Foreign Affairs: 100 Years
A New Americanism
Why a Nation Needs a National Story
Let us get down to cases rather than generalize grandly. In India, food- grain output is the pivot on which economic development swings. The most urgent demand of the population is for more to eat; the most acute problem of economic stability is keeping food-grain prices from rising too sharply as money demand outpaces the supply of food; and the core of development strategy has to be either an increasing provision of food-grains to satisfy new consumer demands in the urban and industrial sectors or deliberate retardation of industrial growth to head off the new demands. What is the record and prospect on food-grains?
In 15 years of planned development, India has increased food-grain production about 50 percent. Interrupted between 1961 and 1964, agricultural growth resumed with a 10 percent jump in production last year, the crop year 1964-65. The resulting gain in welfare has been partly drained away in population growth, so that the per capita gain in food- grain production is perhaps 15-20 percent instead of 50. Still, India has managed to put a poorly trained labor force, whose marginal productivity has often been estimated to be zero, to work with little capital on exhausted soil and somehow come up with a massive increase in product.
We know why the gain was not more. Exhausted soil. Poor seeds. Little mechanization. Crude tools. Primitive plows, and bullocks too weak to pull heavier ones. Untrained farmers. Little capital investment in the land. The low repute of manual labor. Caste rules that block innovation. Traditionalism. Ignorance. Insecurity. Corruption. Apathy. But how in the face of these obstacles was any progress made at all?
Perhaps between one-fourth and one-third of the growth in output in the last 15 years came from new acreage brought under cultivation. That is a substantial share, and it has implications for the future to which we need to return. But what of the rest of the increase? Given the power of the obstacles, one would question the possibility of greatly raising productivity. It should not have been possible. How was it done?
Output requires input, and in many parts of the world it is encouragement of the use of chemical fertilizer that has done the trick. But India has been using very little fertilizer, on an average about three pounds of nutrients an acre, compared with 300 in Japan, 180 in Taiwan and 100 in Korea. Because much, probably most, Indian fertilizer goes into its cash crops, the application per food-grain acre is even less than three. Moreover, the government of India has not clearly weighed in on the side of fertilizer promotion; it has restricted fertilizer production by private firms and then failed to push through its own modest plans for government production; it has restricted private sales of nitrogenous fertilizer and then boosted the price of fertilizer through co-op channels in order to protect high-cost government plants; and it has not either permitted or constructed a distribution system to get fertilizer to the farmers when they need it on credit terms that are possible for the majority of farmers. Although the government claims to be encouraging the use of chemical fertilizer, its various interventions have had other objectives as well and may have on balance restricted the rate of increase in its use. Fertilizer does not explain the big increase in production.
Irrigation? Between the beginning of the First Plan and the middle of the Third, India brought 20 million new acres under irrigation. But "under irrigation" does not mean what it does in the United States. It usually means providing water on an uncertain delivery schedule and in amounts insufficient for high yield. It is a valued method of drought relief, and what is often officially claimed for it is that it helps keep production from falling badly in drought, not that it greatly contributes to a secular upward trend in production. Disciplined delivery of water for sustained high yield is a concept of irrigation not yet accepted by the Ministry of Irrigation and Power. Nor, because the costliness of irrigation calls for austerity in project design, has drainage been incorporated into irrigation well enough to escape the charge, often made by foreign irrigation specialists, that major irrigation projects may have, through waterlogging and salinization, destroyed more productive acres than they have created. The government has invested heavily in irrigation; but it is a source of widespread complaint that major projects lag badly in construction, with the result that even the limited objective of drought relief is not effectively pursued. Clearly, irrigation projects do not explain the growth of output, and the big projects may have on balance retarded the growth of output.
Extension work? It has been largely incorporated into India's extraordinarily ambitious program of community development, in which tens of thousands of Village Level Workers, backstopped by specialists, have been scheduled to carry new ideas to villagers and new techniques to farmers. But the Village Level Worker has been, it seems everywhere agreed, over-scheduled. Even originally he was to be a general development officer; and he has been made into a messenger, tax collector and intelligence officer, ever taking up new tasks he prefers to agricultural demonstration, for which his training has turned out to be insufficient anyway. It is widely agreed that India does not have an effective agricultural extension service at this date.
