Swadeshi’s Karmic Loop: Nationalism to Nationalisation and Back

The early Swadeshi movement in the pre-Independence years went from a phase of production as a replacement to British and imported goods as a gesture of nationalistic defiance to a valid business proposition. After Independence, Swadeshi took on a distinctly Soviet command-and-control model before wearing a liberal cloak from the early 1990s.

The second and concluding part of this searching essay (read the first part here) traces this evolution, and the return since 2014 of a populist Swadeshi that is built as much on political theatre as practical application in a 'post-globalisation' world.

The Mass Politics Phase (1903-1947)

While Swadeshi had been used as an instrument of protest against the colonial government and its policies at least since the Namdhari agitation in 1860s Punjab, it was its use to protest the partition of Bengal province that catapulted it into the predominant method of mass protest. While historians contest both how much of a mass movement it really was and whether it was as effective as has been claimed, it is befitting that the anti-partition agitation in Bengal between 1903 and 1908 is described as the ‘Swadeshi Movement’.

As historian Sumit Sarkar says, the movement leaves us with two contradictory impressions: “A sense of richness of promise, of national energies bursting out in diverse streams of political activity, intellectual debate and cultural efflorescence; and a feeling of disappointment, even anticlimax, at the blighting of so many hopes.”

Indian goods, culture, art and education were energetically promoted in parallel with a boycott of imported goods in general, and British goods in particular. Implicit and explicit social coercion — and occasional violence — entered the scene, as people were exhorted to boycott foreign goods or face social ostracization.

– Although the movement — perhaps for the first time — extended across caste and religious lines in Bengal, it emanated from a Bengali upper caste urban core.

By 1908, the movement subsided in the face of riots and revolutionary terror, and the colonial government’s political repression in response—to the extent that Rabindranath Tagore, hitherto an enthusiastic supporter of Swadeshi and nationalism, was turned away from them due to what he saw as their perhaps unavoidable excesses. But before its temporary ebbing, it had come to define the main political themes, sides and personalities that dominated national life for the next four decades.

Differences between the moderate constitutionalists and the extremists came to a head, with a formal split in the 1907 Surat session of the Congress. Albeit at the margin, revolutionary terrorism gained traction. The Muslim League was formed in 1906 and the Punjab Hindu Sabha in 1909. The Minto-Morley reforms of 1909 introduced limited elections and gave Indians a share of political power, setting the stage for representative government and democracy.

Gandhi arrived in India in 1915 and made Swadeshi an essential part of all his politics. In typical fashion, he argued that Swadeshi was a moral end in itself even as it was clearly an instrument of political mobilisation and economic coercion. As described earlier, his conceptualisation of Swadeshi was expansive, covering religion, politics and economics; celebrating a romantic self-sufficient village life, rejecting modern industry. Ahead of launching himself in national politics at the head of his first major political campaign — the agitation against the repressive Rowlatt Acts of 1919 — he set up the Swadeshi Sabha, where he experimented with ways to best promote the practice. The organisation fizzled out, but Gandhi, Satyagraha, Swadeshi, Charka and Khadi became icons of the freedom struggle and influenced the thinking of generations of Indians.

In historian Christopher Bayly’s view, “It was Gandhi’s genius that notwithstanding the incoherence of his formal economic and political thought, he was able to enlist around a single issue a huge range of beliefs, aspirations and popular symbols.” He didn’t persuade everyone, though. As we shall discuss in detail a little later, intellectuals like Tagore, political leaders like Nehru and Ambedkar, and ordinary and vocal citizens like Kantilal Amratlal disagreed with various aspects of Gandhi’s Swadeshi philosophy, but it was the latter that prevailed.

Policy Phase 1947-1992

– As India headed towards independence, Swadeshi began to move from being an instrument of protest to a principle of economic policy of the new republic.

Economic historian Aashish Velkar points out that “as swadeshi’s role to promote Gandhian self-sufficiency among the masses faded by the 1930s, the swadeshi principle of protectionism and capital controls filtered into the various national plans that were drawn up between 1938 and 1944.”

The plan of the engineer and Mysore’s Diwan, Mokshagundam Visveswaraya, one of the earliest such initiatives, called for centralised decision-making and investment in large-scale heavy industries as a path to economic self-sufficiency. The Gandhian plan called for the exactly the opposite: decentralised decision-making and small-scale cottage industry. All plans led to Swadeshi, including the Bombay Plan proposed by the country’s prominent business leaders. In the Constituent Assembly, Mahavir Tyagi introduced a motion to enshrine Swadeshi as a Directive Principle of state policy. As a result, the Constitution of India enjoined governments to promote cottage industries.

Perhaps the most influential of all blueprints was the one drafted by the Congress under Jawaharlal Nehru’s leadership. It was drafted in the context of “the Great Depression of the 1930s and the decline in foreign trade resulted in disillusionment with capitalism and the urge towards self-sufficiency,” as the economist George Rosen noted. “There was also a fear of ‘economic imperialism’ replacing political imperialism if India encouraged foreign investment and undue trade dependency.” Socialism and Swadeshi thus animated the economic policies of independent India for the next four decades.

