Mr Modi stoops, will he conquer?

‘Self-sufficiency.’ Self-sufficiency is a myth. No country can produce all the goods and services that are desired and consumed by its people.

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A protectionist country will suffer from low growth, low investment, shoddy goods, limited choices and poor customer services. The history of the last 50 years has established conclusively that an open economy and free trade—not protectionism—spur economic growth. The richest countries of the world are countries that are open to trade and competition.

India adopted protectionism for nearly 40 years. Imports were heavily restricted. As a result, exports were also constrained. We had a division in the Ministry of Commerce and an army of officers under an authority designated as the Chief Controller of Imports and Exports. No one raised the obvious question, ‘We understand why you are the chief controller of imports, but please explain why you are the chief controller of exports?’ The irony of controlling exports in a country that desperately needed foreign exchange was lost on everyone.

Change of guard

Enter Dr Manmohan Singh as finance minister in 1991. His economic policies paved the way for shedding protectionism and opening the economy. The new Foreign Trade Policy, announced in 1991-92 tore up the dreaded Red book and declared that India was open to free trade.