Good prices? Compared with other countries, the ratio between output price and fertilizer price has been strikingly unfavorable to the purchase of fertilizer. More generally, food-grain prices have lagged behind industrial prices. The government's interest in incentive prices has taken second place to its more urgent concern for low food prices to hold down urban unrest. The result has been compulsory procurement at less than open-market prices as well as zonal and state restrictions on the movement of food- grains out of the most productive areas, both of which policies have driven prices down in the producing areas and undercut the monetary incentive to grow more food.
A similar account can be given of seed and insecticide programs. But we already have enough evidence to make three points of significance for India's future. First: it is not the new inputs of modern agriculture that have achieved the growth in food-grain output. Fertilizer, some new seeds and insecticides have contributed marginally; and irrigation water may have hurt as much as helped.
Second: developmental policies are not to be credited with the gain. As regards fertilizer, new seed and prices, they have probably retarded growth; on irrigation, they may have; and on extension, they have been ineffective. From other points of view, the policies have been good: irrigation for drought relief, low prices for urban consumers, Village Level Workers for general community development, fertilizer monopoly to help the co-ops. But they have not served the cause of growth and cannot possibly explain India's great gain in food-grain output.
No one knows just how the increase has been achieved. But it seems clear- and this is the third point-that there are powerful, pervasive, local and "spontaneous" forces for growth in Indian agriculture-even in this the most backward sector of the economy-without which the growth cannot be accounted for. There appears to be a greater expenditure of labor in agriculture than before and a shift toward better methods of cultivation, not because it has been so planned but because on their own initiatives Indian peasants have made the choice. They have done so for a variety of reasons: more mouths to feed, new aspirations spreading through the countryside by informal communication, new techniques communicated from neighbor to neighbor. Even if the governmental programs have accomplished more than we have just estimated, these spontaneous forces for growth are noteworthy in a society that gives so much evidence of resistance to change.
The implications of all this for the future of agriculture might be taken as hopeful. The near exhaustion of possibilities for bringing new land into cultivation is a threat to the future. But the record of the last 15 years assures us that the slow transformation of the countryside-of its attitudes, aspirations and dispositions to try new techniques-is well under way, so that the long-run trend is favorable. And as for India's acute need this year and next-that is, in the immediate and near future-for a more rapid annual increase in food-grain production than over the past 15 years, the evidence is that government policies for accelerating food-grain output are a weapon still largely held in reserve. They can now be thrown into the battle. It would appear that obvious policy changes could easily achieve a sharp acceleration of food-grain production-for example, to a minimum average over the years of 5 percent annual growth-a rate that would put an end to pessimistic speculation about the future of Indian agriculture.
That a future for Indian agriculture thus lies within grasp is typically missed in a preoccupation with the long-run necessity of more fundamental social transformation in rural India. It is everywhere said that Indian yields are no better than a fourth of what they could be with already known agricultural technology. It is then correctly inferred that a fourfold increase in yield would require a fundamental social transformation: new attitudes, aspirations, levels of education and training, specialized techniques, means of communication, market and career incentives, and the like. India, however, can afford to wait many years for a fourfold increase; and everyone, from Indian peasant to critical foreign observer, would rejoice in a steady 5 percent per year increase in production. For that level of gain, modest as it is, a social transformation need not be completed; it need only keep up its present steady pace. The indispensable new element that is required for the 5 percent annual gain is policy that will bring fertilizer, new seeds, water and insecticides to the farmer on price and credit terms advantageous to him-social transformation for the long run, inputs plus the financial incentives to use them for the urgencies of the near future.
Are Indian peasants ready and able to use the new inputs that better policies could bring them? We all wring our hands these days over the unreconstructed peasant who lacks the ambition to change his ways. There are millions of such peasants. There are also millions who have these past years been asking for credit denied them, who badger their more fortunate neighbors for seeds superior to those they can get through the state seed farms, who even without credit are buying all the overpriced fertilizer that is available to them, and who are eager for the new technical knowledge that the Village Level Worker cannot, because he lacks both time and training, give them. If both kinds of peasants have to be incorporated into a long-term program of bringing agricultural output up to levels achieved elsewhere in the world, only the latter, already in a high state of readiness, need to be counted on for a moderate 5 percent gain per year. Their readiness is indicated by their production last year. The extraordinary 10 percent jump in farm output realized in the year 1964-65 was not due wholly to better weather; it appears that the high prices of 1963-64 were, among other considerations, a powerful new incentive to produce. Good price policy could perpetuate such a force for those farmers who have proved their responsiveness to money incentives, even if other millions might remain untouched.
