III. Models of Underdevelopment and Dependence

Referring to Gandhi's opposition to industrialization, Partha Chatterjee states:

"Nehru in turn did not conceal his impatience with such 'visionary' and 'unscientific' talk and grounded his own position quite firmly on the universal principles of historical progress: 'we are trying to catch up, as far as we can, with the Industrial Revolution that occurred long ago in Western countries'."[1]

However, it is untenable to talk of 'universal principles of historical progress', for the laws of development do not apply equally to all countries. There were fundamental differences in the initial conditions in the countries of the West on the eve of the Industrial Revolution and in post-colonial India when planning was undertaken. It was not a mere question of a time lag. It was not possible for post-colonial India to catch up with the Industrial Revolution that took place in the West without first bringing about radical changes in the deformed social structure that it inherited from its colonial days. And if the transformation of the Indian society was to take place, if India was to rid herself of the domination by the foreign and domestic classes — foreign and Indian big capitalists (whose interests coalesced) and the Indian landlords — there would have to be a political revolution. And out of this revolution would emerge an India that was completely different from the countries of the West before and after the Industrial Revolution. It is unhistorical to assume that post-colonial India could simply repeat the development process of the industrialized West.

The economic, social and political conditions in post-colonial India were radically different from those that prepared the soil for the Industrial Revolution in the countries of the West. In those countries the bourgeois revolution had taken place, the feudal fetters of the development of productive forces had been smashed and a class structure with an independent bourgeoisie as the dominant class had emerged — conditions which made it possible for the Industrial Revolution to take place. In England, for instance, it was the bourgeois revolution in the 17th century, which removed the fetters on the productive forces and which afterwards gathered strength and prepared the way for the Industrial Revolution that took place in the late 18th and early 19th centuries. As Mao Tsetung said, "the revolution in the production relations is brought on by a certain degree of development of the productive forces but the major development of the productive forces always comes after changes in the production relations."[2]

The bourgeois democratic revolution in the West was essentially an agrarian revolution. The abolition of feudalism and advance in agricultural practices contributed to a larger surplus of food than before and created a much wider market for industrial goods including capital goods (at first, mainly for agriculture). India is yet to witness an agrarian revolution.

From the days of the Renaissance, from about the mid-fifteenth century, a radical change was taking place in the ideas, attitudes and institutions in Western Europe. As J.D. Bernal said, the achievements of the new social forces of the Renaissance and Reformation determined the technology and moulded the ideas of the Modern Age that was to follow. To quote him, "The change in ideas in science in this crucial period... amounted to a Scientific Revolution, in which the whole edifice of intellectual assumptions inherited from the Greeks and canonized by Islamic and Christian theologians alike was overthrown and a radically new system put in its place."[3] The industrial revolution was preceded by this scientific revolution in Western Europe, which transformed the outlook of men. But in India colonial rule that intervened in the 18th century arrested the process of the transformation in ideas and attitudes that had been taking place. It fostered religious obscurantism and intellectual backwardness as it set up a new semi-feudal structure in place of the old one. So India can hardly conceal even today its mediaeval obscurantism beneath a thin veneer of modernity.

Besides, on the eve of industrialization the countries of the West were strong, independent nation-states that had not passed through long colonial rule as India did. It is true that capital goods and technical know-how from Britain played an important role in the initial phase of industrial development in France and some other countries of Europe. But, as L.H. Jenks pointed out, the impulsion came from within. Speaking of France, Jenks observed: "Initiative, leadership, decision were in French hands, and in the government in France."[4] The same cannot be said of post-colonial India. She has not only been heavily dependent on foreign capital and technology but major policies of hers, as we shall see, have been shaped by imperialist countries and by international institutions controlled by them.

The long colonial rule gave rise in India to an economic and social structure which served foreign imperialist interests. The two main domestic classes which acted as the props of colonial rule and exploitation — the feudals and the big compradors — as already noted, became the ruling classes of post-colonial India, and she has remained integrated into the capitalist-imperialist system. To quote Harry Magdoff,

"The integration of less developed capitalisms into the world market as reliable and continuous suppliers of their natural resources results, with rare exceptions, in a continuous dependency on the centres of monopoly capital that is sanctified and cemented by the market structure which evolves from this very dependency.... The chains of dependence may be manipulated by the political, financial, and military arms of the centres of empire, with the help of the Marines, military bases, bribery, CIA operations, financial manoeuvres, and the like. But the material basis of this dependence is an industrial and financial structure through which the so-called normal operations of the market-place reproduce the conditions of economic dependence."[5]

There are many other differences in the objective conditions between the West on the eve of the industrial revolution and post-colonial India. It may be pointed out, for instance, that "Europe on the eve of the Industrial Revolution was a society that had already advanced a long way economically beyond the level of minimal subsistence." David S. Landes has cited figures showing income per head in eighteenth-century England and pre-industrial economies of the twentieth century and said:

"Western Europe... was already rich before the industrial Revolution — rich by comparison with other parts of the world of that day and with the pre-industrial world of today. This wealth was the product of centuries of slow accumulation, based in turn on investment, the appropriation of extra-European resources and labour, and substantial technological progress, not only in the production of material goods, but in the organization and financing of their exchange and distribution."[6]

Many of these countries of the West had colonies the plunder of which formed a considerable part of their capital formation. It has been estimated that it amounted to as high as 70 per cent of the gross domestic capital formation in Britain in 1801.[7] The colonies served also another purpose. They became markets for the manufactured goods of the industrializing West and in the process their own industries were crippled.

It is indeed preposterous to argue, as Nehru did, that India, where pre-capitalist relations prevailed, where the ruling classes, creations of British colonialism, were anxious to retain and strengthen the old ties with it, where imperialist capital dominated the economy and where industrialization depended on the influx of fresh foreign capital and technology, was capable of accomplishing the industrial revolution which had occurred in the bourgeois nation states of the West with their independent, self-reliant economies.

Economic development of the capitalist West and the under-development of countries like India are closely related. The process of economic development in the West cannot be repeated by India. If India is to develop and regenerate herself industrially, she has to chart an altogether different path.

The real question which many of our social scientists seek to obscure is not one of 'a time lag' between industrialized countries of today and underdeveloped ones like India but one of politics. Economic development is not a mere economic question but also a political and ideological question. Without resolving it, the economic question cannot be resolved and no worthwhile economic development can take place.

In China after liberation in 1949 the Chinese people following the political line of Mao Tsetung demolished the structural barriers to progress and opened the road to independent, self-reliant, all round development. On the other hand, it was the politics of the Nehrus, the politics of India's ruling classes, to keep intact the structural barriers, to preserve the domestic class structure and existing production relations as well as the imperialist grip on Indian economy — the factors which perpetuate India's underdevelopment and dependence.

Indeed, instead of being models of development and self-reliance, India's plans are models of underdevelopment and dependence. Underdevelopment is a product of a set of production relations which act as a barrier to the development of productive forces. India's development does not depend on more and still more import of foreign capital and technology but on the liquidation of the existing production relations and foreign capital's grip, and on the reorganization of the economy on independent lines and in the interest of the people. That again depends on the political question: which classes hold State power?

Mere increase of some industrial or agricultural output from a very low base is no evidence of development. As M. Barratt Brown said: "underdevelopment is not non-development but a distortion of development."[8] It may be noted that during the years 1900-1 to 1946-7, that is, during the days of direct colonial rule, there was considerable increase in the output of the manufacturing industries in India. To quote S. Sivasubramonian,

"While the net output of the secondary sector between 1900-01 to 1904-05 and 1942-43 to 1946-47 rose 2.2 times, that of manufacturing industries rose 5.5 times, of small-scale and cottage industries 1.1 times, and of mining 2.4 times over the initial 1900-01 to 1904-05 level."[9]

During more than four decades of planning, India's industries have no doubt expanded and diversified and her agricultural production has increased. In this context it should be borne in mind that the contribution of foreign capital — investment capital as well as loan capital — and technology to this growth and diversification is quite considerable and that foreign capital's hold on Indian economy has been tightening instead of relaxing.

