David Cameron came to sell things and borrow capital. This is more or less what Sir Thomas Roe came to do in Jahangir?s Court. The British then had only wool to sell, which they thought should be a hit with the Indians. They ended up buying textiles and a lot else and paying for it in gold. This was so until they got power and then used Bengal Treasury to settle the balance of trade deficit. Later still, they found that selling Indian opium to China paid for the British imports of tea from China.
It was only when the textile trade was reversed after the Industrial Revolution that the balance changed. India still had a ?drain?, i.e., an export surplus, which paid for the army and the pensions of retired British officers. In the 50 years before 1914, India had a trade surplus of about 6% of GDP and out of that around half was drained away. India imported machinery as well and many other knick-knacks from Britain and exported foodgrains to pay for it all.
Now again a 100 years later, the British want to sell to India. This time India is a growth opportunity for them. The problem is Indians do not want to buy much. The private sector entrepreneurs know that for technology they are better off with Germany or the US rather than the UK. The UK needs Indian capital and management as Ratan Tata has already shown. It could also use skilled Indian labour if only the local politics in Britain did not feel so hysterical about immigration. This is, of course, more about unskilled European migration but as that cannot be legally prevented, all the opponents of immigration have to go for is immigration from non-EU sources. British business is dead against such restrictions but then even the Labour Party was pandering to anti-immigration sentiments at election time.
Britain brought to the table armaments and civilian nuclear know-how to offer. Even in these sectors it has to compete with the US, France and Russia. The same goes for higher education, which the UK has some comparative advantage in, but even there the US may be better. It may try to sell consumer goods such as beer and chicken tikka masala, but soon the list will run short.
What, however, the UK has always had was a lead in soft technology or what I may call abstract goods. For all the depredations of colonialism, who can put a price on the knowledge of English language that the Brits passed on to Indians? And what about cricket? How many Koh-i-Noors is that worth? There is also the legal system to which Indians have taken like fish to water. Whatever the legal system was before the British established did not have things like suo moto, which trips off our tongues. Many arcane disputes today, ranging from the fake encounter killings in Ahmedabad to mining disputes in Karnataka and in Orissa with Vedanta, hinge on law as laid down by Macaulay.
It is time, therefore, to import something else from the Brits than what Cameron was offering. This is honesty in economic policy presentation. Recently, David Cameron was criticised publicly by Sir Tom Scholar, the chairman of Statistics Service. The charge was that in answering a question in Parliament, Cameron had conflated two statistical series that were incompatible and hence given a false impression of the effect of the Budget. Previous Prime Ministers have been pulled up for releasing data prematurely or using it before the wider public had access to it. Indian debates on the issue of inflation would be immensely helped by an independent agency, which could correct politicians? misuse of data in public debates. Faith in official statistics is an intangible asset of great value.
There is also a strong argument for independence in monetary policy with or without an inflation target. A Monetary Policy Committee like the UK has, with the minutes of its monthly meeting published, would be great help in making policy transparent. RBI performs well but often it cannot move without the permission of the finance ministry and this must cost Indian economy some non-negligible amount in delays in controlling inflation.
The new government in UK has also begun another bold experiment?an Office of Budgetary Responsibility?to vet the forecasts of income, expenditure and public revenues used in the Budget. The government has promised that a parliamentary committee has the right to interview candidates for the jobs of chairman and members before their final appointment. Thus, transparency and honesty are reinforced. India could emulate this practice.
But perhaps the best export will be good parliamentary manners. British MPs do not rush down to the well ( there isn?t one); nor do they force adjournment without getting any business done and they do not walk out. That would save a lot of money!
The author is a prominent economist and Labour peer