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BW Businessworld

How Times Changed

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Times are interesting today, but not tumultuous. Anna Hazare keeps going on fast in relays, his acolytes keep talking on television nonstop. But no one thinks the country is going to dogs. That was the thought that occurred to many in 1981. The world had seen the oil crisis in 1973. Upset at Israel's victory in the Yom Kippur war, the Arab countries had suddenly quadrupled the price of oil. That made them very rich very quickly; they did not know what to do with the sudden wealth. They told their bankers to invest it; but the banks could not find big and promising clients. Finally they settled on Latin American countries. They had a great time playing with the wealth. Soon they were bankrupt, as surely as Greece is today.

Domestically, India had seen the strong-arm tactics of Indira Gandhi. When she got the army to give Pakistan a bloody nose and freed Bangladesh from its clutches, the nation cheered. But when she tried the same  tactics at home and sent the entire opposition to jail, people were not so thrilled. When she held a general election, they took their chance and threw her out. Unfortunately, the opposition was good at opposing her, but not too good at working together to run the government. So stability evaded India.

The oil crisis had been a terrible wrench; but by 1981, the country was resigned to it. Oil-rich Arab countries prospered; their people could enjoy themselves by just pumping oil and sending it abroad. They did not have to work. They hired Indians and Pakistanis by the lakh. North Indians built their palaces; south Indians kept their accounts. Their remittances had started pouring back into India; so there were signs of imported prosperity. That is when Anandabazar Patrika decided to launch BusinessWorld.

The next decade saw a distinct acceleration in growth, and an industrial boom. Although Indira Gandhi came back to power in 1983, she had lost her evangelic zeal. She did not reverse the trade liberalisation of her predecessors. After she was killed, her son Rajiv was even more iconoclastic. As a result, industrial growth accelerated in the 1980s. Unfortunately, it did well out of the domestic market, and forgot to export. By the end of the 1980s, we had a vicious payments crisis — and a government powerless to tackle it. The Congress stayed out of power, but had the power to stop the government from acting. The government took one loan after another from the Fund, the Bank, from anyone who would lend. By 1991, it was bankrupt.

That is how we got the accidental Prime Minister, Narasimha Rao. He talked little, but did a lot quickly. His government abolished industrial licensing and import licensing, and reduced the absurdly high tax rates that made tax evasion profitable. The economy recovered. But the people did not give Narasimha Rao a second chance. It gave the BJP the first chance in its life. Given its provenance, it could have been disastrous; just three years earlier in Ayodhya it had shown how disastrous it could be. But power made it responsible. It abolished the last vestiges of licence raj. After a number of false steps, it freed the telecommunications operators; it started the boom that made India the cheapest country to make calls in. While it was looking away, the information technology revolution gathered strength, and transformed the balance of payments.

The country earned the dividends of the transformation in the last decade. Growth crept up to 7, 8 and 9 per cent — rates that were unimaginable before. It was led by industry; India emerged a competitive producer of machines and pharmaceuticals. Indian companies mastered technology. They started running out of markets in the country and ventured abroad.

That is where we have arrived in the 30 years since the birth of BusinessWorld, which grew up to become today's Businessworld. We did not think we were recording history; unknown to us, history happened, and we were lucky to watch it, to be part of it.

It was exciting. But we cannot say we have learnt anything from it; we certainly have no idea where India is heading next. The world economy is going through dark times. The Indian economy is far more open than it was 30 years ago; it can no longer insulate itself from the world. That is how we have been seeing sudden exodus of foreign capital, and violent gyrations in the exchange rate. We do no know what will come next, but we are pretty sure it will be different from what has passed. We revel in the uncertainty; we will continue to bring the tumultuous future to you as it unfolds.

(This story was published in Businessworld Issue Dated 12-12-2011)