economic-progress
economic-progress

The murder of rationalist thinker M M Kalburgi of Karnataka was followed by many writers returning their awards. Some have since reconsidered and are inclined to re-accept those awards. This is a welcome development. It means that the government has been able to rein in the irresponsible elements that indulged in such acts of intolerance. The problem though is deeper. It is the ambience that matters. There have been few, if any, attacks on tourists visiting Kashmir in the last few years. That has not led to hordes of tourists coming because the ambience remains negative. It is necessary for the government to not only pretend but actually cultivate an atmosphere where dissent is welcomed and honoured. Only then the Indian economy will take off.

The government is engaged in a huge effort to attract foreign investments. Intolerance hits at this objective. The burning example is that of South Africa. That country had a government controlled by white people. The blacks were deprived of many rights. There arose an international uproar against this system. Demonstrations were held at the headquarters of Multinational Corporations doing business with that country. These Corporations had to shut their operations in South Africa. Developed countries refused to supply arms to that country and these had to be purchased by South African Government through middlemen at exorbitant prices. Goods made in South Africa were not allowed entry in many countries. Exports of the country were hit. Economic growth rate slid to near zero. These steps led to the breakdown of the economy and forced the white government to hand over power to a government elected by universal franchise. A similar movement started in the United States against Modi though it appears to have been nipped in the bud. Many intellectuals got together and condemned the visit of Modi to the Silicon Valley. Such events leave a lasting impression on the minds of the investors. They prefer to invest in a tolerant country.

 INTOLERANCE leads to the task of governance being handed over to incompetent persons. Good policies and good governance are the rock bed of economic growth. Making a correct policy requires that the policy maker understands various aspects of the matter.

The United States is today at the heights of economic prowess, in part, because it has developed an atmosphere of tolerance in which people holding contradictory viewpoints are welcome. This intellectual freedom has a huge impact on the economy. The policymakers and the businessmen also feel free. Correct policies are made and businesses concentrate on expanding their businesses rather than worry about protecting themselves from attacks by chauvinists.

Mind of a person does not work in parts. A boy who is aggressive and a troublemaker at school will also be abrasive towards his mother and sister at home. Similarly a society that provides an open religious environment will also create an open business environment. The Renaissance created a free thinking atmosphere in England in the seventeenth century. Minds of the people were unshackled from the chains of the Church and the State. The result was invention of the steam engine by James Watt in 1781. Mr Watt could scarcely have made this invention if he was afraid of religious attacks. This invention made it possible to mine coal from greater depths. That led to a huge reduction in the cost of energy and fuelled economic growth. It became possible to run large steamships. That led to the development of the Royal Navy. Britain became the global sea power and workshop of the world. The businessman has to similarly feel free in order to undertake risks involved in business. He would scarcely put his money in foreign trade if he was afraid that he would be put in jail due to his religion upon return to his homeland.

Intolerance leads to the task of governance being handed over to incompetent persons. Good policies and good governance are the rock bed of economic growth. Making a correct policy requires that the policy maker understands various aspects of the matter. For example, the policy of textiles imports requires understanding of its impact on the country’s commitments under the World Trade Organisation, balance of payments, soil health, farmer’s suicides, impact on minorities, nutrition, employment, etc. A correct understanding of these many facets requires that the policymaker be open to inputs from various stakeholders. This input will be forthcoming only if there is an atmosphere of tolerance. Large numbers of weavers in the country are Muslims and belong to lower castes. These communities will not provide inputs to the policymakers in an atmosphere of intolerance. The dissent will grow inside until it erupts and takes the economy downhill. Say the government has to select a person to represent the country at the WTO. The more competent person belongs to an “unwanted” community. But the government is driven by religious considerations. Therefore a less competent person belonging to the “wanted” community is given the job. As a result, the country’s case is not put forth in the WTO strongly and the economy suffers. In this way intolerance leads to the implementation of wrong policies and to bad governance and hits at economic growth.

Intolerance leads to social unrest and hits business activities. I was running a paperboard factory in Faizabad District of Uttar Pradesh in the eighties. The city was repeatedly put under curfew due to the ongoing Ram Temple agitation.

It became difficult to bring raw materials or to send finished products. Banks were closed and it was not possible to either receive or to make payments. The business suffered. Similarly we hear of the losses of so many businesses worth crores of rupees due to the recent Patel agitation in Gujarat.

Intolerance gives rise to social tensions and they erupt in some unforeseen ways. Foreign buyers do not care about the circumstances back home. They want their goods to be delivered on time. The disruptions hit at supplies and throw us out of the global marketplace.

The taking back of awards by the writers is a good sign. But this is merely firefighting. The damage that has occurred from the murder of Kalburgi is only being partly compensated. This certainly makes the atmosphere less negative. But these reacceptance of awards does not make the atmosphere positive. More is needed. Ambience of the country has to change. The talk of the government inviting suggestions from the public has more or less evaporated into thin air. The government has become impervious to external inputs. Decisions in the PMO are being guided by the whims of IAS officers rather than the mood of the country. Economic growth requires openness which can only be instituted if there is intellectual openness.

Author was formerly Professor of Economics at IIM Bengaluru

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