Can a set of new policies sufficient for accelerated growth be imagined? They would look something like this: on fertilizer, more imports; higher production targets than are emerging for the Fourth Plan; a big and immediate push on actual construction of fertilizer plants, public and private alike; a variety of distribution and credit channels to support fertilizer sales; and a lower price for fertilizer retailing. On new seeds, established foreign firms to enter the seed business, both to offer their own services and to shake up the state and central government seed farms. On water, an agreed new concept of irrigation with two main features: no design of irrigation without design of drainage; and no design of irrigation with exclusive attention to drought relief and without attention to the possibilities of disciplined delivery of adequate water for sustained high yield. On extension, the development, through both a training program and administrative reorganization, of a corps of Village Level Workers specialized not merely in agriculture but in agricultural demonstration and other field work. On prices, an end to zonal and state restrictions on movement of food-grains plus minimum support prices that do not serve as an excuse to requisition at less than market prices; that is, minimum prices that are not also maximum prices.
With the exception of the task of swinging the whole professional practice of irrigation engineering over to a new concept, no one can doubt that these policy changes lie within the technical competence of the government of India and of the states; they are not bizarre, unusual or especially difficult policies. If they were all successfully pursued, agricultural output could be expected to rise by a good deal more than 5 percent; hence, not all of them are essential for the modest 5 percent rate that would gratify everyone.
The prospects for India's agricultural future therefore rest-for some years to come-on the prospects for policy changes of this kind. Are they likely? It is a hard question to answer. That these policies are not already in force is no accident. Fertilizer importation and production have always suffered from the opinion, common in underdeveloped countries, that so precious an asset as foreign exchange should be saved for the industrial sector rather than given to agriculture. And the inefficacy of fertilizer distribution is rooted in a laudable Indian desire to build up a vast coöperative network, an ambition with understandably wide political support. Irrigation remains primarily concerned with drought relief because drought is a terrible problem; and humanitarianism joins with practical politics in sanctioning a system that spreads water widely even if thinly and irregularly. An intelligent concern with political stability in a periled democracy continues to make a kind of case for low rather than high farm prices. And so it goes; Indian policies fail to promote agricultural growth not out of oversight or foolishness but because there are good reasons for pursuing objectives other than agricultural growth.
Still, agricultural growth is looming larger as a policy objective. Political rhetoric is now all on the side of first priority for agriculture. It is coming to be believed that agriculture is the keystone of industrial growth and that foreign exchange is therefore worthwhile for farmers, that a failure to keep food-grain production well ahead of population growth promises the end of political stability, of Indian democracy and perhaps of the unity of the national state. These themes are repeatedly sounded in Indian public discussion.
More than that, specific policy changes are either under way or subject to intense debate. In the last two years, a debate on fertilizer policy has resulted in substantial increases in imports, an upward revision in earlier Fourth Plan production targets, a scheduling of new construction beyond earlier plans, and one great effort, significant even if it fell through, to enlist foreign enterprise in a coördinated program of plant construction. The price of fertilizer has already been somewhat reduced; and perhaps every state in the Indian Union is casting about, some with more energy than others, for credit and distribution facilities to supplement the inadequate coöperatives. It is reported that the Chief Minister of every single state has conceded the inadequacy of the coöperative distribution system and the need for a supplementary system. No doubt present policy on fertilizer is significantly better than it has ever been; whether it will be good enough is of course not yet certain.
On irrigation policy, the new concept of irrigation appears to be gathering adherents. A member of the Planning Commission declares, "We all are agreed on it!"-although what he must mean is that the new concept is carrying the day except among the professional engineers who build India's irrigation systems, and who not surprisingly remain a core of conservative resistance. The situation is reminiscent of American experience with unexpected deterioration of irrigated land because of inattention to drainage, of conflict between the agricultural interest and the engineering interest in irrigation, and of the conservatism of the professional engineers. Perhaps the battle progresses as well in India as in a comparable decade in recent American history.
