A Total War on Indian Poverty

Summary

“A Total War on Indian Poverty” is the text of the A. D. Shroff Memorial Lecture delivered by Eric P. W. da Costa at the Delhi Centre of the Forum of Free Enterprise and issued as a Forum booklet dated 15 January 1973. Da Costa, then Managing Director of the Indian Institute of Public Opinion, opens by restating what he calls Shroff’s two-strand economic philosophy: that the central role of development belongs to individual entrepreneurs who conceive and shape productive enterprises, and that such entrepreneurship is best secured in societies not overwhelmed by State regulations and the armoury of political power. He measures India’s record against that philosophy and finds it wanting — the 1961 Census revealed that employment projections had been built on a 1.25 per cent population growth that was in fact twice as fast; the Second and Third Plans squandered scarce capital; foreign debt approached Rs. 8,000 crore; prices had doubled since 1961; and the country was now planning a Fifth Plan around a growth rate of perhaps 6 per cent while Brazil, Iran, South Korea and Taiwan had moved into the 10–15 per cent range.

The positive programme da Costa proposes is a “total war” on poverty along Gandhian lines but with classical-liberal instruments. He calls for halving the Capital:Output ratio toward the 2:1 figure of the First Plan, sustaining a 7 per cent annual growth rate, generating six million jobs a year (63 million over the coming decade), and channelling rural works of roughly Rs. 1,250 crore per year into agriculture, small irrigation, medium and small industry, and the labour-intensive “mistri” economy. Punjab is held up as a working prototype of integrated agricultural and industrial revolution, contrasted with the “great losing giants like Hindustan Steel” and the inflationary record of large multi-purpose projects. Government must mobilise resources and raise revenues from about 20 to 25 per cent of GNP by 1982, but the people must equally be able to discipline the Government — freedom of expression and constitutional rights, even as though in an emergency, must operate without restraint.

Da Costa frames the lecture as a moral as well as economic argument. Quoting Diocletian’s failed price edict of 301 A.D. and warning against Fair Price Shops without supplies, he insists that the basic laws of supply and demand are no respecters of persons. He concedes he cannot prescribe a single ideological answer — “We know that it is not Socialism, nor Free Enterprise, nor Resources nor Plans, which have down the years, been the catalytic agents of any nation’s will” — but reduces the social content of justice in India to food, clothing, shelter and jobs, declaring that “Social Justice means jobs.” The closing paragraphs invoke 1922 and the 1971 Bangladesh war as proof that India retains the capacity for superhuman tasks, and call on intellectuals and the private sector alike to abandon hobby-horses and join a single-point national programme against endemic poverty.

Key points

• Restates A. D. Shroff’s twin theses: development is driven by individual entrepreneurs, and entrepreneurship requires societies not overwhelmed by State regulation and political power.

• Uses the 1961 Census revision of working-population growth (from 1.25% to roughly twice that rate) to indict the Second through Fourth Plans for relegating employment to a ‘lowly place’.

• Charges economists and planners with wildly inefficient use of scarce capital — foreign debt near Rs. 8,000 crore, prices doubled since 1961, growth stuck near 4% while South Korea, Taiwan, Brazil and Iran posted 10–15%.

• Prescribes a Capital:Output ratio of 2:1, a 7% growth rate, 14% domestic savings, and 6 per cent foodgrain growth as the non-inflationary path.

• Calls for rural works of around Rs. 1,250 crore per year and 63 million additional jobs over the coming decade — about 6 million jobs annually.

• Holds up Punjab as a working prototype of simultaneous agricultural (8%) and industrial (10%) revolution, and rejects high-capital labour-short technologies outside steel, cement, paper and petrochemicals.

• Argues that Government must raise revenues from ~20% to 25% of GNP by 1982 but that people must equally discipline Government — constitutional rights and free expression must operate without restraint even in emergency.

• Reframes ‘Social Justice’ as concretely food, clothing, shelter and jobs, refusing both pure socialist and pure free-enterprise answers and invoking a Gandhian register of mass mobilisation.