The History of India's Economic Prosperity – Part 2

Read Part 1 First
History of India's Economic Prosperity – Part 1

One dollar has risen to 70 rupees, and along with this, some people are thoroughly confused as to why, if we are the sixth-largest economy in the world, our currency is not the sixth-strongest. The game of the dollar and the rupee began in 1952. As I wrote in the previous part, the result of the unrelenting British plunder was that India, which once held a 35% share of world trade (global GDP), shrank to a mere 2% in just two hundred years. Why has the rupee steadily declined to reach an all-time low of 70 rupees per dollar?

Even so, when the white British handed power over to the brown sahibs, India did not owe a single rupee of debt to any country. Our philosophical and cultural principle is: "Stretch your legs only as far as your blanket extends." But lamentably, as the nation moved forward after 1947, it left this principle far behind and advanced on the Charvaka philosophy of "Rinam kritva ghritam pibet" (incur debt and drink ghee).

Under Nehru ji's leadership, we took our first loan in 1952. From whom? From the very people who had looted us for so long! Then again in 1957, in 1962, in 1967, 1972, 1977, 1982, and every year thereafter—often twice a year—once to drink ghee and a second time to pay the interest on previous debt. In this manner, we began to run the country on borrowed money. When any bank gives you a loan, it gives it on its own terms. They, too, imposed their conditions.

What was the condition? The condition was: open your markets to us. We all know that India is a market of nearly 135 crore people. Under the terms, their companies would enter, conduct business, and cart away the profits. This was the second phase of plunder, and it was far more terrifying. A single East India Company looted us for two hundred years, bringing us down from the top to the very bottom rung; now there are thousands of such companies.

After that, the plunder began in the name of globalization and liberalization, under which foreign companies kept pouring into India. Now some will jump up and argue that there are immense benefits to this, and ask how progress is possible without it. From the beginning, we were fed the narrative that when foreign companies enter, market competition will increase and you will benefit. The reality is quite the opposite; let me give an example.

When Coca-Cola entered India, Parle's Thums Up was in the market and Campa Cola was in the market. Both were swadeshi (indigenous). What did Coca-Cola do? It had ostensibly come to compete. But taking advantage of propaganda machinery and government concessions, it took over Thums Up. Campa vanished from the market as well. Competition takes place between two equals—not between a financial behemoth and a struggling player with modest capital. What competition could there possibly be between them? The outcome was that the giant swallowed the other.

When the swadeshi brand was in the market, a 300ml bottle cost 2 rupees and some paise; today, a one-liter bottle costs 80 rupees, meaning roughly 24 rupees for 300ml—a price increase of 1200%. Or put another way, prices were hiked twelve-fold over how many years? A mere ten to fifteen years. This is the effect of globalization! This was just one consequence, and it is merely one example among thousands. The second and far more lethal condition was that you must repay the loan in the currency of the lending country. And alongside that, you must elevate the value of that country's currency—meaning the rupee weakens against it.

I listened to that speech by Manmohan Singh, a pawn of the World Bank serving as Prime Minister, in which he fooled the leaders of the entire country on the floor of Parliament by claiming that if we devalue our currency, we can earn more rupees from exports. It sounded great to everyone—it might sound convincing to you as well—and thunderous applause followed. But the great economist Manmohan Singh did not explain how profit would be impacted. Consider this: when one rupee equaled one dollar, we earned 14 dollars by selling one kilo of rice at 14 rupees. But today, by selling five kilos of rice at the same price, we earn only 1 dollar. Now we have to sell seventy times more rice for the same value, because the dollar is seventy times stronger.

This is how the game of the dollar and the rupee is played. Today, the situation is such that even if we take no new loans and merely repay existing debt, every individual would have to pay 52,000 rupees. Ten years ago, in 2006–07, India's external debt stood at 172.4 billion US dollars; by 2010–11 it reached 317.9 billion US dollars, in 2014–15 it touched 475 billion US dollars, and by 2016 it stood at 485.6 billion US dollars—which amounts to 23.7% of India's Gross Domestic Product. Of this 485.6 billion US dollars, 17.2% is short-term debt, while 82.8% is long-term debt.

Finance Minister Arun Jaitley provided this information in a written reply to a question in the Lok Sabha. In the financial year 2015–16, the interest paid on debt amounted to 4,41,659 crore rupees. These figures are available only up to 2016. As long as this game continues, India can never become a developed nation. The positive development is that the current government has taken comparatively less debt than the previous one. However, the legacy debt itself is so colossal that we remain unable to pay it off.

Now let us address why we are the sixth-largest economy but not the sixth-strongest currency. The simple reason is that our total share in the world market is very small. You may be in sixth place, but the value of your currency is determined by how far ahead the country in first place is from you. An India broken by the plunder of the white British is today tormented by the plunder of the brown sahibs. Until we return to swadeshi, this will continue, and no one can stop it.

-Shailendra Singh, author, specialist in national and social issues, writes on contemporary affairs.

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