According to the economist Vijay Kelkar, if the objective of self-reliance did not explicitly appear as a policy until the Third Five Year Plan (1961-66), it was because drafters of earlier plans “took that to be axiomatic.” By the Fifth Five Year Plan (1974-78), self-reliance had formally joined growth and redistribution as basic social objectives.

– In addition to the “socialistic pattern of society”, a mixed economy with a large role of the public sector, the 1947-92 phase saw import substitution as a policy tool that eventually, for all practical purposes, became an end in itself.

Foreign investment and trade were controlled. Undue consumerism was discouraged. Small-scale and handicraft industries were protected from competition from large domestic firms, which in their turn, were protected from foreign competition.

Administratively, these policies were implemented through regimes of industrial licencing, quotas, administered prices and foreign exchange controls. There was some easing of controls beginning in the early 1980s, but the overall framework remained in place until it was shaken apart by the economic crisis of 1991.

Recession Phase 1992-2016

The frequency of the word ‘Swadeshi’ in English-language publications peaked around 1965 and hit a bottom in 1980, perhaps an indication of popular disenchantment with the idea.

– In response to the economic crisis of 1991, the Congress-led government of P V Narasimha Rao and (the finance minister at the time) Manmohan Singh opened up the Indian economy, abolishing industrial licencing, reducing the scope of the public sector, devaluing the rupee, removing import restrictions, and reducing tariffs and excise duties.

Although the reformers continued to profess commitment to Swadeshi, government policy through the decade of the 1990s cautiously embraced an open economy. The rest is well known: over the next 25 years, India experienced unprecedented economic growth, massively reduced poverty and saw the emergence of globally competitive indigenous firms in several sectors.

Both the Left and the Hindu Right opposed the opening up of the Indian economy, albeit for different reasons. The sociologist Gail Omvedt noted that the “leftists are defending a state-dominated economy, the BJP with its hatred of ‘Nehruism’… are claiming to stand for some form of liberalisation. The official position is that there should be ‘internal liberalisation’ (freedom from government controls for industry within the country’) but not ‘external liberalisation’ (removing trade barriers and exposing ‘swadeshi’ industry to foreign competition).”

When the BJP came to power in the late 1990s on a pro-Swadeshi platform, the Atal Behari Vajpayee government trod a tenuous balance between ministers who preferred greater openness and influential members of the Sangh Parivar who adhered to their interpretation of Swadeshi. The title of Yashwant Sinha’s book Confessions of a Swadeshi Reformer and the official embrace of the euphemism “disinvestment” to refer to privatisation indicates how the Vajpayee government executed the art of the possible.

During the decade (2004-2014) of the two Congress-led governments, the dominant policy narratives were of social justice and inclusive growth. Redistribution and sound macroeconomic management took priority over further liberalisation and structural reform of land, labour, administration and capital. Paeans were paid to Swadeshi and self-reliance as usual, but neither the government nor the Opposition took up its cause with any seriousness. Even the BJP’s prime ministerial candidate in 2014, Narendra Modi, gave a non-committal response to a query on where he stood in the debate between pro-market reform and the Sangh Parivar’s Swadeshi ideas.

Populist Reprise (2014 - )

‘India First’, a feature of Modi’s 2014 manifesto, was more than a slogan. The economic policies of the successive Narendra Modi governments follow Omvedt’s description of the stance the BJP evolved in the early 1990s – encouraging of domestic business and entrepreneurship while being sceptical of international trade. The much publicised ‘Make in India’ initiative exemplified this approach in the first term.

The government liberalised foreign direct investment restrictions in many sectors, including defence, even as it hardened India’s position in the World Trade Organisation’s logjammed negotiations and decided to stay out of the Regional Comprehensive Economic Partnership (RCEP) at the risk of being marginalised in East Asian trade. This was in the context of declining support for globalisation in the West, essentially due to the relative gains made by China, and to a lesser extent India.

But it is in Modi’s second term that the economic policy narrative dramatically shifted towards self-reliance and a resurgence in the popularity of Swadeshi. The trigger was a combination of the impact of the Covid-19 pandemic and Chinese belligerence along the Himalayan frontiers. By disrupting global and national supply chains, the former made ‘Vocal for Local’ a necessity through the year 2020. The government simultaneously turned it into a virtue.

China’s aggression in Ladakh during the same year deepened public outrage to levels where calls for boycott of Chinese companies and imports became widespread. Many Chinese apps were banned. Imports faced greater official scrutiny and suffered delays. Chinese telecommunications equipment has been excluded from India’s fifth generation networks on national security grounds.

In response to China’s weaponizing of the global supply chains it dominates, India joined the United States, Australia, Japan and other economies in a strategic initiative to shift them in ways that reduce vulnerability to Beijing. In the middle of 2021, after two centuries of ups and downs, Swadeshi and ‘national self-reliance’ rose to the top of India’s economic agenda in the form of the ‘Atma Nirbhar Bharat’ initiative.

Swadeshi had never really gone away. It just took a short break for a couple of decades on either side of the new millennium.

– ABOUT THE AUTHOR



Nitin Pai is co-founder and director of the Takshashila Institution, an independent centre for research and education in public policy.

This article is part of our special series the 'Making of Modern India' through which we are focussing on the period between 1900-2000. This century saw the birth and transformation of India. This series aims to chronicle India's exciting journey and is a special feature brought to you by LHI Foundation.