The government of India is these days deep in a program of reorganization of the extension system. It was agreed in 1964 that the Village Level Workers should concentrate their efforts on agriculture; what remains to be done is to work out a manageable program of retraining those that can be made into effective agents of an extension system and to free them of tasks other than demonstration and field work. The relevant ministries seem clear about these necessities, and at least some top-level people in the ministries seem eager for ideas on how to transform a ponderous administrative system into what is necessary. Reform of the extension system is well advanced, although in a bureaucracy nothing is easier to sabotage than reform of the bureaucracy itself.
On price policy, it now begins to look as though the die has finally been cast for incentive prices for producers,. The government of India is now committed at least in principle to what may be as important a single policy shift as can be imagined for India. To be sure, continued anxiety about high consumer prices-it would be folly for the government not to be concerned-has compromised the new price-support policy by establishing maximum prices only slightly above the minimum, so that government still can and does sometimes requisition at below-market prices. But the new minima and new requisitioning prices are much higher than one would have believed possible only a short time ago; and, in addition, the government has pushed ahead to establish a semi-autonomous food corporation that can accumulate inventory and then enter the market as buyer or seller to support falling prices and stabilize rising prices without, it is hoped and planned, recourse in the future to legal maximum prices. The outlook for good price policy has never been better.
It is always possible that intended policies fail for lack of administrative energy or skill. On this score these new policies are not demanding. A big push on fertilizer can be had through administrative inaction; the government of India need only remove present restrictions on import, production and distribution of fertilizer. If it has the energy for active construction and promotion on its own, so much the better; but it is not essential. In price policy, a great gain would ensue from nothing more than the retirement of government from compulsory procurement, even though, again, positive action through the Food Corporation will in the long run be essential. In seed and insecticide programs, it would be enough to admit private firms to a larger role in production and distribution: whether in addition then the state and national seed farms can be revitalized would not be crucial. Improving the government extension service does indeed call for administrative energy and skill, and the whole program of reform may bog down for that very reason. But humble practical extension work of the kind India needs is done in the United States very largely by salesmen for farm supply houses; and the liberation of private firms in fertilizer, seed and insecticide offers the same possibility to India without administrative skill and energy. On irrigation policy there seems to be no prospect of substantial improvement without a thoroughgoing change of attitude on the part of the engineers in the civil service. But skill they have, and prodigious energy too, as proved by the scope of their present undertakings.
If India can make better headway with food-grains, it need not worry about the pace of industrial growth. It has been running for many years at about 9 percent annually, an acceptable rate as it stands but one that could be raised if a more rapid growth in food-grain output permitted a more expansionary monetary policy. The special problem in this field is exports; they need to rise sharply if foreign aid is ever to be terminated. Something like a jump from a current 3 percent per year (to hard-currency countries) to 5 percent would remove everyone's present concern.
The sluggishness of Indian exports is not attributable to weak demand in international markets or to lack of products to export. The traditional exports like jute products and tea have been suffering not from a falling world market but from a decline in India's share in it, attendant, it appears, on a slight but significant rise in the Indian selling price relative to its competitors' prices. In the very near future, India's excellent iron ore promises great new export earnings if it will only organize efficient mine-rail-seaport complexes and assure dependable delivery with quality control on the product. In the longer future, machine- made products, including machine tools, are a promising area for large expansion.
As in the case of agriculture, what stands between short-term potential and realization is not a hopeless paucity of resources or a backwardness in attitude and practice. Again, as in agriculture, there is backwardness in attitude and practice: inexperience in finding markets, in packaging, in quality control, together with a propensity to go for short-run gains in trade rather than to build up a lucrative long-term market. But if these are obstacles to the achievement of the maximum in exports, they are not obstacles that prevent the achievement of the gains required in the near future. These near-at-hand gains are denied India by a foreign-exchange and import-control policy that have the effect of making the acquisition of rationed import licenses inordinately profitable to importers, guaranteeing a highly profitable domestic market for goods that otherwise could be exported, and depreciating the price received by the exporter for exports. India's licensing system together with its overvalued exchange rate is a triple-threat attack on its own export possibilities.
