The Rise of Goliath

Title: The Rise of Goliath – Twelve Disruptions that Changed India

Author: A K Bhattacharya

Publisher: Penguin Random House, 2019 (First)

ISBN: 9780670091805

Pages: 351

India has been a caged tiger for the last thousand and a half years. By the time of decline of the Gupta Empire, its society was caged by a rigid caste hierarchy that wilted its ability to adapt to challenges arising out of its interactions with foreign powers. Then came the Muslim invasions and occupation that lasted nearly seven centuries. Even though there were occasional spells of resurgence in this period, the fact that the society was caged by religion was unmistakable. The colonial cage of the British came up for around two centuries. After attaining independence, petty politicians who considered themselves and their flawed socialist ideology above the nation, imprisoned the society and the economy inside the suffocating mediocrity of Statism. So it was a profound release of the nation’s competitive spirit in 1991 when Prime Minister Narasimha Rao opened up the economy to the world which in a sense was an ideological return to the assimilating and competitive synergies of the late-classical India. This caused a disruption for all participants. India’s post-independence history is full of such disruptions, which are nothing but a change in the way of doing things till that time. Such disruptions can thus be positive or negative. This book considers twelve such disruptive episodes happened in India after 1947. A K Bhattacharya, popularly known as AKB among his colleagues and friends, is a veteran journalist specializing in business and economic affairs. He has worked in leading publications such as Pioneer, Economic Times and Business Standard. This is his first book, but you have to read it twice on the fly-leaf to believe it. So disciplined and absorbing is the narration that lucidly explains twelve arbitrary disruptions that woke up the Goliath of the nation.

Of course, asking one person to name twelve events that altered the course of economic history is like asking to list out twelve books or songs one likes most. There can be considerable diversity in the choices of two people. However, AKB’s selection is so convincing and balanced by seasoned argument as to find immediate acceptance among readers. The disruptions identified by the author are: 1947 partition of the country, rise of Statism, oil shock of 1973, proclamation of Emergency in 1975, reforms of 1991 in the industrial, trade and financial sectors, the Mandal-Mandir issues, demonetization of 2016 and the introduction of a united tax structure in the form of GST in 2017. Can anyone deny the tremendous impact and long-term effects of these weighty events?

Jawaharlal Nehru brought in a tilt that veered Congress party’s course towards the left. With the tacit support of Gandhi, his position was strengthened beyond challenge. Gandhi preferred Nehru as a person and not due to his political shade. But this fact hardly changed matters. With the exit of Subhas Bose from the party, Nehru's power grew beyond all opposition. Even before independence, Congress deliberated on the steps to usher in, in a socialist state. The Bombay Plan of 1944 proposed state intervention in building infrastructure and basic industries. Nehru could rope in even leaders of corporate industry after independence in supporting his Industrial Policy Resolution of 1948 which tightened the screw on private enterprise. Three sectors were entirely reserved for the state and six others as a partnership between it and free industry. Nehru introduced the controversial Industries (Development and Control) Act in 1951. After much persuasion, the term ‘Control’ in the act’s title was changed to ‘Regulation’. Nehru was more accommodative to market competition in the initial stages. In the first Five Year Plan, 43% of the total investment came from the private sector. A subtle shift came about in a few years. The government nationalised Air India in 1953 by buying the majority shares against the company board’s wishes. This was a blow to private sector initiative as it proved the government’s authoritarian power to take away or dilute the scope of their business if it wanted to. Imperial Bank was taken over as SBI in 1955 and Life Insurance Corporation was nationalised in 1956.

Whatever beneficial effects materialized during Nehru's socialist crusade was a byproduct of abundant harvests facilitated by good monsoon rains. When it failed, the country was brought to its knees. This book explains the food crisis in the 1960s which may feel like an incomprehensible thing for the new generation of readers used to seeing mountains of surplus grain generated by the Green Revolution. At the dire prospect of dwindling foreign exchange reserves, India was forced to import food grains in a kind of ship-to-mouth subsistence. Prime Minister Shastri appealed to the people to give up a meal a week and restaurants were directed not to serve evening meals on Mondays. Indira Gandhi requested assistance from US with the utmost reluctance owing to her affiliation to the USSR and obtained support in the form of PL-480. But Indira’s tactless criticism of the US over Vietnam while continuing to receive food aid from them turned the experience sour.

It may be argued with some conviction the case for some amount of Statism in the Nehru era in the light of other economies trying it successfully at the time. But a relaxation was warranted in the Indira era, but she tightened it to kill off free enterprise. The MRTP Act of 1969 curtailed the growth and expansion of any company that had an asset base of over Rs. 20 crores. All the expansion plans would be subjected to close scrutiny by government officials and exemption granted on a discretionary basis. This was a recipe for corruption and was promptly milked by the Congress. Indira damaged India's economy to score political points. She wanted sole credit for populist measures. Just three days before the nationalization of fourteen private banks in 1969, she ousted her rival, Morarji Desai as the finance minister. This was a cheap trick to secure her credentials as a leader keen on bringing about social and economic equity through government policies. Even the governor of RBI was kept in the dark till the last moment. Coal mining was nationalised in 1973. In the same year, she amended FERA and restricted foreign equity to just 40 per cent in a company. Again, exemption was granted in specific cases! 881 companies applied for exemption, but were granted only to 150. Within four years, 54 companies wound up their operations in India. 1973 was a crucial year for she nationalized general insurance, textiles and petroleum companies too, in that year. Such is Indira’s legacy. Bhattacharya offers a sharp criticism on the waywardness of the state.

The book traces the gradual rise of the socialist economic policies enunciated by Nehru and Indira and the quick though intermittent bouts through which they were scrapped. The influence of Left political parties and Left-leaning advisors of Congress ministers provided ideological sustenance to the idea of the state leading the industrialisation effort till the 1980s. The final departure from Statist policies happened in the 1990s and the final nail in the coffin was driven by the Narendra Modi government in 2014, when the Planning Commission itself was dissolved.

AKB makes a critical analysis of Rajiv Gandhi's legacy and debunks the myth that he was the father of the reforms in the telecommunication sector. Contrary to popular belief, he claims that Rajiv Gandhi made little contribution to the telecom sector and instead encouraged an indigenous thrust which only delayed the onset of the telecom boom in the country, which was moulded in 1994 and 1999 by Rao and Vajpayee. Moreover, Rajiv is identified as the real culprit behind the acute balance of payments crisis in 1991 that forced the country to sell a part of its gold reserves and pledge another part in London to ward off default in foreign debt servicing. Ambitious growth plans during his tenure as prime minister was structured around debt through deficit financing and repayment was due when he was out of power.

As a bonus to readers, the author has listed twelve disruptions that can be expected in the future. They are: India going presidential, simultaneous elections to Lok Sabha and state assemblies, scrapping of articles 370 and 35A of the Constitution, Ram Mandir, One Country One Language policy, delimitation of electoral constituencies, bank privatisation, corporatization of agriculture, private sector in railways, Universal Basic Income (UBI), dismantling the Indian Administrative Service and change in the financial year. The actual abrogation of Articles 370 and 35A conferring special privileges to Kashmir last month came as a tribute to the political acumen and sharpness of perception of the author. It must also be noted here that he guessed this would come about by November 2020 when the ruling NDA might obtain a majority in the Rajya Sabha.

The book is easy to read and the analysis is well-balanced. Narendra Modi is criticized for demonetisation as it is thought to have provided no immediate results aimed for by the designers. A lot of information is cramped in these pages that serve as a goldmine for discerning readers.

The book is highly recommended.

Rating: 4 Star