Indo-Pak Conflict: Time to build an indigenous economic defence strategy

India needs an economic model that is developed indigenously and is also in sync with the global economy.

(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)

The recent Indo-Pakistan conflict has brought back to the fore the issue of implementing ‘Swadeshi Economics’ for four reasons.

First, we witnessed yet another failure of a Western icon of globalisation—the International Monetary Fund (IMF)—as it cleared a tranche of US $1.3 billion for Pakistan amidst an armed conflict with India, knowing well that most of this money would go to the coffers of the Pakistan Army, which is the de facto ruler of the country and openly supports terrorist groups operating against India.

Second, there was the success of ‘Swadeshi’ defence equipment and systems in effectively countering the Pakistani attack and targeting the hideouts of terrorists with surgical precision.

Third, Swadeshi activists launched a nation-wide agitation against Turkey’s tourism and industry in response to Turkey’s political as well as logistical support to Pakistan.

Fourth, the way US President Donald Trump tried to introduce the ‘trade deal’ factor in the context of the Indo-Pak conflict.

The US President's bizarre attempt to take credit for allegedly brokering the cessation of hostilities between India and Pakistan was seen by many as an effort to arm-twist India, although Trump tried to do damage control by diluting his earlier stand. But the indications are clear—we need an economic model that is developed indigenously and is also in sync with the global economy.

This is where it becomes critically important to begin building a conceptual framework for Swadeshi Economics. This could be our own economic defence mechanism. The urgency is further underlined by the growing global conflicts and the evident failure of existing economic development frameworks tied to the concept of the nation-state. A pertinent example is the IMF bailing out Pakistan 24 times since 1958, despite the country being under the control of its military and acting as a haven for global terrorism. India, despite being a major stakeholder in the IMF, could not stop the release of this tranche, as a group of Western nations once again overlooked Pakistan’s complicity in the global terror network—a menace from which the West itself suffers.

Recent events have laid bare the flaring of geopolitical and economic conflicts, and the failure to collectively address global challenges like climate change. These failures are compounded by the dubious roles of institutions like the United Nations, IMF, World Bank, and World Trade Organization (WTO), which appear to cater primarily to the interests of a select group of Western nations and their military-industrial complexes—often supporting authoritarian and radical regimes at the expense of democracies such as India.

Gaye B. Müderrisoğlu and Jonathan K. Hanson, in their research paper Authoritarian States & IMF Conditionality, concluded that military regimes, dictatorships, and single-party rule are more likely to receive IMF funding. They wrote, “…All else being equal, personalist dictatorships are more likely than other authoritarian types to enter into an agreement with the IMF, while single-party regimes are most likely to receive funding.”

The failure of this “Western model” has become most apparent in recent weeks, where Pakistan was effectively 'rewarded' by the IMF despite being a global terror hub that openly hosts terrorist organisations and training camps. During the Indo-Pak conflict and beyond, Pakistan was backed by two countries governed by some of the world’s most notorious dictatorships—China and Turkey.

Alvin Toffler, author of the famous trilogy Future Shock, The Third Wave, and Powershift, described such a scenario aptly years ago:

“We live at a moment when the entire structure of power that held the world together is now disintegrating. A radically different structure of power is taking form. And this is happening on every level of human society. Power is not just shifting at the pinnacle of corporate life… This crack-up of old-style authority and power in business and daily life is accelerating at the very moment when global power structures are disintegrating as well…”

With the emergence of powerful technology monopolies that influence social behaviour and choices—often more than the state itself—the world is heading towards increasing anarchy and chaos. Volatility in the global economy has become a permanent feature. An ever-increasing number of countries, including several in the West as well as China (touted as a recent economic success story), are facing major economic crises.

Eminent intellectual Dattopant Thengadi, an ideological stalwart of the Rashtriya Swayamsevak Sangh (RSS) and a strong proponent of Swadeshi Economics, lucidly explained in his seminal work The Third Way:

“Western thinking was based on ‘either-or-ism’; Hindu thinking is based on ‘as well-as-ism’. Their thinking was compartmentalised; ours is integrated. For them, man was a mere material being; for us, he is a physical-mental-intellectual-spiritual being. For them, society was a club of self-centred individuals; for us, it is a body with all individuals as its limbs. There, the goal was happiness for oneself; here, it is happiness for all. It is a case of acquisitiveness versus aparigraha (non-possession); profit motive versus service motive; consumerism versus restrained consumption; exploitation versus antyodaya (welfare of the last person); a rights-oriented consciousness of others’ duties versus a duty-oriented consciousness of others’ rights; the rape of nature versus the milking of nature; and constant conflict between the individual, society, and nature versus complete harmony among the three.”

Incidentally, Swami Vivekananda had also rejected the Western economic model as early as 1893, attracting criticism from several Western-educated intellectuals. Interestingly, Margaret Noble—follower of Prince Kropotkin, one of the most well-known anarchists of the late 19th and early 20th centuries—arranged a meeting between Kropotkin and Swami Vivekananda. However, after her encounter with Swami Vivekananda, she became a life-long advocate of Hindu values and was famously known as Sister Nivedita.

A major critique of Swadeshi Economics, based on Hindu values, is that it lacks a structured body of knowledge. Nothing could be further from the truth. Thousands of treatises, starting from the Rig Veda, have laid the foundation for Swadeshi or Hindu Economics. This body of knowledge includes specific theories on price, demand, supply, welfarism, the role of the state, taxation, national income and expenditure, foreign trade, and employment.

These theories and principles have been obscured by the dominance of Western thought in our academic and policy frameworks.

It is high time that, to protect India’s interests, we immediately build a comprehensive body of knowledge on Swadeshi Economics. Just as our indigenously developed defence systems protected us during the recent conflict with Pakistan, Swadeshi Economics could become the most effective economic defence mechanism for India in the midst of global trade and tariff wars and the growing irrelevance of dysfunctional international bodies.

Earlier Sanghnomics columns can be read here.