"Culture saves India But what has ultimately saved India from internal and external bankruptcy is not fully evident in the public discourse. How were the fiscal deficits financed? Simply by the government issuing bonds to the commercial banks and the Reserve Bank and borrowing. The government could borrow within India because the traditional Indian families ‘safely’ bank their savings. They deposit close to Rs 10 lakh crore a year in the banks, which saves India from internal bankruptcy. But how is the bankrupting CAD really met? The truth, an untold story, may shock. It is the ‘remittances from the Indian workers for family expenses’ and ‘local withdrawals’ from the non- resident Indian accounts that has saved India from external insolvency. The forex contributed by Indian families totalled $335 billion during the nine-year UPA regime, almost equal to the CAD. Not a single dollar of this remittance is returnable. It bears no interest. This huge lifeline remittance is not the product of economics laws or the government policies. It is the traditional, cultural gift to the Indian economy. Had the traditional Indian families, struggling against modern individualism, not held together, would there have been such remittance? Never. More. If the Indian workers did not remit for the maintenance of their kith and kin, besides the loss of the $335 billion lifeline for India, the state will have to fend for them. Has the Indian establishment discourse ever noticed this culturally devised protection to the economy? The relation-based nature of the Indian society makes this remittance culturally mandatory. This would not happen in contract- based societies like those in the West. Yet the government is making laws and the public discourse is striving hard to atomise the Indian family and society and turn it into a contract-based one. The establishment takes this lifeline for granted, perhaps not even conscious of it. But it tom-toms the investment inflows and debts. The final part of the story will show how naive or criminally negligent the UPA Government has been in allowing a large part of the huge current account deficit to run contrary to India’s strategic interests." Swaminathan Gurumurthy
Posted on: Fri, 23 Aug 2013 08:15:32 +0000
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