ECONOMIC WEEKLY

d o l l a r areas, a n d m u s t i m p o r t less p e n d i t u r e on these services can- ism and w h a t not! It w o u l d thus

a n d less a n d less. S i r S t a f f o r d ' s not be cut, nor "therapeutic u n - appear that the o n l y e x p l a n a t i o n
"hold-the-line" policy for dollar employment" enforced to bring i s t h a t w h i c h seems m u s t n a i v e —
imports still continues. Some- d o w n costs o f p r o d u c t i o n b y r e - viz., t h e r e a l i s a t i o n t h a t i n a
t i m e later than September, the d u c i n g taxes or wages. buyers' market, Great B r i t a i n is
p r e s s u r e o n d o l l a r s m i g h t b e eased T h u s the o n l y tune left for the the biggest r i v a l for the U . S . A .
a l i t t l e by the recent arrangement reactionaries is: "devalue the and to be "easy" w i t h d o l l a r - a i d
whereby the Commonwealth pound sterling". Now, in view would mean building up a r i v a l
countries cut their dollar imports of the scheduled meeting of the faster t h a n is h e a l t h y f o r t h e
by 25 per cent. B u t despite a l l I M F , t h e r e m a y be, b e f o r e t h e e n d capitalists, especially w h e n the
that Britain's gold and reserves of t h i s y e a r , a revaluation of all prices are falling. It is the m a c h i -
are b o u n d to dwindle, unless currencies, i n c l u d i n g the dollar. nations of these pressure g r o u p s
something v e r y h e l p f u l emerges T h e r e w o u l d b e sense i n a s k i n g a n d vested interests that Sir
from Washington. for such a r e v i s i o n ; it is almost Stafford and M r . B e v i n have to
T h e difficulties abroad are i n - t h r e e years since these exchange- contend with. Probably, Mr.
tensified by the amazing g r o w t h rates w e r e agreed u p o n a n d o n l y A c h e s o n i s o n t h e i r side, e v e n i f
of anti-British propaganda both in a few currencies have been re- M r . S n y d e r i s against. B u t t h e y
A m e r i c a and Europe. Great B r i - v a l u e d since. B u t h o w m u c h have this c o m f o r t i n g thought: if it
t a i n , w h o was the m o d e l for others w o u l d the vested interests in means a s h o w - d o w n , the w h o l e
t o e m u l a t e , has s u d d e n l y b e c o m e A m e r i c a gain i f o n l y the p o u n d country is behind them, solidly
an A u n t Sally. P o w e r f u l inter- sterling is devalued? Surely not and in a m o o d to tolerate no n o n -
ests l i k e t h e S e r i p p s - H o w a r d a n d enough to w a r r a n t the intensity sense f r o m across t h e A t l a n t i c o r
H e a r s t press h a v e s t a r t e d a c a m - of the attack on B r i t i s h Social- the English Channel.
p a i g n o f v i l i f y i n g B r i t a i n , accus-
