COVID-19/70: How a Lethal Virus is Resurrecting a Control Economy

“Businessman hai, chor hoga” was once a refrain when entrepreneurs were treated like Sukhilalas of Mother India.

COVID-19 has visibly blighted two strands of India’s economy. The first is tragically obvious in the mounting number of daily new cases and fatalities. The second is manifest in the psychology of fear that has gripped producers and consumers, who are postponing everything but the bare necessities of living in digital caves. This deadly virus has overwhelmed hospitals, mask-makers, testing labs, and the unemployed; it’s devastated showrooms, malls, theaters, markets, and airports. All of this is grievously visible.

But there is a third, mostly sub-terranean impact. I am calling it COVID-19/70, that is, a virulent sub-strain that is unleashing the socialist/command/control policies of the dreadful 1970s. Some of the diktats in post-lockdown India have been breathtakingly uneconomic and illogical.

Sample these:

• Thou shall continue to pay workers, even as revenues plummet to zero. This was the first firman (royal order), and perhaps the most egregious economic instruction ever passed by any government anywhere in the free world. Workers are paid out of revenues earned by businesses; if the state has forced an operation to shut, how can it “order” that wages and salaries be paid? I remain convinced that this triggered the tragic migration of laid-off workers. Had the state not passed such an absolutist order, many owners would not have panicked; several would have worked out a survival/subsistence arrangement, instead of throwing workers on the streets fearing imminent bankruptcy

• Thou shall not charge for COVID-19 tests, even if labs are incurring real costs in administering these life-saving procedures. In fact, government orders have zig-zagged with frightening frequency, almost paralysing such a critical activity. Thou shall not (and a few days later, thou shall) test asymptomatic patients; thou shall (and a few days later, thou shall not) test all contacts; thou shall only test if your lab is in the same city, as sending samples across district borders is banned!

• Thou shall work back-breaking hours, expose yourself to health risks, but after that, thou shall be booked in a police case. The impunity with which hospitals and doctors have been charged in criminal cases during the pandemic leaves one speechless. The state is rampaging all around!
• Thou shall fly people, pay higher taxes on aviation fuel, but not charge a market price. If somebody wants to pay extra to keep the seat next to him unoccupied (remember social distancing to save lives?), he won’t be allowed to do that
• Thou shall pay through your nose for petrol and diesel. Why? Because your government needs to squeeze every vestige of revenue from your rapidly dwindling incomes
• Thou shall be protected behind high tariff walls, even if you are an inefficient, cash-guzzling producer of critical goods
• Thou shall not charge interest on deferred interest. It doesn’t matter that a deferred interest payment is equal to an increase in the outstanding loan, which should be serviced. It doesn’t matter that it gives a free ride to the borrower versus the poor depositor or shareholder. It doesn’t matter that banks’ balance sheets will get ravaged, putting the whole financial system at risk

Yes, it doesn’t matter that India is supposed to be a free market democracy; and of course it doesn’t matter that we’re regressing half-a-terrible-century into, yes, I’ve said it before, the dreadful 1970s.

Disbelieving Millennial Descendants of Mother India

But I can already see the disbelieving look in millennials’ eyes. These are “liberalisation’s children”, born after 1991 into a country which had begun to celebrate private enterprise. Surely, I am exaggerating, right? Surely the past could not have been that horrible?

Well my dear, since you have no clue what India was like back then, let me begin with an unusual story of pathos and drama, of ‘Mother India’, the iconic film made in 1957, but one that also captured the tragedy of India’s economy in those bad old days.

Katherine Mayo, an American author, penned a hate-book called Mother India in 1927. It was a vile, provocative diatribe against India’s poor Hindus. Mahatma Gandhi used uncharacteristically strong language, dismissing it as a “drain inspector’s work”. A quarter century later, in free India, Mehboob Khan conceived a film with megastar Nargis using the same title, Mother India. It was a tale of human nobility and sacrifice in the face of extreme adversity, a powerful anti-dote to Mayo’s venomous work.

At that time, a young, independent India was in the throes of Nehruvian socialism. Mehboob Khan had to apply for permission in 1952 to import the raw stock on which the film would be shot. From there, encountering several bureaucratic twists and turns, it took another half-decade to complete Mother India. Cinematically, it was hailed as a work of genius. It was India’s first Academy nomination for Best Foreign Language Film, losing to Fellini’s Nights of Cabiria by one vote. Nargis was best actress at Karlovy Vary. She and Mehboob Khan got Filmfare Awards. The encomiums were endless.

But what escaped equal celebration in socialist India was the film’s outstanding entrepreneurial success. The magnum opus was produced at a colossal budget of Rs 60 lakh (about $ 1.3 mn at the prevailing exchange rate). It was a runaway hit grossing nearly seven times its cost, about Rs 40 mn at the box-office (equal to about $ 2-3 bn, or Rs 20,000 cr in current money, showing the brouhaha over today’s “Rs 100 cr club” to be trivial!). One hundred million people saw it across the globe. As an aside, a callow Sunil Dutt saved Nargis from a fire which broke out at the sets. Nargis nursed him to health, fell in love and married him. This tidbit has nothing to do with my advocacy here, but it’s impossible to talk about Mother India and skip this milestone.

Mother India Created an Ugly Stereotype – “Businessman hai, Chor Hoga”

But Mother India also created another enduring, ugly stereotype. Legendary character actor Kanhaiyalal played Sukhilala, the greedy, lecherous, heartless, usurious, exploitative village moneylender who hounds Nargis to trade her body for food when her children are dying of hunger.

Sukhilala was so hideous and hateful that India loathed him. His image got etched in the country’s consciousness as the archetypal “capitalist”, who could sell or buy helpless women for sex or profit. In any case, India was tilting far left, towards communist Russia, all through the 50s, 60s and 70s. It became a national sport to pillory business-people as corrupt and venal.

Bollywood pumped up this popular narrative with a string of “colorful bad men” – Ajit, Jeevan, Pran – who played unscrupulous businessmen swilling smuggled scotch, puffing on 555 cigarettes, surrounded by “Mona darlings”, that is, skimpily clad cabaret dancers in the middle of a working day!

India bought into this debauched image with gusto. All entrepreneurs, businessmen had to be crooked, ab initio. We followed up with laws to severely restrict enterprise. “Businessman hai, chor hoga” became a refrain as entrepreneurs were treated like a cabal of Sukhilalas. Incredibly, we even began to penalise productivity gains, which were the plasma of wealth and prosperity in free market economies. But in India, if you produced more with less resources – that is, you improved productivity - you were hauled up like a criminal. How dare you produce more than what you were “licensed” for?

Alas, COVID-19/70 has injected quite a bit of this primordial virus back into our economy’s veins. Unfortunately, this sub-strain doesn’t have a vaccine that is being tested at any lab or university. The only way to stop it is if We, THE PEOPLE, push back hard to preserve the economic freedoms we were grudgingly given in 1991.