What If India’s PMF Was Agriculture and Not Industry?
India and China- These two names feature in the news time and again, often in relation to each other. Frequently at odds with one another over boundary disputes, these neighbouring countries have a lot of similarities in their history. For instance, both the countries at one point housed two of the oldest civilisations of the ancient world. Extremely rich in natural resources, both these countries have always been the favourites of traders and colonialists.
Apart from this, both India and China gained political Independence around the same time in the late 1940s, their demography at the time comprising primarily of farmers and agriculturists. During the same period, both their industries were severely underdeveloped and the vast majority of their citizens were unemployed. Furthermore, after independence, the leaders of both the countries preferred non-capitalistic forms of economic systems for their countries, viz. socialism and communism, over a laissez faire setup.
However, inspite of having so many similarities in their histories, the rate at which both the countries grew post independence could not be more different. While India’s GDP growth rate in 1994 was 6.4% , China’s was at a staggering 13%. Another instance that highlights the differences is the fact that in 2010, when India held a 2.7% share of World Manufacturing Output, China was already the biggest manufacturer in the world, with a share of 19.3%.
But what is the reason for their contrasting growth rates? Experts believe that the principal reason for this difference was that China chose Agriculture as its Prime Moving Force (PMF), while India chose Industry. This single decision taken by their respective leaders is touted to be the primary reason why China today is a $14.7 trillion economy, while India is trailing, with its GDP at a relatively lesser $2.66 trillion.
An avid reader of Alternate History, today I will attempt to paint a picture of the growth and progress that the Indian Economy could have had, if they had chosen Agriculture as their PMF and not Industry.
Conquer Lack of Capital
The limited capital of the country would have been directed towards agriculture, which was a low investment activity, rather than the high investment industries like steel and thermal plants.The money could have been used to create multiple small yet self sustaining factories that would produce farm tools necessary for agriculture. All surplus labor would be trained to work at these factories, and this would create employment and also build the base for industries in the future.This way, India would need to take significantly lesser loans from International financial institutions, greatly decreasing its debts and improving its Balance of Payments right from the start.
Reorganised Agriculture and Introduced ‘Panchayati Raj’ System Sooner
By abolishing high taxing systems like the ‘Zamindari System’, taking stock of agricultural resources, and mobilising farmers at the lowest levels, ie. the villagers, the Government would facilitate the financial independence of the villagers much sooner. Excess income and savings of their families would be saved in banks, increasing the money in the market.
The Panchayat System ie. a three-tier system of local self-government of the villages in rural India, would have been established on priority, by accepting the Balwant Rai Mehta Committee’s recommendations for the same, in 1957. This decentralisation, which was eventually done in 1992 after years of stalling, would have resulted in the access to health, security and shelter for all Indians, almost four decades sooner.
Reorganised Finance
Cooperatives and Agricultural financing institutions would be established on priority, giving farmers access to cheap loans with low interest. Speedy insurance of crops and subsidies for fertilisers would further incentivise farmers to increase their activities. Promoting organic farming and use of local and sustainable manure such as cow dung, which was already in popular use, would further reduce incidental costs, benefitting the farmers even more.
Poverty Eradicated Sooner
Early focus on agriculture would have reduced poverty in the whole country. The poorest sections of Indian Society, ie. the farmers would have been the first to have an income and means of livelihood. This would guarantee them a good standard of living in the villages because of which fewer labourers would migrate to the cities in search of work. This would greatly reduce the stress on urban jobs and land resources, and a better and more balanced quality of life would be achieved for all.
Opening Economy Earlier
By opening the economy earlier and trading with foreign countries, India would have achieved the dual goals of improving trade relations as well as preventing the Balance of Payments (BOP) crisis that it faced in the late 1980s.
To avoid a meltdown of its economy during the BOP crisis, India had to drastically change its foreign policies and devalue its currency, as per International Monetary Fund (IMF) guidelines. This could have been prevented if India had begun trading earlier, using the surplus agricultural produce. The money earned from this could have been used to import machines and all other equipments that would require India to build large industries.
After assuring financial stability and welfare for its people using Agriculture as PMF, India could have shifted its focus toward industrialisation and continued to grow. China practiced this switch in PMF from Agriculture to Industry in the early 1980s, and after realising that its industries were not growing, India also did the same. However, this was done in 2003, decades after China.
Inspite of what seems like an overwhelming number of reasons for choosing Agriculture over Industry for its PMF, India chose Industry. Experts believe the reasons for this are:
- During the period post World War II, defence and security were taking a priority over everything else for nations worldwide. At the time, building a strong industrial base for a robust defence system was the first concern for all, especially the lesser developed nations who had to build everything from scratch.
- It was believed that industrialisation was the fastest way to achieve high growth, and was emphasised by the World Bank and IMF.
- Countries that chose agriculture as their PMF were regarded as “backward” by World Bank and IMF. This outlook changed significantly in the 1980s, after economists observed China’s phenomenal growth using Agriculture as PMF.
Moving on from the past, it is important to remember that the goal of analysing history is to learn from it, not to dwell over it or to blame people for it. Though the ideal situation would have been for India to also begin with Agriculture as PMF and shift over to Industries later, it was not to be. Successive generations of Indian leaders learnt from the errors of the past and incorporated the necessary changes into their economic system. The LPG reforms under the guidance of the IMF were a result of this.
Current Position
Today, India is one of the larger economies in the world. It is the world’s largest pulse and milk producing nation, and the second largest producer of steel. In the pharmaceuticals industry (by volume), mobile market and refinery output, it has ranked in the top three countries. Additionally, India also has the world’s biggest rail network in terms of passenger traffic, and the largest renewable energy expansion plan.
High Growth Predicted
India is projected to to become “one of the largest growth engines in the world,” according to a McKinsey Global Institute (MGI) Report. In 2018 before the Covid-19 pandemic, India’s economy grew by 6.1%, while, in contrast, the U.S. economy grew by 3%. Superior technology, an improved ease of doing business rank and easier FDI routes have made India a top tier choice for investments, and as per the Centre for Economics and Business Research (CEBR), India is expected to become the third largest Economy in the world by the year 2031, ranking ahead of Developed countries like Japan and the UK.
Achievements During COVID-19
Even during the pandemic, India achieved milestones unprecedented in both, scale and reach. The National COVID-19 vaccination drive of India is the world’s largest vaccination drive , and India is on its way to closing in on administering 2 billion Covid vaccination doses in record time. Apart from this, Mission Sagar organised by it has provided vaccines and humanitarian assistance to multiple nations globally. This includes over 3,000 MT of food, over 300 MT LMO, 900 Oxygen Concentrators, and 20 ISO containers.
Humanitarian Aid
India’s sense of responsibility towards its fellow countries and its diaspora is reflected from the fact that all of the top 10 spots for the biggest evacuations from War Zones in the world, including the phenomenal Kuwait Airlift, are held by India. The most recent of these is “Operation Ganga II”, the largest evacuation from the Ukraine-Russia war zone, wherein India brought over 17,000 of its stranded students back home.
The future for India is bright and vibrant, with the country achieving several milestones daily in the fields of Defence, Nuclear Technology and Space Explorations, amongst others. In spite of having had a rocky start, India is showing a steady growth, somewhat similar to the rise of Japan and China in the 20th Century. Though India liberalised its economy several years after its South East Asian neighbours, it is quickly developing and is currently on the path towards becoming one of the biggest economies in the world.
Sources
Indian Economy- Ramesh Singh
