Professor J.K.Galbraith’s terse tract on the Indian public sector is bound to evoke two extreme reactions. While the socialists on whom he has fixed the responsibility for the failures of the public sector will accuse the Professor of oversimplifying everything, the partisans of private enterprise will charge him of being “more loyal than the King.” With scholarly scrupulousness the Professors avoid straying into the side-alleys of irrelevances and sticks to the main theme: how best can the public sector be organised to become the bedrock of an affluent society? The Galbraith report, which was presented belatedly to the Lok Sabha the other day, is based on the conviction that there is no real alternative to extensive public enterprise in India. Indeed, this conviction is shared by the country’s power elite, but as the Professor points out the real bit in the mouth of the public sector is the hierarchical outlook of the socialist power elite that fledged it. According to his findings, undertakings in the public sector are hamstrung by severely restricted autonomy, ministerial interference and the rigidity of the civil servants who have neither the talent nor the training to occupy managerial positions they do. The result is allround frustration and lack of progress which in their turn are leading us to a state of stagnation aptly described by the Professor as “post office socialism.” That is, the public sector is dangerously close to a state in which it is concerned principally with the avoidance of losses and possibly with returning a marginal profit to the exchequer. Clearly, this is not enough to justify the existence of the public sector. Professor Galbraith’s idea of a public sector is a self-generating sector in which the role of the Government will be largely limited to bringing new industries into existence. Such undertakings, staffed by skilled managerial personnel, functioning with full autonomy should operate on a commercial basis and even make profits not for the treasury but for the purposes of expansion and regeneration of the venture, it must be run by specialists, free even to make some mistakes that are inevitable in making quick decisions. This is something for the highly centralised Government of India to ponder. Professor Galbraith takes our socialists to task on two more counts. First for giving rise to the “paralysing belief that success is a matter of faith, not work”; and for encouraging workers and consumers “ to appropriate the surplus on which expansion and growth depend and without which there will be stagnation.” Stagnation is bad enough, but what is worse, the Government, committed as it is to the expansion of the public sector in furtherance of its socialist principles, is compelled to resort to taxation, and rely on uncertain domestic savings and foreign loans in order to provide capital for new ventures. The Galbraith thesis is likely to offend the doctrinaire socialist who is committed to the belief that the principal function of the public sector is to mobilise economic surplus exclusively for the State. That is more apparent than real. For the Professor’s contention is not that the public sector must be a law unto itself, but that it must be allowed to grow to its full stature before it can be regarded as a source of revenue for the treasury. It is to be hoped that our socialists in New Delhi will pay more than a passing attention to the Professor’s observations and be guided by them before assuming the role of guiding the nation’s industrial development.
24th December, 1960.