i n g her of not being sufficiently
industrious, and of t r y i n g to
m a k e A m e r i c a pay for her g r a n - Economic Factors in India's
diose social services. T h e s e dis-
tortions have started an equally Foreign Policy
bitter campaign o n t h i s side o f
the A t l a n t i c . A l l this propaganda
Girja Kumar, M.A.,
w o u l d not be of much conse-
quence, h a d there been no p l a n Indian Council of World Affairs
behind it. Faced w i t h the declin-
ing p r i c e - l e v e l at h o m e , the reac- HE purpose of this a r t i c l e is a i m e d at s t r e n g t h e n i n g the forces
tionaries have timed this T
out- to examine o b j e c t i v e l y t h e o f peace. The quite erroneous
burst, so as to synchronise w i t h recent trends in o u r foreign rela- belief t h a t we can f o l l o w such a
the Washington talks, and w i t h tions in the l i g h t of the f o l l o w i n g foreign policy or that we have
the m e e t i n g o f the I M F soon after. factors: been f o l l o w i n g i t , in fact, arises
It is rather p e r p l e x i n g w h e n one 1. T h e economics of our from our attempt to apply the
asks: W h a t d o t h e y e x p e c t B r i - foreign relations; principles of Gandhian philosophy
t a i n to d o ? As The Economist 2. O u r association w i t h the in the field of e x t e r n a l relations,
pointed out sometime back, it is C o m m o n w e a l t h a n d its re- w i t h o u t f o l l o w i n g t h e m i n o u r
t o o s i l l y f o r w o r d s t o accuse B r i - percussions on the situation domestic economics.
tain of not w o r k i n g hard, or to in South-East Asia; Slowly, but surely, our foreign
expect any party in power to 3 . T h e e m e r g e n c e o f C o m m u - p o l i c y has b e e n s h i f t i n g i t s e m -
have done other than what. n i s t C h i n a a n d t h e E a s t - p h a s i s f r o m s e e k i n g a m o r a l basis
L a b o u r has d o n e s u b s e q u e n t t o West cold war. for the o r d e r i n g of w o r l d affairs
1945, e s p e c i a l l y i n i n t e r n a t i o n a l It has b e e n f r e q u e n t l y d e c l a r e d
to seeking economic and political
arrangements. It is equally true by our P r i m e Minister that India
advantages and alliances that
that b o t h state r e s p o n s i b i l i t y for w i l l n o t align herself w i t h any savour of expediency. The deci-
health, and f u l l e m p l o y m e n t as particular group, power or bloc
sion to remain within the
a n o b j e c t i v e o f p o l i c y h a v e c o m e a n d t h a t she w i l l p u r s u e a p o s i -
C o m m o n w e a l t h and the f o r t h -
t o stay, Hence, G o v e r n m e n t ex-
tive independent foreign policy coming visit of Pandit N e h r u to