Again, as in agriculture, these established policies are now under fire. A few years ago, India made a step forward through a system of special entitlements to imports based on export performance, and some more general way to increase the profitability of exports is now actively being sought. Old policy is defended because it possesses advantages, like protection of new Indian industries, which many Indians are fearful of altering even to achieve a desperately needed expansion of exports. The struggle is not a simple one between folly and wisdom but between two versions of wisdom, one version being heavily influenced by the prospect that aid will not forever continue to supply the imports that a weak export trade fails to do. Advocacy of a new import-export policy seems clearly to be growing; the probability that it will win in the near future (in contrast to the longer future in which it will surely win) is worth betting on, but lightly.
Population growth does not match India's growth in food-grain production and lags far behind the growth of industrial production. Population can continue to grow at its current rate of 2½ percent per year if gains in food-grain production run at 5 percent, fearful as is the prospect of indefinitely more mouths to feed. India's prospects on this score are better, however, than a simple race between output and uncontrolled population growth implies, for the new development of intra-uterine devices coincides with a fundamental change, marked even before Nehru's death, in the government's disposition to push birth control. India is currently in the throes of organizing, equipping and financing a big program of family planning following upon pilot programs in both urban and rural areas which have been successful in greatly reducing the birth rate. If it is too early to say whether the big operation will succeed, it is none the less clear that 1965 is a world away from 1962, when the government was both indisposed and without a feasible low-cost technique.
Is it wishful thinking that assigns to changes in policy a reasonable chance for greatly accelerated economic growth? Is it naïve to believe that in a society as rigid as India's the will of government can sharply change the pace of social change? Again, it is necessary to distinguish between the prerequisite conditions for a modern India and those for a modernizing India. The mind boggles at the changes in thought, attitude and behavior of all participants in Indian development that would be required before India could bring itself into the modern world. In any case the requirements run far, far beyond any imaginable change in public policy. But man and social institutions are already changing in India fast enough to come close to meeting the requirements of a satisfactory rate of change-policy changes can push India across the line to success. It is not fanciful to imagine they will do so, even if it is not at all certain that they will.
That India shocks foreign visitors with poverty, filth, the inhumanity of caste, complacency, apathy, cynicism, corruption and mistrust says little about India's prospects. Such sharp reactions tell us what India is, not what it might be. If these distressing features of Indian society were absent, India would already be a developed nation; if they were already greatly moderated, India would already be among the nations far along the road to development; if they were only in process of moderating, India would be a staggeringly retarded nation slowly moving toward modernization. It is. These appalling aspects of Indian life are those that give any thoughtful man reason to interest himself in India's future, not reason to despair. They define India's problems; they do not prove the impossibility of solving them.
They are, of course, the reason that India requires foreign assistance, not, as is sometimes oddly proposed, reason for foreign lenders and donors to become despondent and pull out. Aid from the United States to India has been, relative to population and size of economy, about half as generous as aid to Pakistan, and greatly less than aid to Latin American countries, to say nothing of special cases like Viet Nam and Korea. It has never been large enough to cope with India's fundamental problems, and never will be. Since it is change in policy, not fundamental social transformation, that is within India's immediate grasp, American aid would make the most of India's prospects if it supported growth-oriented policies that promise annual gains in Indian income attainable next year, the year after, and the years that quickly follow after that. On fertilizer, seeds, irrigation, export policy, as well as on other policies like education and health, assistance from the United States, coming to the aid of good policies, could be critical for India and represent a high-payoff American investment.
Foreign lenders, especially the World Bank, have been criticizing Indian economic policy with increasing frankness in recent years. India responds in two ways: on the one hand, it is disposed to listen and consider; on the other hand, it takes umbrage, morosely speculating on whether to try to do without foreign assistance. The second reaction reveals a national pride with which Americans should feel sympathy; yet its practical consequences could be dangerous if it led India to starve itself.