"As the term 'underdeveloped' suggests", wrote Paul Baran, "output in underdeveloped countries has been low and their human and material resources have been greatly underutilized, or altogether unemployed. Far from serving as an engine of economic expansion, of technological progress and of social change, the capitalist order in these countries has represented a framework for economic stagnation, for archaic technology, and for social backwardness."[10]

All this is quite true of India. Her vast human and material resources are to a great extent underutilized, even unemployed and wasted. The actual output falls far short of the potential output. In a recent annual report on world employment, the International Labour Organisation has estimated that 22 per cent of male workers in India are unemployed or underemployed and the figure is rising.[11] If the percentage of unemployed or underemployed female workers, which is much higher, is taken into account, one may guess the staggering extent of waste of valuable human resources in India under the present system. Material resources too remain greatly unutilized. India's finest iron ore, for instance, is exported to imperialist metropolises at throw-away prices. India is underdeveloped not only because her actual development falls far short of her potential, but also because her capacity to exert herself to realize her potential is impaired by her political and social structure and by the strangle hold of imperialist capital on her economy. Perhaps it is superfluous to mention that much of India's economic surplus is drained away to foreign countries.

Over the years India has retrogressed compared not only to the advanced capitalist countries but also to the Third World as a whole. With a population which is nearly one-sixth of the world population, India's share in the world GDP fell from two per cent in 1950 to 1.4 per cent in 1980. As Surendra J. Patel writes, "The decline has been greater when compared with the Third World GDP — falling from 10 per cent in 1950 to only 5.4 percent in recent years." India's share in world agricultural output declined from 11 per cent in 1900 to nine per cent in 1980 and in Third World agriculture from 25 per cent to 17 per cent during the period. India's share in world industrial output fell from 1.2 per cent in 1950 to less than 0.5 per cent in 1980 and in Third World industrial output from over 12 per cent in 1950 to only three per cent in 1980.[12]

The Human Development Report of 1994, prepared by the United Nations Development Programme, which ranks 173 countries of the world using three indicators — life expectancy, education and per capita income — assigns India 135th position, even below Pakistan and Vietnam.[13] In terms of per capita income India's rank would be 146, according to the Human Development Report of 1993.[14]

Despite 'development' planning for more than forty-five years, India continues to underdevelop. The gulf between the advanced capitalist countries and India grows wider with the passing of years. In 1949 the per capita income in high income countries was $915 and in low income countries $54.[15]

According to the World Development Report 1997, India ranked 27th from the bottom in a list of 133 countries; in 1995 its per capita average income was $340 while the per capita average income of 49 low income countries (including India) was $765 and the U.S.A.'s and Switzerland's were $26,980 and $40,630 respectively.[15a] In a developed country, industrial workers outnumber by far the agricultural workforce. Here, in India, the reverse is true: the agricultural workforce far outnumbers industrial workers and the number of workers engaged in traditional, non-mechanized industries is almost as large as that of the workers employed in modern industries small, medium and big. Overcrowding of agriculture, the existence of pre-capitalist relations, labour, as well as a large pre-capitalist sector in industry are features of India's underdevelopment.

'Development' planning has, as we shall see, deepened India's dependence on imperialist countries. Between developed countries there is interdependence — interdependence between equals though one may be more equal than the others. The advanced capitalist countries are not self-sufficient but self-reliant. The underdeveloped countries like India, on the other hand, are far from self-reliant. As a Latin American economist said, "Interdependence among national economies becomes dependence in the case of underdeveloped countries, for they are subordinated to the power of those who control the world market and the most advanced techniques and means of production."[16] He further said:

"The concept of dependence itself cannot be understood without reference to the articulation of dominant interests in hegemonic centres and in the dependent societies. 'External domination', in a pure sense, is in principle impracticable. Domination is practicable only when it finds support among those local groups which profit by it."[17]

It is the collusion between the different international and national interests (national only in the geographical sense) that make up the dependent situation, though there may be contradictions between them, which which are secondary.

Today a feature of world economy is internationalization of capital on a large scale. A transnational corporation operates in different countries and forms ties with the domestic capital of host countries, but it has a national centre from which it is controlled. These national centres — the advanced capitalist countries — are, as already noted, independent, self-reliant. But the relationship between the advanced capitalist countries and countries like India is altogether different. Indian big capital, far from being an equal, plays a subordinate role, the role of an underling. To quote from Joint International Business Ventures, a Columbia University project, "Advanced technical know-how and continuing research give [foreign] investor companies effective control of joint ventures without majority ownership or legal control of the board." It also says: "To spare local susceptibilities, the existence of investor company control is often disguised in the form of technical assistance agreements which do not overtly convey managerial powers."[18] Kidron also observed: "the technologically-progressive firm would seem securely in control of a joint venture in a technologically-intensive industry whatever its financial stake."[19]

India is fated to underdevelop so long as the structural barriers to her underdevelopment are not removed, so long as semi-feudal relations prevail and India orbits the capitalist-imperialist system as a satellite. Instead of seeking to remove these stumbling blocks to India's progress, her 'development' plans have integrated India closely to the capitalist-imperialist system.

We propose to dwell briefly on India's structural barriers to development. When planning was undertaken, zamindari and talukdari were abolished. But huge compensation was paid to these classes of rent-collecting intermediaries between the State and the peasantry. Practically, little has been done to end the concentration of land in the hands of the rural oligarchy. The Eighth Five year Plan 1992-97 states: "After the imposition of the ceilings, 7.23 million acres of land was declared surplus of which 4.65 million acres of land had been distributed by the end of the Seventh Plan", that is, by 1990.[19a] Two things may be noted. It is claimed that, of the total net sown area of about 143 million hectares, less then 2 million hectares were distributed. And much of this land was hardly cultivable. The Eighth Five Year Plan also says : "The thrust in the Eighth Plan will be towards recording the rights of tenants and share-croppers with the objective of giving them security of tenure."[20] The Plan admits that not only does share-cropping, essentially a feudal relation of production, prevail even today, but the tenants and share-croppers do not even enjoy security of tenure.

"The share of agriculture in the total workforce has not gone down at all: it was 73 per cent in 1921, 73 per cent in 1961 and in fact slightly higher at 73.8 per cent in 1971."[21]

According to the Eighth Five Year Plan (vol. I, pp. 13-14), two-thirds of the workforce in India still depends on agriculture and allied activities.

In percentage terms the increase of the agricultural workforce from 1921 to 1971 to the present day is marginal, but in absolute terms the number of the people dependent on land is several times higher. For lack of opportunity for non-agricultural work, this has intensified the terrible overcrowding of agriculture and the problem of unemployment and underemployment of the vast masses of the agricultural population. The Draft Five Year Plan 1978-83 conceded that "the land reform measures have had no visible impact on the distribution of rural property."[22]

Concluding its review of a quarter century of planning, the Draft Five Year Plan also admitted that the "most important objectives of planning [the loudly professed objectives of "the achievement of full employment, the eradication of poverty and the creation of a more equal society"] have not been achieved, the most cherished goals seem to be as distant today as when we set out on the road to planned development."[23]

"The extent of surplus land redistribution under the land reform programme is less than one-fourth of the officially estimated surplus. More important, 'the officially estimated surplus is [only] a fraction of the area held in large ownership holdings as estimated from survey data.' The upshot is that land redistribution has touched less than one-half of one per cent of the total land under cultivation."[24]

So the basic problem — the problem of the ownership of land — remains unsolved. Vast human resources remain unutilized or under-utilized and the actual economic surplus from agriculture is far less than the potential surplus. And much of the surplus is appropriated by landlords, usurers and traders and mostly invested not for productive purposes but in the purchase of land, in usury and speculation. For lack of the purchasing capacity of the bulk of the peasantry, the market for industrial goods catering for the needs of the masses remains stagnant. Without an agrarian revolution there can be no industrial regeneration.

Even for food, India had to depend for years on the U.S.A. When, in the mid-sixties, the food crisis grew alarming, India's ruling classes, unable because of their class character to bring about radical changes in the agrarian structure, and prodded by the U.S. imperialists and the World Bank, [25] adopted a technocratic approach to the food problem and opted for the Green Revolution. This major shift in policy, like many other policy decisions, was not initiated by India's planners but was dictated by U.S. imperialism and the World Bank controlled by the imperialist powers. The plans have only adjusted themselves to the policies formulated in Washington.

