a way that shuts out the rest of the world, foreign investment included. "The mantra should be self-reliance, not self-sufficiency, because that is rubbish," says Rahul Bajaj, chairman of Bajaj Auto and one of the members of the so-called Bombay Club. "The fact of life is that you don't export to earn paper, you export because you want to import. So the mantra really is: you are able to export enough to be able to import whatever you want."

That's what drives swadeshi exponent Mahathir Mohammad, prime minister of Malaysia, who often justifies his strong-arm economic tactics with phrases like "in the end, what matters is how much you can buy with what you earn". For Malaysia, it has meant clearly spelling out what its own businesses and foreign business can or can't do and push for exports at all costs. That policy now brings Bill Gates to discuss information super corridors with Malaysian leaders, Intel to set up its only other chip facility outside the US in Penang. China, which brought in $62 billion in FDI inflows last year, 12 times what India did, consistently uses its money clout to stall US pressure on human-rights violations, among other issues, and yet retain the Most Favoured Nation status with the US. Both countries focus on getting foreign expertise and capital to boost their economies -- freeing domestic funds for critical infrastructure and social development projects -- and finally building up a huge export surplus which serves as a hedge against any international economic belligerence.

The irony of the diluted agenda is that as its stand on foreign-related issues is either unclear or suspect, the BJP alliance's much-touted domestic agenda is in danger of appearing equally suspect. For instance, BJP leaders stress they plan to stick by a manifesto assertion that eight fast-track power projects will get off the ground by the end of this year; the method will be to smoothen all the paperwork rapidly and put the promoters on a deadline. But nobody has figured out what to do with partner Samata Party, which recently showcased its opposition to one such project, by Cogentrix in Karnataka, or a CBI inquiry that has been ordered by the state high court into it.

What will happen to labour opposition from Samata Party and another partner, the Trinamool Congress, when a newly energised Disinvestment Commission recommends, again, that majority stakes in X or Y public-sector undertaking (PSU) be sold off, or Indian Airlines and Air-India be merged, and workers laid off? Trinamool chief Mamata Banerjee is already demanding that some sick PSUs in West Bengal be revived, when good sense demands they either be wound up or sold. What will happen when its rural-base partners like the Haryana Lok Dal react to charging real rates for water and electricity, a BJP plank, when the first thing leader Om Prakash Chautala did after elections is promise more subsidies in these areas to his state's farmers.

"The Government has to focus on the needs of the economy vis-a-vis a preconceived agenda," says Uday Kotak, managing director of premier financial institution Kotak Mahindra. "There is a need to have a reality check and see if your agenda fits the needs." So far, the reality is a check.

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