SUBRAMANIAN     SWAMY

Reset by Subramanian Swamy ;Published by Rupa ; Pages 200 ; Price Rs.595/-

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Dr Subramanian Swamy is an economist with a PhD from Harvard University, who has published articles with Nobel Laureates Simon Kuznets and Paul A. Samuelson. He returned to India to be Professor of Economics at I IT, Delhi, but his scathing criticism of socialism and communism as being inapplicable in a democracy, invoked the ire of Prime Minister Indira Gandhi and his professorship was terminated in 1973. However, a Delhi court held the termination as null and void in 1991, but he resigned after resuming his Chair for a day .

Dr Swamy has been elected six times to the Lok Sabha and the Rajya Sabha, three times each
respectively.  As a Cabinet Minister twice in 1990–91 and 1994–96, he helped Prime Minister Chandra Shekhar and Narasimha Rao to launch economic reforms. He is well versed in law and has   many feathers in his cap.

Dr Swamy is a renowned scholar of the Chinese economy and is highly respected in China for his contribution in improving bilateral relations in the 1990s.

He is regarded as a maverick and a Scarlet Pimpernel of Indian politics. He has a finger in every political pie in India.

At the request of a few Jan Sangh leaders Swamy prepared and presented in 1970 in our Parliament a “Swadeshi Plan” which demanded that socialism be sacrificed for a competitive market economic system, to enable India to grow at 10 per cent per year, achieve self-reliance, full employment and produce nuclear weaponry. Indira Gandhi denounced this plan as dangerous.

Almost fifty years later, Swamy redefines his path-breaking ideas on India-specific economic development in his seminal work--- “Reset: Regaining India's Economic Legacy”. Swamy undertakes a nuanced analysis of the manner in which the highly prosperous Indian economy witnessed a long, accelerated decline due to persistent British imperialist aggression, and compares the distinctive manner in which Asian giants—India and China—suffered at the hands of imperialism. He critically analyses the the Nehruvian model of centralized economic planning borrowed from the Soviet Union, and the debilitating circumstances that impelled him, as Commerce Minister in Prime Minister Chandra Shekhar’s government, to draw up a blueprint for economic reforms .
Swamy has asserted that unless India targets 10 per cent growth rate, it will not be able to remove unemployment in the next 10 years. India can achieve the double digit growth as it has a high savings rate and a huge young population. For this the economy needs to be "Reset".

He faulted the BJP-led NDA government for its handling of macroeconomic issues .He is critical of the government's decision to merge banks and slash corporate tax rate.

According to Swamy this is the first time since liberalisation, India is witnessing a slowdown driven by a steep decline in private consumption.

The decline in gross domestic product (GDP) growth since 2015 has been largely driven by a fall in household savings that morph into investments through financial institutions.

The situation is further complicated by a collapse in the shadow banking sector and a widening spate of corporate bankruptcies.

The hard task of balancing what is socially just in the long term with what is economically necessary in the short term requires governance to blend the sanctity of righteousness with the pragmatism of the marketplace.

Swamy identifies the three components that must drive GDP growth in India as capital deployment, employment and technological improvements through innovation.

There are a few ideas briefly touched upon in the book. The abolition of personal income tax is one of them. It is the middle-income group and particularly the salaried class that gets disproportionately squeezed by personal income taxes.The elite find multiple loopholes to minimise it, the rich farmer does not even have to do that much. The intent of this proposal is to lift savings and enhance their flow into investment.

Swamy also proposes moving back to a fixed exchange rate of Rs 50 per dollar, abolishing participatory notes and printing rupee notes to fully finance basic infrastructure.

The comparisons with China are a recurring theme throughout the book, given the coincident advent of industrialisation in both countries and their similarity in scale, which define them as natural competitors in the global economy.

What this book provides is the context that has brought us to where we are, through the history of our economic evolution over the last 150 years. It talks of the key challenges that have remained unaddressed and provides a broad framework for corrective action.

The book is an accessible primer on some fundamental issues that influence the macroeconomic scene a provides a perspective on the historical exploitation, political gridlocks and ideological missteps that have restrained the Indian economy from reaching its full potential.

It places the challenges in a structural context that reveals the logic in how resolutions must be prioritised.

Economies are built by a collective culture that leverages strengths and mitigates weaknesses.

This is what consistently informs the broad vision and detailed proposals outlined in the book.

The author combines an understanding of the delicate equilibrium that influence macroeconomics and the limitations of human social behaviour.

The author makes plain that while Dr Manmohan Singh was an “accomplished economist, he remained a marginal figure”. Modi is “honest in money matters” and a “domineering figure who brooks no political competition”. But on complex issues concerning the macro-economy, its dynamics being very different from micro issues, Modi has to rely on political advisers and colleagues who know very little about the subject, according to Swamy.

Dr Swamy asserts that the “folly of demonetization and the inanity of the Goods and Services Tax (GST),” have accelerated the tailspin of the economy,” partly to what may be called lack of intellectual sophistication and no familiarity with mathematical economics in the present dispensation.

"Now is the time for a structural overhaul to purge the remnants of the command economy, and usher in an incentive-driven, innovation-structured and market-determined competitive economy.” India’s future rapid growth model needs to dovetail “our ancient values and heritage; thus, today’s India is an ancient nation in search of a renaissance.”

Swamy’s turnaround economic plan wants the government to focus on the twin engines of growth - consumption and investments. Both have slipped badly besides exports. Abolishing Income Tax is part of his reform.

The peak of Dr Swamy’s economic philosophy emerges in his re-visiting the implications of the famous economist Kenneth Arrow’s ‘General Impossibility Theorem’- on ‘aggregating’ individual preference functions into a social preference ordering by satisfying certain conditions like majority-decision rule
In his ‘Appendix’, Dr Swamy seeks to reconfigure Kenneth Arrow’s relevance on the basis of the ‘Hindu Way of life’, as articulated by RSS leaders

Critiquing both capitalism and communism, Dr Swamy implies the Hindu theory of ‘Purusharthas’ as having already anticipated Kenneth Arrow!

P.P.Ramachandran.

1/12/2019.