The Green Revolution is confined to irrigated areas — Punjab, Haryana, Western Uttar Pradesh and a few pockets in other states. The Indian State offered landowners a package of subsidized inputs — high-yielding hybrid seeds, chemical fertilizers, pesticides, herbicides, etc., and large, cheap credit to enable them to buy farm machinery and tubewells to be assured of a perennial supply of water. Besides, irrigation water rates and electricity to run the tubewells are heavily subsidized. Their surplus production is procured by government agencies at prices which leave an attractive margin for large landlords (albeit not for poor and middle peasants in these areas). The Green Revolution has cost the people hundreds of thousands of crores of rupees under different heads. It has accentuated the inequalities between class and class, between region and region. It has furthered the interests of the substantial landowners in favoured areas who can take advantage of the bounties of the government to the detriment of the interests of the poor and landless peasants who have to buy food at increasingly higher prices. It has caused soil degradation, destroyed much fish wealth and created health hazards through use of chemical fertilizers and insecticides without proper safeguards. Because of the uniform use of a few rice and wheat hybrid seeds, many precious traditional varieties of rice and wheat have been lost to this country.

Now India hardly depends on imports of cereals as she did before, but large imports of edible oils take place. But this self-sufficiency in foodgrains is more apparent than real. It is because forty percent or more of the people go hungry and semi-starved for most part of the year that this much trumpeted 'self- sufficiency' has been achieved.

A note entitled "Agricultural Price Policy in India," released by the Punjab, Haryana and Delhi Chamber of Commerce and Industry (PHDCCI) in December 1988, stated:

"it must be noted that in the post-Green Revolution period and from the period when price support scheme has been active, there has been a significant fall in production growth rate. For all commodities, production growth rate has declined from 3.2 per cent per annum during the period 1951-52/1964-65 to 2.3 per cent per annum during 1964-65/1987-88. This is true even for foodgrains where considerable emphasis has been laid since the mid-1900s. The growth rate came down from 3.1 per cent to 2.5 per cent per annum. Decline in index of per capita production has been even more significant." [26]

Between 1984 and 1994 the growth rate of foodgrains in Punjab, the showcase of the Green Revolution, was 3.8 per cent and the average all-India growth was 2.5 per cent per annum.[27]

"The technological transformation that has taken place has remained confined to a very limited area and a limited number of crops. Besides, as we have observed, it has not even given rise to any significant improvement in productivity and production growth. Neither the support price mechanism nor the policy of subsidized inputs has succeeded in removing the basic inefficiency of the agricultural production system, which is obvious from the low level of yields of even HYV seeds."[28]

"the cost of modern inputs, or in other words, the cost of technological transformation has been significantly high. A question that arises is at what cost have we achieved the technological break through in agriculture? Technological breakthrough is considered successful when it means that a greater production is achieved at a given input level and at a lower per unit cost. This has not happened in our case. One would also wonder whether the price policy has at all helped in keeping the cost of production under control and thus raising the net return of the farmers. We have seen earlier that wherever technological breakthrough has been achieved like Punjab and Haryana, net return of farmers has declined. This is particularly true in the case of small and marginal farmers."[29]

While the growth rate of production decreases, the unit cost of production increases. The total cost of inputs increased at the rate of 3.7 per cent (at 1980-1 prices) a year between 1980-1 and 1987-8, but the rate of increase in the value of output during the same period was 1.2 per cent a year.[30] This leads to the spiralling of the prices of foodgrains. As M.L. Dantwala writes:

"We have repeatedly argued that the most critical issue for Indian agriculture is the rising cost of production of almost all crops. We are producing wheat and rice at a cost which we are protecting with higher and higher support prices which are beyond the reach of a large section of domestic consumers."[31]

While a landed class in some areas, helped with lavish State bounties, has become much more powerful than before, the Green Revolution has hit hard the poor and landless peasants in different ways. According to the PHDCCI note, most of the small and marginal farmers (operating respectively holdings of 1.0 to 2.0 hectares and of less than 1.0 hectare) cannot avail themselves of the facility of subsidized inputs, for even the subsidized prices are too high for them; and "for working capital, they depend primarily on loans, a large part of which is again obtained from the non-institutional sources", for they "often do not qualify for institutional finance."[32] Poor and landless peasants, especially the latter, are hit in the stomach as the prices of food spiral higher and higher.

"Better seed grains can certainly not be a substitute for agrarian reform.... the spread of the use of new seed grains, as of other improved techniques, will not reach far without an agrarian reform. Indeed, without such reform the availability of the new seed grains will join the other forces of reaction that are now tending to increase inequality among the rural populations of the underdeveloped countries."[33]

It is true that "an acid test of the true nature of a government in any underdeveloped country", as Michael Tanzer wrote, "is its real position on land reform."[34]

While the Green Revolution has strengthened the economic and political power of the rural oligarchy, it has opened up, as it was intended to do, a vast market for U.S. and other western agribusiness — for its products like chemical fertilizers, pesticides, herbicides, hybrid seeds and farm machinery. Some of these are imported and some manufactured in India by foreign transnationals in collaboration with their Indian partners. The Green Revolution is indeed, as Harry M. Cleaver, Jr. wrote, "the latest chapter in the long history of increasing penetration of Third World agriculture by the economic institutions of western capitalism."[35] And the second phase of this revolution has now opened with the signing of the treaty by India under the General Agreement on Tariffs and Trade (GATT) in December 1994. To quote Pat Roy Mooney, "If you control the seed, you are a long way to controlling the entire food system: what crops will be grown; what inputs inputs will be used; and where the products will be sold.... Control of the world seed industry [by a few trans-nationals] would be the second phase of the Green Revolution."[36] The GATT treaty ensures this control of the world seed industry by a handful of western transnationals.

The penetration of imperialist capital into Indian agriculture is a comparatively recent development. It has promoted some sort of dwarf-capitalistic features in Indian agriculture in some areas while preserving basically the old social structure in the country as a whole. (A rather elaborate discussion of imperialism's stranglehold over Indian agriculture and of the present agrarian relations will be found in the author's forthcoming book Imperialism's Tightening Grip on Indian Agriculture.)

With the transfer of power in 1947, the Indian ruling classes inherited a foreign sector in Indian economy, which dominated India's industry, plantations, external commerce, banking and insurance. The planners made no attempt to break this foreign stranglehold, rather, every attempt was made to encourage foreign capital to expand and spread its tentacles. As early as July 1945, Jawaharlal Nehru, 'the architect of modern India', declared: "Since rapid progress of the new State required capital and trained personnel, any national government will welcome the co-operation of advanced countries, especially America, in supplying capital goods and experts."[37] This was the refrain of many of his speeches and statements. In a statement of 6 April 1949, Nehru said in the Constituent Assembly of India (Legislative):

"Indian capital needs to be supplemented by foreign capital not only because our national savings will not be enough for the rapid development of the country on the scale we wish, but also because in many cases scientific, technical and industrial knowledge and capital equipment can best be secured along with foreign capital. As regards existing foreign interest, Government do not intend to place any restrictions or impose any conditions which are not applicable to similar Indian enterprise. The Government of India have no desire to injure in any way British or other non-Indian interests in India and would gladly welcome their contribution in a constructive and cooperative role in the development of India's economy." [38]

From the very beginning India's plans have been heavily dependent on loan-capital and investment capital, technology and technical 'experts', from foreign countries. The First Five Year Plan stated: "In securing rapid industrial development under present conditions, foreign capital has an important role to play. A free flow of foreign capital should be welcome because it will ensure the supply of capital goods and of technical know-how." Giving foreign capital appropriate assurances like non-discrimination between foreign and Indian undertakings, it said: "it is of the highest importance to ensure to the foreign investor the prospects of a fairly good return and the certainty of fair and equitable treatment." It expected foreign capital to act "as a catalytic agent for drawing forth larger resources for domestic investment." It held that "The system of joint enterprises under which a number of foreign concerns have established new industries in collaboration with Indian industrialists appears to be suitable for securing the employment of equity capital."[39]

One of the documents of the Planning Commission relating to the Third Plan said: "until the base has been built up, industrial development remains largely dependent on foreign exchange being made available from outside for setting up the industries required. Quicker progress towards the 'self-sustaining economy' in the sense of its being technically equipped to make capital goods and equipment it needs will raise the foreign exchange component of the Third Plan and will necessitate a larger measure of external assistance."[40]

While welcoming foreign investment and depending on foreign loan-capital for financing India's 'development,' the planners kept up the flow of rhetoric about achieving 'self-reliance' and 'self- sustaining growth.' Their path to 'independence' ran through the path of abject dependence on foreign capital. And this kind of 'development' planning admirably suited the interests of the imperialists.