10
3rd September 1949 ECONOMIC WEEKLY

the U.S.A. are clear e n o u g h i n d i - potential to reinforce it. Other- Acheson, U.S. Secretary for
cations of the change. wise a so-called positive policy State, was emphatic in saying
attempted by a country like that President T r u m a n had India
Surely, it is pertinent to ask, India, of comparatively poor mili- also i n m i n d w h i l e p u t t i n g u p t h e
w h a t is a positive independent tary strength, with a dependent famous Point Four in his in-
foreign policy? P a n d i t N e h r u has economy and with the traditions a u g u r a l speech, i n w h i c h h e p r o -
described its advantages in one and the m a r k e d bias of the p a r t y - mised technical assistance and
o f h i s r e c e n t speeches i n t h e f o l - in-power, w i l l gradually lead her capital to help backward areas
l o w i n g terms: into one or another p o w e r bloc. t h r o u g h their o w n efforts to p r o -
"By aligning with any parti- The sheer force of circumstance duce the necessities of life a n d to
cular group, we lose the tre- — t h e signs are not w a n t i n g i n the ward off p o v e r t y and famine.
mendous vantage ground we case of India—in spite of her
have of using the influence that moral resolve, w i l l make it inevit- This was further corroborated
we possess—and that influence able for her to resign herself to by B. Rama Rau, Governor of the
is growing—for the sake of a state of belligerency in the Reserve Bank of India in his
world peace. Our main stake event of war. Our disquieting speech, in w h i c h he made the f o l -
in w o r l d affairs is racial equa- economic situation is the villain l o w i n g significant points: (1) In
l i t y a n d t o see t h a t p e o p l e w h o of the piece in this respect. t h e i n t e r e s t of peace a n d p r o g r e s s
a r e s u b j u g a t e d s h o u l d be free."' in Asia and the w o r l d , India m u s t
It is a sad c o m m e n t a r y on o u r collaborate with the U.SA. and
T o say the least, t h i s s e n t i m e n t economic policy that the coun- should not hesitate in getting
is very deceptive. It is well- try is getting deeper and financial assistance from that
k n o w n that the foreign policy of deeper into deficit on foreign country. (2) India today is re-
any country is an extention of cit on foreign p a y m e n t s accounts. garded as the leader of South-
its internal politics and of its To tide over such difficulties, East Asia because of her geo-
economic policies. Our internal India had applied for a loan to graphical position, her great
policies have been charac- the World Bank. Though a potentiality of raw materials,
terised by indecision and specialised agency of the United stability of her constitution, effi-
lack of planning. The fitful and Nations, for all practical purposes ciency of her administrative
ever-changing regulations of our the World Bank is an American machinery etc. etc. He added,
foreign trade, resulting in the affair because most of the funds however, that she would be re-
dissipation of our external re- at its disposal are subscribed by luctant to accept the responsi-
sources are only one instance of the U.SA. The leader of the b i l i t y of A s i a n leadership because
the l a c k of a consistent economic World Bank Mission to India of her pressing domestic pro-
policy. The improvident hand- frankly admitted in New Delhi blems. Our responsibility to
l i n g of o u r public finances is an- that political factors were an i m - grapple with our economic diffi-
other. T h e cycle of price control, portant consideration in extend- culties has forced us to seek
de-control of prices and re- ing loans to m e m b e r States. foreign credit. B u t a f o r e i g n eco-
imposition of control in food nomic aid programme will
grains is a t h i r d . S u c h instances B e c a u s e o f the t i g h t c o r n e r she naturally imply subservience in
can be multiplied ad nauseam. has got into in consequence of our foreign policy.
Suffice it to say that our indus- her muddled economic policies,
trial and foreign trade policies India badly needs foreign aid Can we stabilize our economy
and control muddle hardly sup- today in the shape of foreign without recourse to credit from
ply the premises on which a capital and investments. With U.SA. which is likely to have
sensible foreign policy can be China gone communist, India is political strings, direct or implied,
built up. t h e o n l y stable factor in this p a r t attached to it? We can, p r o v i d -
of the w o r l d as a b u l w a r k against ed we adopt socialist planned
A positive approach of n e u t r a - Communism. Thus we see that economy w h i c h provides the only
lity to international relations economic co-operation is "mutu- solution to our problems. A
demands as a pre-condition that ally advantageous to India and determined policy of controlled
the country which pursues it United States of America." production, distribution and
should possess the necessary Economics and strategy equate foreign t r a d e in the context of a
economic resources and military each other. That is why Dean co-ordinated and planned eco-