Although the United States and other lenders would be mistaken if they tried to buy the policies they like in India by making aid contingent on India's accepting their advice, at the same time they will do well to make clear that the attractiveness of lending to India-the prospect that it will pay off either to India or to the lender-depends on Indian policy. India can be expected to understand that no prudent lender ignores the size of the payoff in calculating what it is willing to put into the growth process. Even on extreme assumptions about altruism in foreign lending, governments-especially democratic governments-cannot lend and give without tailoring what they do to fit their estimates of the contribution it will make to Indian growth.
The distinction between trying to buy, with aid, the policies we like and coming more generously to the assistance of policies that promise growth is a fine one; but it is a genuine one. Trying to buy desired policies opens up a range of possibilities for negotiation in which a foreign lender might, as a tactic for forcing India to knuckle under, offer less aid than the country's economic prospects warrant. Conversely, a foreign lender might, for a good enough bargain in the adjustment of Indian policies, offer more aid, or more aid of a particular kind, than is required in the light of prospects for growth. By contrast, supporting India less strongly when prospects for using aid effectively are poor, and more strongly when they are more promising, is a method of using foreign resources in a systematic way for encouraging Indian growth. This method challenges Indian sovereignty no more than does any significant mutual accommodation among powers.
India's capacity for reconsidering policy in the light of experience is not one of the conspicuous weaknesses of its development effort. American criticism of India often underestimates the rationality of Indian policy- making. We commonly allege that the Indian policy is doctrinaire- specifically, socialistically doctrinaire. But on the relative merits of private versus public ownership of industry, Indian policy, though strikingly different from ours, is exploratory, self-corrective to a degree and capable, as the record shows, of moving either toward or away from private ownership. The most conspicuous difference between domestic policy in the United States and in India is that U. S. policy is rigid in restricting public ownership to few fields, is less open, less exploratory, more governed by doctrine than is the Indian. Similarly, although Indian policy after independence began with a hardened position against foreign private investment, it has softened as the government of India gained confidence in dealing with large foreign firms. Although it is still timid and self-defeating, it shows more flexibility, more self-correction through feedback, than does United States policy, which has always been at least a little rigid. The point being made is not that Indian policies are correct and ours are not but that Indian policies are pragmatic to a degree unappreciated.
We have already noted that Indian policies are often hostile or indifferent to growth not because of oversight or folly but because other objectives stand in the way of growth. Of all these, the Indian desire for national political unity on a democratic basis is foremost. It is this praiseworthy ambition that has repeatedly produced compromise instead of a bold thrust on a new program, as illustrated in the deference shown states restricting food-grain movements out of their territories or in the distribution of inadequate irrigation to large areas.
Praiseworthy as is the ambition for democratic national unity, there can come a point at which its pursuit is at such a cost to growth that one believes both objectives cannot be simultaneously achieved. India's chances of finding itself at such a point have been diminished by a growing appreciation that more rapid growth will itself unify the society and strengthen the commitment to political democracy. There is as yet no major political leader, however, who acts as though he perceives the possibilities of combining the two objectives in a new coalition of political forces. Nehru himself seems to have thought in "either or" terms; Shastri has perhaps gone no further than to see, negatively, that too little growth can undermine national political unity and stability. A creative response to a chance to employ the aspiration for growth to achieve the aspiration for unity perhaps waits for another day, another leader. Indian political leadership is probably generally strong on compromising existing political forces but weak on the kind of political entrepreneurship through which interests are re-formed into new coalitions for new programs.
Of course, Indian political unity may crumble anyway-from conflict over language, regional disparities in interest, or from a military humiliation from China or Pakistan, even if the present border war does not promise to trigger the death of the Indian Union. To have maintained as orderly and democratic a government as India has maintained since independence, with an illiterate citizenry divided by caste and the isolation of the village, and to have achieved such orderly transfer of power to Shastri is, in the light of European efforts at democracy in the interwar period, a magnificent accomplishment. One is pained to think that even so fine an achievement is not enough to assure a unified, democratic future for India. It may turn out that India has no greater problem than its centrifugal tendencies, dangerous either because they pull the nation apart directly or because they undermine the prospects of growth to a point at which economic distress brings down the régime. But we have now ascended from the specifics of estimating food-grain production to the imponderables of guessing the future of a whole political system.