In their book A Proposal: Key to an Effective Foreign Policy, Max Millikan (a former deputy director of the CIA) and Professor W.W. Rostow (who became head of the Policy Planning Division, U.S. State Department, during the Kennedy regime) spoke of three stages of growth — first, the precondition stage; second, the take-off stage; and third, the stage of self-sustained growth. According to them, India was then entering the take-off stage "when a substantial amount of external capital must be supplied if the country is to get over the hump, this capital must be supplied in part at least by other than private investors."[41] They stated: "...over time major progress might be made in increasing the flow of private capital to the underdeveloped areas.... Since successful private investment projects generally require a favourable environment in terms of expanding local markets, available transport and communication facilities, and the like, their share in the early stages of development must necessarily be low. Public loans by helping to create the necessary environment, can pave the way for greatly expanded private investment as growth takes hold."[42]

Public loans would not only create the proper climate and promote private investment form imperialist countries; they would benefit these countries in other ways, too. The mineral and other raw material resources "could be further exploited to provide the supplies needed by the industries of Japan, Western Europe, and the United States". The international division of labour must be promoted: "The receiving country's national development programme must be consistent with the requirements of expanding world commerce and the international division of labour." The underdeveloped countries would serve the imperialist countries as "expanding markets" and "expanding sources for food and raw materials."[42a]

So the interests of the ruling classes of the USA and other imperialist countries and the interests of India's ruling classes converged.

For foreign exchange expenditure that would be required for imports of machinery, components, spare parts, industrial raw materials and technology and of luxury items for the rich, the Planning Commission entirely depended on fresh external "assistance", and "for the first two years [of the Third Five Year Plan] at least, even repayment obligations would have to be discharged from the proceeds of new borrowings from abroad."[43]

In the Draft Outline of the Third Five-Year Plan, the Planning Commission "specifically admitted that the very effort to achieve self-sustaining growth at a comparatively early date increased the dependence of the country on external resources during the intervening period."[44]

The repeated declarations about building a self-reliant economy are no better than empty verbiage. India's dependence on imperialist countries has grown from more to more. International 'aid', as R. K. Hazari and S. D. Mehta wrote, "holds the key to the entire Indian development effort... However, the importance of external assistance has necessarily meant some extra-national influence in the shaping of domestic policies."[45] Even in the late fifties a shrewd American observer, Selig S. Harrison, was right when he said: "the political and economic order in India is in crucial respects dependent on outside capital and, as matters stand, will be progressively more so in the future."[46]

The following table reproduced from the Sixth Five Year Plan 1980-85 gives the official estimates of the gross and net 'aid' received to finance the plans from 1951-52 to 1978-79:

Period	Utilization of External Assistance (Rs Crore)^	Amortization and Interest Payment (Rs Crore)^	Net Aid (Rs Crore)^	Net Aid as % of Plan Expenditure	Net Aid as % of Imports
1. First Plan 51-52 to 55-56...	201.7	23.8	177.9	9.1	4.9
2. Second Plan 56-57 to 60-61...	1430.4	119.4	1311.0	28.1	26.9
3. Third Plan 61-62 to 65-66...	2867.7	542.6	2325.1	27.2	37.5
4. Annual Plans 66-67 to 68-69...	3229.6	982.5	2247.1	33.9	37.5
5. Fourth Plan 69-70 to 73-74...	4183.7	2445.0	1738.7	11.2	17.6
6. Fifth Plan 74-75 to 78-79...	7309.5	3770.4	3539.1	8.9*	12.8

* On actual expenditure for the first four years, anticipated expenditure for 1978-79.

The above table provides the estimates of net 'aid' received as percentage of the Plan expenditure during the Plan periods. It should be borne in mind that the actual debt from imperialist countries and the financial institutions dominated by them is far greater than the net 'aid', for net 'aid' is the actual debt minus amortization and interest payment, which together may be much greater that the net 'aid' received. The World Bank's World Debt Tables, 1991-92: External Debt of the Developing Countries stated:

"Net flows [into India] from both official and private creditors excluding non-resident Indian deposits have almost doubled since 1985 from US $2.5 billion to US $4.6 billion in fiscal year 1991 including almost $1.8 billion from the IMF. But net transfers have recorded a constant decline over the same period; from a peak of US $1.7 billion in 1985 to US $0.5 billion in fiscal 1991."[48]

That is, apart from the deposits from non-resident Indians (NRIs), which too form a part of the external debt, India incurred an external debt of $4.6 billion in 1991 but actually received only $0.5 billion; it paid the rest — $3.1 billion, more than six times the net 'aid' received — to service old debts — as amortization and interest payment.

And, according to the World Debt Tables 1993-94, the total external debt incurred by India in 1992 was $8.01 billion but $3.32 billion and $3.30 billion out of that went respectively towards principal repayments and interest payments.

To service old debts, India has to seek fresh loans. The more India pays, the more India owes.

In 12 years between 1980 and 1992 India's outstanding foreign debt increased about five-fold from $20.58 billion (according to the World Bank's World Debt Tables 1993 [49]) to $100 billion (non-defence loans of $80 billion and defence loans of $20 billion, according to an IMF estimate, as reported by Business Standard [50]). The burden of amortization and interest payment is now huge.

The Central Government's Economic Survey 1994-5 states that India's external debt amounted to $90.45 billion at the end of the first half of the financial year 1994-5 and that the debt service payment in 1995-6 was likely to be around $13 billion up from $8.32 billion in 1993-4.[51] It appears that the Economic Survey for 1994-5 takes an estimate of India's defence loans which is only half of the IMF estimate quoted earlier. Hence the Economic Survey figure for total external debt is roughly $10 billion lower. (It is curious that even the estimates of external debt that the Government presents from time to time differ from one another and even more so from the estimates made by international organizations like the IMF and the World Bank). There is some amount of jugglery in the figures that the Government presents. 'Development' planning has indeed landed India in debt bondage to imperialist creditors.

Some features of 'aid' need to be noted. 'Aid' (that is, loan on what are supposed to be concessional terms) exacts its price from the debtor country in various ways. Bilateral 'aid', that is 'aid' from a foreign country has to be spent on the purchase of capital goods or other goods from it. It is usually country-tied as well as project-tied. 'Aid' from an international financial institution like the World Bank, the watch-dog of imperialist interests, is always project-tied, tied to projects for which international tenders have to be invited, and the acceptance of a tender has to be approved by the Bank. "A senior Indian official, much concerned with its negotiations", writes P. Eldridge, "estimated during an interview that a combination of country-tying and project-tying can increase the cost to India anywhere upto 60 per cent above what would apply if she received free foreign exchange."[52]

According to a news item, datelined Geneva, 28 February 1977, the International Labour Organization stated in a report that for every dollar given to a third world country to continue buying from the West, the 'donors' receive three dollars in return."[53]

Not only is 'aid' responsible for this continual, severe drain of India's economic surplus to advanced capitalist countries but it contributes to India's underdevelopment in other ways, too. Under 'aid' agreements huge imports of machinery, components, etc., from those countries take place while the public sector enterprises which manufacture similar goods, like Bharat Heavy Electricals or Heavy Engineering Corporation, built at enormous cost by squeezing the people and with foreign collaborations, starve for want of orders, their manufacturing capacity remains greatly underutilized and workers suffer from forced idleness.

'Aid' forges not only chains of economic dependence but also political dependence. We shall return to this point later.

