Prophetic Notes

SOMETIMES, the future can be dug out of the past. After 40 years of experimenting withpervasive state controls and planned economic development, a forex crisis was all it tookfor reform textbooks to be taken out of trunks and dusted back to life. To show how Indiais returning to the road it once deliberately rejected after much consultation with globaleconomists of all hues, the Delhi-based ccs has brought out a timely reminder: acollection of two articles Milton Friedman wrote on India in 1955 and 1963.

The Nobel laureate’s first article was really a memorandum submitted to C.D.Deshmukh, then finance minister: a roadmap to attain an “entirely feasible” 5per cent growth since “India lacks none of the basic requisites for economic growthexcept a proper economic policy”. Friedman was critical of the focus on heavy publicsector industries and traditional handicrafts at the expense of small and medium units,rigid investment controls and input taxation, excessive deficit financing and forexcontrols and warned against overdependence on forex. Much of that has been put to practicein the ’90s, work is on on the rest. But precious time has been lost forever.

Something he realised when he returned after seven years and found that by not heedinghis suggestions, or those of lse’s Peter Bauer, India had nurtured an“influence” society characterised by public affluence and private squalor. Onethird of the people, the poorest, had seen no change in their food consumption in 13 yearsof planning. Dismayed, he wrote: “The current danger is that India will stretch intocenturies what took other countries only decades.” How eerily prophetic this American“free-marketeer” was!