11
ECONOMIC WEEKLY

n o m y is the only conceivable w a y rapidly, too—-those identical nomic, financial aria technical
out, o f the present impasse. I f w e conditions i n w h i c h c o m m u n i s m fields.
d o n o t f o l l o w i t , w e w i l l also g o thrives most and prospers.
the 'China Way'. It is only by As a result of the revised
evolving an economic organisa- I t follows f r o m o u r association colonial policy, semi-indepen-
t i o n of this type, that we can with Great B r i t a i n that the dent States have come into
effectively maintain our neutra- actions of the colonial powers in being i n South-East A s i a u n d e r
lity from international frictions south-east A s i a have o u r i m p l i - the economic and strategic
a n d succeed i n o u r efforts f o r t h e cit consent. M a l a y a and lndo- spheres o f influence, direct o r i m -
eradication of colonialism from C h i n a are g r i m instances of this plied, of the metropolitan coun-
South-East Asia. This w i l l call policy of masterly inactivity on tries. Indonesia, Indo-China,
for a positive p o l i c y of co-opera- our part. It was the logic of B u r m a , P h i l i p p i n e s etc. a r e a l l set
tion w i t h new China. these events tnat made Dr. i n t h e same p a t t e r n ; t h o u g h t h e
Keskar, our D e p u t y M i n i s t e r for degree of dependence varies f r o m
For a determined economic E x t e r n a l A f f a i r s , t o say a b o u t t h e one to another.
p o l i c y alone cannot m a k e i t pos- Bao Dai regime in Indo-China
s i b l e f o r u s also t o d i s p e n s e w i t h that "the present developments in T h u s w e see t h a t o u r d e c i s i o n
foreign credit. W i t h o u t it, foreign I n d o - C h i n a show clearly that the to remain w i t h i n the C o m m o n -
a i d w i l l g o d o w n the d r a i n t h e French Government is being w e a l t h has b e e n p s y c h o l o g i c a l l y a
same w a y i t d i d i n China, and w e o b l i g e d b y e v e n t s t o cede p o w e r v e r y fateful decision. These re-
w o u l d be repeating the same a n d t h a t is a p l e a s a n t e v e n t . " g i o n s o f i n f l u e n c e c u t across t h e
m i s t a k e s . 8300 m i l l i o n U . S . a i d conception of Asian unity. It is
to China did not and could not The present colonial empires clear f r o m the proceedings of the
save t h K u o m i n t a n g r e g i m e . T h e c u t across t h e r e g i o n a l a l i g n - United Nations that Asian coun-
m a j o r reason for the collapse of ments, leaving a gap w h i c h they tries are d i v i d e d almost on a l l
t h e K u o m i n t a n g w a s its f a i l u r e t o are t r y i n g t o f i l l b y t o n i n g d o w n issues. T i l l n o w , A s i a n u n i t y has
carry out land reform, w h i c h is their policies. The Common- remained a m y t h . An expanding
the c r u x of the problem, not only w e a l t h has set a p a t t e r n f o r o t h e r and equitable economy, a n d co-
in China but in all Asian coun- colonial powers to follow. The operation between India and new
tries. p o l i t i c a l i m p e r i a l i s m of the 19th C h i n a can s t i l l lead us out of this
c e n t u r y has g i v e n p l a c e t o f i n a n c e rut. O n t h a t basis a l o n e c a n w e
O n e w r o n g s t e p w i l l l e a d us c a p i t a l i s m of the 20th Century. visualize a politically independ-
into another a n d thus on to the The treaty between the F r e n c h ent a n d e c o n o m i c a l l y s e l f - s u f f i c i -
abyss. O u r difficult economic authorities and ex-Emperor Bao ent Asia.
s i t u a t i o n compels us to go w i t h a Dai is itself an unashamed ex-
begging b o w l to the international position of colonial policy of the
M o n e t a r y F u n d a n d t o the W o r l d F r e n c h U n i o n . lt lays d o w n :
Bank. As we have already
s t a t e d , these a r e A m e r i c a n i n s t i - 1. T h a t the independence of
t u t i o n s for a l l practical purposes. V i e t n a m has n o l i m i t s o t h e r t h a n
D e p e n d e n c e o n f o r e i g n assistance t h o s e e m a n a t i n g f r o m its m e m b e r -
makes it desirable for us to r e t a i n ship of the F r e n c h U n i o n ;
the Commonwealth link and
d i r e c t l y e m b r o i l s u s i n t h e East- 2. That the Vietnam will
West cold war. Probably we utilise preferably French Coun-
have been compelled by c i r c u m - sellors and technicians for its
stances i n t o association w i t h the internal and economic organisa-
C o m m o n w e a l t h on account of our tion;
fear of C o m m u n i s t aggression.
B u t u n f o r t u n a t e l y , the fear of 3. T h a t the V i e t n a m w i l l agree
c o m m u n i s m has b l i n d e d u s t o t h e w i t h the representatives of the
necessity of c o n t r o l l e d economy French Republic on various
and economic p l a n n i n g a n d has special arrangements in the col-
been b r i n g i n g i n its t r a i n — a n d toral, diplomatic, military eco-

12