In addition to 'aid' and commercial borrowings, foreign capital has entered India as direct and portfolio investment. "In the early 1970's", writes Sudip Chaudhuri, "the share of the foreign branch companies and the foreign controlled rupee companies" (i.e. companies incorporated in India with foreign equity of 25 per cent or more) in private corporate sales was about 30 per cent and that in the total corporate sector about 25 per cent. Including the 'companies indirectly controlled by foreigners' (i.e., the rest of the companies having foreign equity) the shares have been estimated to be 50 per cent and 41 per cent.[54] The pace of direct investment of foreign capital in India became more rapid in the eighties. Since the middle of 1991 the flow has become still more rapid. Foreign direct and portfolio investment between 1991-2 and December 1994 alone, according to the Economic Survey 1994-95, amounted to $8.601 billion.

Huge Indian capital contributed by state financial institutions, banks and Indian shareholders is subordinated to foreign capital to finance the growth and expansion of foreign-controlled companies in India. According to a study of 50 largest foreign subsidiaries (companies incorporated in India with foreign equity of 50 per cent or more) existing in March 1975 and accounting for about 82 per cent of the assets of all foreign subsidiaries, foreign sources contributed only 5.3 per cent to the growth of these TNC-affiliated companies in India during 1956-75. The balance was raised from accumulated depreciation, retained earnings, locally raised loans and share capital and other Indian sources.[55]

According to a report in The Statesman (Calcutta) of 9 January 1997, Rajive Kaul, former president of the Confederation of Indian Industry, said at a press conference held under its auspices that in the period since mid-July 1991, more than Rs 70,000 crore of equity has been invested in India by foreign investors through FIIs (foreign institutional investors), FDIs (foreign direct investments) and through GDRs (global depository receipts) and ADRs (American depository receipts). Staggering amounts of Indian capital contributed by Indian partners, financial institutions and banks and the public will be utilized to serve the needs of foreign capital and will be subordinated to it while many existing enterprises in India are made to turn sick or gobbled up by foreign capital.

Foreign equity capital is much more expensive to the host country than foreign 'aid'. First, foreign private investors would choose to invest in industries of other sectors which assure them of high profits. They drain away several times more than what they bring in. Let us take two concrete instances. Ingersoll Rand (India), which was a wholly-owned subsidiary of a U.S. transnational, had an initial share capital of Rs one lakh (Rs 100,000). This was raised to Rs four lakh through the grant of bonus shares, three for each equity share held, to the original shareholders, that is, the U.S. parent firm. During five years alone — 1972, 1973, 1974, 1975 and 1976 — the company paid to the parent company dividends of 150 per cent, 750 per cent, 100 per cent, 750 per cent and 1,670 per cent respectively. Besides, immediately before it issued equity shares in September 1977 for subscription by Indian investors in order to bring down foreign shareholding to 74 per cent, the company granted its parent company bonus shares worth Rs 69 lakh in the ratio of 69 bonus shares for four equity shares held — with the consent of the Indian government and the Reserve Bank of India. Thus the U.S. transnational's initial share capital of Rs one lakh in the company soared to Rs 73 lakh by 1977 without any fresh investment, while it earned yearly dividends, even as high as 750 per cent or 1,670 per cent in some years.[56] It may be noted that the government and government organizations were the main buyers of the company's products.[57] It is also highly likely that while importing goods from the parent company and its subsidiaries Ingersoll Rand (India) repatriated concealed earnings of considerable amounts through the mechanism of transfer pricing. Observing that Indian businessmen are "no strangers to [rather adept at] over-invoicing and under-invoicing, and their related arts", Michael Kidron wrote: "It is none the less true that foreign firms are better equipped for this type of operation at the point where the Government is least able to reach them."[58] Ingersoll Rand (India)'s capital rose to Rs 31 crore (Rs 310,000,000) and assets to Rs 132.71 crore by March 1993 and it made a net profit of Rs 21.04 crore in 1992-3.

Colgate-Palmolive (India), a subsidiary of another transnational, "on an original investment at some point in the past of Rs six to seven lakh, paid out foreign dividends of Rs 88 lakh in 1985; Rs 116 lakh in 1986; Rs 165 lakh in 1987; Rs 217 lakh in 1988."[59] During 1994-95 its sales stood at Rs 681.46 crore and it made a net profit of Rs 71.79 crore.[60] The profits of these subsidiaries including the giant ones among them like the ITC and Hindustan Lever are soaring higher and higher every year. To quote Kidron, "Capital gains of over 100 per cent in two or three years are not uncommon."[61]

The type of large and medium industrial unit most common in India today and most favoured by both transnationals and Indian business houses is the joint venture between them. This is the type that the Indian planners have consistently promoted. As already noted, the First Five Year Plan held that such joint enterprises were "suitable for securing the employment of equity capital." Michael Kidron writes, "Since the second half of the fifties, particularly after 1957, the Government has insisted on joint collaboration in new ventures. After the Himalayan War [India's China War in 1962] it grew to demand that the entire foreign exchange cost of a project be covered by the foreign collaborator. [In practice, only a small fraction of the foreign exchange cost is so covered.] ....collaboration agreements seem to give painless and immediate relief to the balance of payments by providing foreign exchange or its equivalent in imported plant and machinery [whatever the ultimate cost to the country may be]. Another, and one that limits approval normally to joint [italics in the original] projects, is the desire to graft foreign management and technical skills on to Indian industry."[62] The control of the joint venture usually rests with the foreign collaborator. "The approval of foreign collaborations together with foreign equity participation", observed the Industrial Licensing Policy Inquiry Committee, "resulted both in giving a dominating voice to the foreign partner and also an indirect drain on the foreign exchange resources of the country."[63]

Collaboration with a transnational, Venkatasubbiah has observed, "became a status symbol" for an Indian partner.[64] Control over the enterprise is usually exercised by the foreign collaborator even when the collaboration is only technical. The majority of large or medium sized enterprises in the modern sector, promoted by Indian big business, have been set up in collaboration — both financial and technical or purely technical — with some transnational or transnationals. This is true even of public sector enterprises.

Dividends, profits, royalties, technical fees, etc., are an attraction for the foreign collaborator, but most of all he uses the joint venture as a sales outlet — for continuous sale of machinery, components, spare parts, industrial raw materials and so on at prices much higher than international prices.[65]

The policy of a transnational is guided by the interests of the parent firm, not by those of its subsidiary or joint venture with an Indian collaborator. It seeks to maximize profits for itself and, as John Martinussen writes, "is in a position to transfer resources from the subsidiary [as well as from a joint venture] to the parent company. This may be done through overpricing the imported inputs [like machinery, components, spare parts, raw materials, etc.].... To the extent that the subsidiary sells commodities or services to the parent company, this provides the corporation with yet another possibility of transferring resources as the commodities and services may be sold at prices significantly below those prevailing in the world market."[66]

Writing in the early seventies, Constantine Vaitsos pointed out: "the absolute amount of overpricing for the foreign firms [in Columbia] studies amounted to a figure of six times the royalties and twenty-four times the declared profits."[67] In another article Vaitsos wrote: "Defining as effective returns to the parent corporation the sum of reported profits of the subsidiary, royalty payments and intermediate product overpricing, the following data can be inferred from our sample of the Columbian pharmaceutical industry. Reported profits constituted 3.4 per cent of effective returns, royalties 14.0 per cent and overpricing 82.6 per cent."[68] He added that "one encounters cases where royalty payments... amount to a multiple of profits or value added."[69]

It is worth noting that foreign capital investments in this country, and even much of the Indian capital invested in the public as well as in the private sector have very few spread effects within India. For the enterprises set up by foreign capital, comprador capital and even state capital depend to a great extent for their machinery, components, spare-parts, industrial raw materials and technical know-how on metropolitan countries. The market for these goods, instead of becoming the internal market of India, is mostly 'an appendage of the internal market' of Western and Japanese capitalism. Such development deprives the country of more resources than it adds to them. It is the imperialist countries which benefit from such 'development'.

"Countries which start later in their industrial career have some advantage in that they have, in the main, to take over and apply techniques that have been worked successfully in more advanced countries."[70]

On this specious plea import of technology from imperialist metropolises and abject dependence on it, like dependence on imperialist capital, has become an in-built feature of India's plans. Besides financial-cum-technical agreements, many thousands of purely technological collaborations have been entered into by transnationals and Indian companies — both in the private and in the public sector — and their number is increasing fast every day.

