The book is divided primarily into three parts, pre-independence era [focused on British Raj including some stories of Mughal period], post-independence pre-liberalized era and post-liberalized India.
Since, the author was born in 1943 West Punjab (now under occupation of Pakistan), he narrates his personal experiences of (economic) conditions of India from 1947-2001.
1. British Raj
While British raj did harm India [economically], the reason that Indian handicrafts lost to machine driven goods is also significant.
Hand looms all over the world were impacted by emergence of technology and since India was largest textile maker in the world, it got impacted the most.
Author further notes that while “some” britishers made huge profits in India, overall the British India did not provide a lot of profit to the crown.
The prevailing culture of looking down on merchants as greedy [as opposed viewing them as lifeblood of economy] did further harm.
Emergence of “brown sahib” in British Raj: Primarily Brahmins learnt English and took up the clerical and managerial job for Britishers. Author notes that those who were quick (as opposed to better) to grab the opportunity benefitted at that time.
Indians prefer vertical over horizontal relations, on numerous instances from wars to running industries, it has been seen that Indians prefer/are more comfortable with their managers and sub-ordinates as opposed to colleagues. Author believes that with globalization (read “fight for survival”) this trend has to change.
2. License Raj
State-controlled planning of 1950’s
Almost all newly independent nations [and many economists of that period] had the feeling that state planning and state controlled industries are necessary which just lead to inefficient, high-priced, low-quality goods.
Also, in that era, most western nations were going through a phase of emphasizing wealth distribution [for “wealth creation” was going on at a good pace].
Unfortunately, many of the Indian bureaucrats trained in these nations forgot that India needed wealth creation first.
Among common man, trade was not seen as positive-outcome game, but it was perceived as zero-sum game.
Note: John Rawls showed that it is possible for a group to agree to different outcomes provided everyone of them is better off by accepting the outcome (market-based liberal democracy) which convinces the author that inequality can sometimes be acceptable.
Nehru’s economic policies
looked down upon private sector,
pursued the policy of import substitution over export promotion,
promoted big state owned industries [steel] as opposed to “small toy making wage goods” industries [Asian tigers took the latter route],
extreme license control where several months will be spent for approval [India was the only non-communist where manufacturing good beyond licensed limit was a crime],
tax rates shot upto ~80% [and thus, the creation of tax-less cash transactions],
[despite repeated warnings from USA] India decided not to focus on agriculture since it was believed that it is a western conspiracy to keep India backward and eventually suffered food crisis,
Finally, when Lerma Rojo was imported [leading to green revolution], it was criticized as being sold to America,
slowly the businesses learnt the tricks like exhausting all the licenses of a product [to prevent any future competition] and this reduced their capability to work in competitive economy.
While socialism was popular during Nehru’s era, it has lost most of its charm in a couple of decades, but during Indira’s rule, controls were further tightened.
Several state-owned enterprises emerged during this era which were not profitable [and sometimes did not produce any goods eg. Scooters India Ltd.] and it was illegal to close them,
By 1980, 75% of state-owned companies were in losses,
14 banks were nationalized and in a decade, most of them were bankrupt,
Final nail was Monopolies Restrictive Trade Practices Act of 1969 which implied anyone with 10 Billion Rupee in combined assets cannot invest any further, which forced Aditya Birla to establish companies in Indonesia, Thailand and Hong Kong.
Author laments that while everyone remembers emergency as 2 years of political suppression, very few realize the 40 years of economic suppression.
The author bluntly criticizes Congress politicians and leftist intellectuals for being anti-free market and anti-west and refers to Indians of these era as lost generation.
3. post-liberalization of 1991
Being short of foreign exchange reserve, India asks for a loan from IMF and starts economic reforms in parallel.
Author praises Narsimha Rao (PM), Manmohan Singh(FM) and P Chidambram(Commerce Minister) for their role in liberalizing Indian economy.
Several examples like Zee TVs Subhash Chandra, NIIT’s Rajendra Pawar has been given to illustrate first generation millionaires created by liberalization.
While some Indian business houses have reformed [and separated ownership from management], others are still struggling with the new world order, Ranbaxy’s Parvinder Singh sat an example by passing his company to professionals instead to his sons,
There are three ways to compete – superior [lower] prices, superior product and superior service, as of now, Indian industries follow superior prices and they should move to superior service now,
the growth of middle class is one of the most significant consequence of liberalization.
A major area where reform has still not occurred is education and nation is in a dire need of it.
Author criticizes swadeshi policy of nationalists[terming as another form of license raj] since he believes that rather than asking for protection from competition, indigenous companies should learn to compete in a free market.
“Ideas can be copied, execution decides who is the winner”
India missed Industrial revolution, IT revolution is therefore, critical for India.
While some people fear that Indians is westernizing, author believes India is “modernizing” and the “spiritual component of life” is here to stay in Indian life.