Under technology collaboration agreements transnationals do not make an outright sale of their know-how; instead, they license to their Indian collaborators the use of their know-how and patents for a fixed period in lieu of lump-sum technical fees, royalty and so on. Collaboration agreements are full of restrictive clauses under which the Indian collaborator is not permitted to improve upon the technology to any other company. So the import of technology is repetitive. The same technology for the manufacture of a particular product is licensed to several Indian collaborators for lumpsum fees and royalties from each of them. In a news item date lined New Delhi, 29 August, 1990, Financial Express reported that the total technology payments made to foreign collaborators had exceeded Rs 500 crore annually. Speaking of it at a seminar, the Secretary, Directorate General of Technical Development pointed out that these direct remittances to the foreign collaborators for technology transfer were only the tip of the iceberg. Larger indirect payments were also being made to the foreign collaborators through the import of capital goods, assemblies, sub-assemblies, components, intermediates and technical services.[71]

In order "to systematize a continuing control of know-how", the foreign collaborators seldom impart the knowledge of the entire production process to the Indian partners. As Kidron says, "the diffusion of skills that does take place is largely fortuitous."[72]

Besides, in these days of fast technological obsolescence, the technological dependence of the Indian collaborators is perennial. When the need arises to upgrade the technology, they choose the soft option of fresh import of technology.

In 1943 the first automobile plant was set up in India by the Nuffields of the U.K. for a Birla company, Hindustan Motors. Over these years the Birlas have entered into numerous collaboration agreements with different transnationals for manufacturing cars, light commercial vehicles, etc. Even today, after more than half a century, for re-designing old models of cars or fitting new engines to them or for introducing new models, Hindustan Motors abjectly depends on various transnationals. The Birlas, Tatas, Hirachands (PAL), Mahindras, Shri Rams, Sipana as well as India's public sector have tied up with the different automobile giants of the world — General Motors, Ford and Chrysler of the U.S.A., Daimler Benz of Germany, Fiat of Italy, Peugeot of France, Daewoo of South Korea, Suzuki of Japan and so on. DCM-Daewoo, TELCO-Daimler Benz and Premier Automobiles (PAL)-Peugeot are seeking to import thousands of cars from the transnationals in CKD condition for assembling them in India. DCM-Daewoo has already been permitted by the Government to import 20,000 cars in CKD kits, worth Rs 350 crore.[73]

The CSIR (Council of Scientific and Industrial Research) Review Committee headed by Abid Hussain admitted in its report which appeared at the end of 1986 that the CSIR system had failed not only to provide "much in terms of break-throughs or advances in the frontiers of knowledge" but also "to develop technologies which would meet even the most agonising needs of our economy and society, let alone facilitate modernization". It further said that "the CSIR system believes that manufacturing firms, which have no capacity for absorption and development, always prefer the soft option of importing proven technologies". It went on to add: "It is possible to cite many examples of situations where technologies were imported for particular sectors at a point of time, and the absorption of such technologies has been followed by stagnation rather than adaptation, diffusion and innovation. At the same time, indigenous technological development, whether in the corporate sector or in the CSIR system, has not led to continuous technological upgradation. Imports of technology are, more often than not, followed by stagnation simply because the firms which import technology are primarily interested in the stream of output and the immediate profits that emerge from the use of such technology.... After all, the soft option of importing the new vintage of technology, when tomorrow comes and there is need for upgradation, always remains."[74]

About the role of the corporate sector in R & D (research and development), a recent FICCI study stated:

"the investment on R &D has been dismal, the average being 0.7 per cent of the turnover as compared to four per cent to seven per cent in industrialized countries.... Industry had thus increasingly depended on outright purchase of technology from abroad despite the in-house R & D facilities. These facilities and funds were devoted to merely resolving the immediate problems of production and technology absorption and meagre resources were devoted for new products and technology innovations."[75]

This estimate of the contribution of the corporate sector to R & D appears to be inflated. A Reserve Bank of India survey of 1,885 private sector companies, constituting 57.1 per cent of all non-government, non-financial public limited companies in terms of paid-up capital at the end of March 1989, reveals facts much more dismal. These companies, whose total turnover in 1988-9 was about Rs 69,000 crore, invested just Rs 47 crore in that year, that is, 0.07 per cent of their turnover. In the same year their expenditure on imports amounted to Rs 5,415.5 crore and their other foreign exchange payments including dividends, royalty and technical fees to Rs 721.4 crore; their advertising expenses were about ten times their R & D expenditures.[76]

A study by the Centre for Technology Studies for the Department of Science and Technology observed: "In spite of liberalization, firms continue to spend very small amounts on R & D." Contrary to what the spokesmen of India's ruling classes claim, the extent of foreign equity, according to the study, is negatively associated with R & D activities. It pointed out that the degree of dependence on raw materials and components were negatively related to R & D intensity. It added: "The liberalization of imports reduced the pressure to indigenize and higher import intensity became associated with low R & D intensity in the post-liberalization period." (The Statesman, Calcutta, 3 Sept. 1993) Another study by the development research group of the Reserve Bank of India regretted that "the entire gamut of foreign technology agreements, foreign licensing arrangements and foreign investment approvals over the past years did not make much impact on domestic technology absorption and innovative capacity and capability so fundamentally imperative to hold one's own in the international market." (The Statesman, Calcutta, 24 Nov. 1993; see also "Stepmotherly", ET, 23 Apr. 1997). This illustrates the comprador character of the Indian big bourgeois; they prefer to depend on foreign transnationals for capital goods and technology despite the large assets they command and the large profits they make and the vast resources that have been made available to them by the Government.

It may be noted that what passes as R & D expenditures by these companies can hardly be called so. As the FICCI study already referred to stated, these funds were mainly spent on resolving immediate problems of production and technology adoption, not on innovating new products and processes.

Advanced capitalist countries like Japan have imported technologies, but they have done so on their own terms and in their own ways. Japan, for instance, has not submitted to restrictive clauses that are in force in India. The Japanese monopolists have not only absorbed, adapted and modified imported technologies but developed them and innovated new products and process and surpassed their rivals in many fields of technology. According to an estimate, Japan spends on industrial R & D about ten times the amount they pay to foreigners in royalties and fees.[77] An article in Business Standard stated that Indian industry invests 0.68 per cent of its turnover in R & D against 12 per cent in Japan.[78]

In an interview to Economic Times, Dr. R.A. Mashelkar, director-general of the Council of Scientific and Industrial Research, said:

"....operating imported and 'screw driver technologies', as we have done in most cases, has been detrimental in many ways. This has killed the instinct for innovation.... We, therefore, will have to recognize that there is no easy purchase of high technology any more and what will be given to us will be just left-overs."[79]

Inevitably the gap in technology between advanced capitalist countries and countries like India which seek to move forward using borrowed technological crutches gets wider and wider with the passing of years.

"Scientific and technological advance in the developed countries has had, and is now having, an impact on the underdeveloped countries which, on balance, is detrimental to their development prospects."[80]

K.M. Panikkar was right when, referring to the negative impact of Western technology on underdeveloped countries, he wrote towards the end of the fifties :

"The world is on the doorstep of a great transformation which will make the gap between the scientifically advanced and the scientifically backward nations [where no social revolution has taken place — S.K.G.] deeper and wider; making the latter more than ever dependent for all essential things on the more powerful nations."[81]

Borrowed technology, while contributing to the prosperity of the Indian compradors and their underlings, has a crippling effect on the economy and the life of the people and perpetuates under-development. Not only does it cause huge drain of wealth from the country impoverishing her; not only does it deepen her dependence on imperialist countries; but it also retards and distorts the process of development and is responsible for maldevelopment.

The technologies that are imported developed in the countries of the West in the course of centuries in response to the needs and demands of their societies. Several technological revolutions took place in the West before it has developed advanced computer technology, robotics, nuclear science, space technology, information technology and so on. Initially, when the Western countries started industrializing themselves, the technologies were simple and unsophisticated, suited to the socio-economic conditions of the times. To quote Landes,

"Thus of 110 cotton spinning mills established in the Midlands in the period 1769-1800, 62 were the creations of hosiers, drapers, mercers, and manufacturers from other districts or from other branches of the textile industry. [In a footnote Landes points out that the figure of 62 is actually an understatement; another 15 may be added to it.] This previous accumulation of wealth and experience was a major factor in the rapid adoption of technological innovation — as it was in industries like iron and chemicals. We are now come full circle: the inventions came in part because the growth and prosperity of the industry made them imperative; and the growth and prosperity of the industry helped make their early and widespread utilization possible."[82]

"the historically important technological developments of the eighteenth and most part of the nineteenth centuries, the so-called period of Industrial Revolution, were effected by practical men, very few of whom indeed had been to university."[83]

From simple to sophisticated technology — it has been a long journey of some centuries. The development of technology has kept pace with the development of the economy, the progress of the country where the innovations took place. It is the socio-economic conditions of the particular country that called forth the innovations. As industry grew, as capitalists felt the need for labour-saving devices to reduce wage costs to be better able to complete with their rivals, technology became more and more capital-intensive and science played an increasingly important role in the development of technology. And science itself was employed as capital by monopoly capitalists to innovate new products and new processes of production. To quote Harry Braverman,

"In place of spontaneous innovation indirectly evoked by the social processes of production came the planned progress of technology and product design.... Like all commodities, its supply is called forth by demand, with the result that the development of materials, power sources and processes has become less fortuitous and more responsive to the immediate needs of capital.... The key innovation is... to be found... in the transformation of science itself into capital."[84]

When, in the colonial days, India became a market for products of Western technology and Western technology itself was introduced in India gradually, India's indigenous technologies disappeared, though Western technology was not quite sophisticated. While a few enclaves of modern industry emerged, India's indigenous industries were ruined and vast masses of industrial workers became dependent on agriculture. The entire process of India's development was distorted. The problems of unemployment and underemployment of large sections of the people became chronic. While modern technology fostered economic growth and development in the capitalist West, it acted as a fetter on development and caused retrogression in the colonial and semi-colonial world. Today when Western technology has entered the age of advanced computers, robots, space satellites, cellular phones, it has a devastating impact on the economy and the life of a country like India. While unrestricted import of it serves the interests of the compradorial class and its servitors, it kills all possibilities of India's technological independence, and makes keener the problem of unemployment and underemployment. While it creates jobs for a few, it takes away millions of existing jobs. The very existence of tens of millions of people is at stake. Ruling class politicians and academicians loyal to them try to hoodwink the people by blaming growth of population as the villain of the piece and talk of Malthusian solutions of it.

India's planners and policy-makers, whose hunger for foreign capital and technology is insatiable, have reduced India to this state in which vast masses of people seem to be redundant. Is this fate inevitable for the peoples of Third World countries? That it is not was proved by liberated China during Mao Tsetung's time, where people came to hold State power. She followed an altogether different policy, adopted a 'do-it-yourself' programme and achieved spectacular successes. In the section "Two kinds of planning" we have referred briefly to the Maoist strategy of development.

The three-volume World Bank study, which can hardly be accused of entertaining any bias in favour of the China of Mao's days and to which reference has already been made in the previous section, stated:

"The contributions of science and technology to agricultural development in China have been considerable, especially for the major food staples — rice, wheat and corn. For rice in particular, China has pioneered several biological innovations: the first semi-dwarf improved rice was released in 1959, some seven years before the International Rice Research Institute realized its similar IR8 variety; in the 1970s, China was the first nation to develop and popularize a rice hybrid, and it has developed techniques of rapidly stabilizing the varietal characteristics in new plant material that are widely studied in other countries. Advanced work has also been done in wheat (for dwarfing, cold tolerance, rust resistance and early maturity); and hybrids are now planted on over 70 per cent of the corn area."

"Much effort has been devoted to attaining new technical capabilities. Almost the entire range of modern industries has been set up, with much emphasis on those making capital equipment. Thus China produces a far greater variety of industrial goods than most developing countries, and is far less dependent on imported equipment.... Quantitative advances, even in periods when China was isolated, were made by overcoming obstacles through a combination of ingenuity and expediency — for example, by using small plants and outdated methods when it was difficult to build larger plants or master newer methods.... "In the past two decades [the sixties and the seventies], China has manufactured the bulk of its new equipment for itself.... Meanwhile, industrial research institutes and the more advanced factories continually strive to make new products and master recent technologies. As a result, there is a foundation of engineering experience, and a breadth of technical capabilities, unusual in a developing country....

"Indeed, since China's energy production record has been achieved largely with outmoded and indigenous technology, it appears outstanding.... Moreover, despite technological limitations and some apparent managerial weakness, the Chinese electrical power system appears quite efficient by international standards...

"In terms of total output, China ranks among the world's major industrial countries...

"China's employment in industry totalled 53.4 million in 1979, or roughly 63 million including brigade industries... many of whose workers, however, work in industry only part of the time.... By comparison, in 1976, a total of roughly 60 million workers were employed in industry in Western and Southern Europe, the U.S.A. and Canada taken together... India's employment in industrial establishments with 20 or more workers, or 10 workers and a power source, was not much more than 7 million....

"The rapid build up of industrial capacity in the 1950s and 1960s increased considerably China's ability to produce machinery and other manufactured goods."

Relying on herself, China could build petrochemical complexes, oil refineries, fertilizer plants, etc., construct medium-size ocean-going vessels, launch space-ships and so on, which India cannot do even now without importing foreign technology and capital goods.

In the 1970s, says the World Bank study, "China changed from a petroleum importer to a petroleum exporter... successful geological exploration and oil drilling and development since the early 1960s reduced oil imports to a negligible amount in the late 1960s and China became a net oil exporter in 1972."[85]

The fact is, there is no alternative to the 'do-it-yourself' programme. Who can lift a technologically backward country into a technologically advanced country? The experience of India and countries like India conclusively proves that they cannot catch up with the Industrial Revolution that occurred long ago in the West with technology borrowed at enormous costs to the people from transnationals, as the planners and policy-makers of India fondly hoped to do and would still have us believe this to be possible. Instead, foreign technology deepens dependence and perpetuates backwardness and underdevelopment. It is the people of the country concerned who alone can accomplish the task. The Chinese experience during Mao's days bears out the truth of this statement.

China then blazed a new path — the path that led the most populous country of the world, almost one-fourth of the world's population, from the quagmire of dependence, backwardness and underdevelopment to a stage of independent, self-reliant, all-round development of the people in less than three decades.

Just as China relied for investment in different sectors not on foreign capital but on her own resources, so she relied for her technology mostly on her own people. But she was not unwilling to learn from others. She purchased for use in very restricted fields sophisticated technology on her own terms and absorbed, adapted and modified it to suit her own conditions. But she depended mainly on her own people. Workers and peasants were encouraged and enthused to improve upon and modify the products and processes with which they were concerned. Managers, engineers, technicians and workers or scientists, cadres and peasants formed teams to innovate new products, new technologies. China walked on two legs — capital-intensive and labour-intensive industries, modern and traditional technologies. Where modern technologies were not available, traditional technologies were used. Nothing was discarded that was useful and satisfied the needs of the people. But traditional technologies were not frozen in their existing state. On the contrary, technicians and workers of modern factories went to backward ones to impart the new advanced technology, modernize them and build new units. Similarly, improved agricultural practices pioneered by some peasant or peasants in one area were demonstrated before peasants of other areas. Here too peasants and scientists worked in close collaboration. New advanced technology was diffused as widely as possible. Like class struggle, the struggle for production and scientific experiment became great revolutionary movements in China of those days.

True to their class character, the Indian ruling classes and their planners, on the other hand, pinned their hopes on foreign technology and foreign capital goods in which that technology is embodied. They expected them to serve as the catalyst for India's modernization. This policy no doubt served their interests and helped them to flourish as underlings of imperialist capital. But they have doomed the country to deeper dependence and underdevelopment. Foreign technology has throttled the growth of indigenous technology. Capital, including loan capital, and technology are made to serve as potent levers for control of the economy of India by imperialist powers.

Modernization and self-reliance cannot be achieved by relying on foreign technology and foreign capital. As a writer rightly put it,

"The theory of leap-frogging with borrowed technology is thus a myth and a trap.... Development after all means a process of self-growth. Its motive power is social ferment, tearing down of institutional barriers, and a release of innovative capacity of the people. Technological revolution cannot be achieved, has never been achieved, without a social revolution. Foreign 'help' will not facilitate but only obstruct such a transformation."[86]

Since the beginning of the eighties the Indian ruling classes and their planners have been step by step opening the door as widely as possible to imperialist capital and technology in the name of 'reforms' and 'liberalization'. In this process of 'liberalization', a stage was reached in mid July 1991 when the Indian ruling classes openly pledged to implement the economic policies formulated in Washington by the IMF and the World Bank. To these recent developments we shall refer later.

"Complete success in attracting foreign investment comes at the price of increasing foreign domination of the underdeveloped country's economy. Among other things this implies an economy which is increasingly dependent upon external decisions; ... Moreover, this decline in independence is furthered by the inherent instability in the foreign exchange situation caused by the accelerating potential profit and capital repatriation outflows.... At this point the underdeveloped country typically has to turn to the International Monetary Fund for assistance, and the process of loss of independence is virtually complete.... What all this suggests is that relying on private foreign investment for developing key areas of the economy may effectively be selling out a nation's birthright for a mess of pottage;..."[87]

References and Notes

1. Chatterjee op cit, p.54. The lines quoted by him are from (Jawaharlal) Nehru's Speeches, Vol. II, New Delhi, 1954.

3. Bernal, Science in History, London, 1954, p.253 — emphasis in the original.

4. L.H. Jenks, The Migration of British Capital to 1875, London, 1903 (first published in 1927), p.167.

5. Magdoff, "Economic Aspects of U.S. Imperialism," Monthly Review, Nov. 1966, pp.38,39.

7. See Utsa Patnaik, "India's Agricultural Development in the Light of Historical Experience," in T.J. Byres (ed.), op cit, pp.267-8.

8. Barratt Brown, "A Critique of Marxist Theories of Imperialism" in R. Owen and B. Sutcliffe (eds.), Studies in the Theory of Imperialism, London, 1972, p.64.

9. Sivasubramonian, "Income from the Secondary Sector in India 1900-47", The Indian Economic and Social History Review, Oct.-Dec. 1977, p.489 — emphasis added.

15. See Baran, op cit, p. 136. Baran's source is Ragnar Nurkse, Problems of Capital Formation in Underdeveloped Countries, Oxford, 1953, p.63.

15a. World Bank, World Development Report 1997: The State in a Changing World, New York, June 1997, pp.207, 214-5.

16. T. Dos Santos, "The Crisis of Development Theory and the Problem of Dependence in Latin America", in Henry Bernstein (ed.), Underdevelopment and Development, Harmondsworth, Middlesex, 1973, pp.67-8

18. W.G. Friedmann and G. Kalmanoff (eds.), Joint International Business Ventures, New York, 1961, pp.151, 153; see also Selig S. Harrison (ed.), India and the United States, New York, 1961, pp.154-5; "Transnational Corporations in Electrical Industry " Economic and Political Weekly (EPW), 20 Jan. 1979, pp.l03-6.

19a. GOI, Planning Commission, Eighth Five Year Plan 1992-97, Delhi, 1992, Vol. I, p.l3.

21. "The Economy and Political 'Stability'," EPW, Special Number, Aug. 1997, p.l220.

25. See Frankel, op cit, pp.269-87; George Rosen, Western Economists and Eastern Societies: Agents of Change in South Asia 1950-1970, Delhi, 1985, pp.74-7, 80-1.

26. PHDCCI, "Agricultural Price Policy in India" (mimeo) Dec. 1988, p.11 — emphasis in the original.

33. Myrdal, The Challenge of World Poverty, London, 1970, p.125 — emphasis in the original.

34. Tanzer, The Political Economy of International Oil and the Underdeveloped Countries, London, 1969, p.347.

35. Cleaver, Jr. "The Contradictions of the Green Revolution," Monthly Review, Jun. 1972, p.81.

36. Mooney, Seeds of the Earth: A Private or Public Resource? San Francisco, 1980 reprint, p.44.

38. GOI, The Gazetteer of India, Vol. III, New Delhi, 1975, pp.676-7 — emphasis added.

39. GOI, Planning Commission, The First Five Year Plan, New Delhi, 1952, pp.437-8 — emphasis added.

41. Millikan and Rostow, A Proposal: Key to an Effective Foreign Policy, New York, 1957, p.53.

45. R.K. Hazari and S.D. Mehta, Public International Development Financing in India, Bombay, 1968, pp.52, 56. This study by Hazari and Mehta was undertaken as a research project of the Columbia University School of Law. George Kalmanoff, associate director of the project, was responsible for the final editing of the study and the drafting of the concluding chapter. In the Preface to the book, W.G. Friedmann, director of the project, wrote: "The responsibility for the presentation of facts, as well as for the opinions formulated in this study, is entirely that of the Director."

47. GOI, Planning Commission, Sixth Five Year Plan 1980-85, New Delhi, 1981, p.14.

48. Quoted in "The World Bank on India's Foreign Debt," AIE, No.9, Jul.-Sep.1992, p.56 — emphasis added.

52. Eldridge, The Politics of Foreign Aid in India, Delhi, 1969. Note 6, p.266; also p.180. See also Hazari and Mehta, op cit, pp.70, 97; and Reserve Bank of India, Survey of Financial and Technical Collaboration in Indian Industry — 1945-70 — Main Report, Bombay, 1974, p.1063.

54. Chaudhuri, "Financing of Growth of Transnational Corporations in India, 1956-75," EPW, 18 Aug 1979, p.1431; also N.K. Chandra, "Role of Foreign Capital in India," Social Scientist, Apr. 1977, pp.17-8.

63. GOI Report of the Industrial Licensing Policy Inquiry Committee (Main Report), New Delhi, 1969, pp.137-8; also p.131.

64. H.Venkatasubbiah, Enterprise and Economic Change: 50 Years of FICCI, New Delhi, 1977. p.93.

66. Martinussen, Transnational Corporations in a Developing Country: The Indian Experience, New Delhi, 1988, pp.19, 20.

67. Vaitsos, "The Process of Commercialisation of Technology in the Andean Pact," in Hugh Radice (ed.), International Firms and Modern Imperialism, Harmondsworth, Middlesex, 1973, p.319.

68. Vaitsos, "Bargaining and the Distribution of Returns in the Purchase of Technology by Developing Countries," in H. Bernstein (ed.), Underdevelopment and Development, Harmondsworth, Middlesex, 1973, p.319.

70. GOI, Planning Commission, The Second Five Year Plan, New Delhi, 1956, p.6.

71. News item dated New Delhi, 29 Aug. 1990 in Financial Express; facsimile reproduction of it in AIE, Jul.-Sep. 1990, p.46 — emphasis added.

74. GOI, Report of the CSIR Review Committee: Towards a New Perspective, New Delhi, 1989, pp.2, 4, 66, 70 — emphasis added.

75. "Role of Public Funded R & D in the New Economic Environment," Statesman, 27 May 1993 — emphasis added.

76. Reserve Bank of India Bulletin, Feb. 1992; cited in AIE, No. 10, Oct.-Dec. 1992, pp.18, 24-5.

77. See N.K. Chandra, "Planning and Foreign Investment in Indian Manufacturing," in T. J. Byres (ed.), op cit, p.511.

81. Panikkar, Afro-Asian States and Their Problems, London, 1959, p.80; cited in Myrdal, Asian Drama, Vol. I, p.698, fn. 1.

83. Johnson, Technology and Economic Interdependence, Macmillan, 1975; cited in Vinod Vyasulu, "Technology and Change in Underdeveloped Societies," EPW, 23 Aug. 1976, p.73.

84. Braverman, Labour and Monopoly Capital, New York and London, 1974, pp.166.

85. World Bank, China: Socialist Economic Development, Vol.I, pp.111, 117-8, 127; Vol. II, pp.121, 123, 420 — emphasis added.

86. K.R. Bhattacharyya, "Wages of Foreign Collaboration," EPW, 29 Jun. 1974, p.1022.

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III. Models of Underdevelopment and Dependence

References and Notes

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