The state of the mass auto industry also helps identify nations in industrial decline. Britain lost most of its car manufacturing industry by the 1990s and is now a services driven economy without much manufacturing. Italy has also witnessed a decline of its auto industry typified by the near bankrupt Fiat. And now the US auto sector is in great strife, perhaps signalling the beginning of the slow decline of US manufacturing.

The mass auto industry, apart from being a signal of rise and decline of industrial power can also be the best symbol of industrial stagnation. No country typifies this more than India. Jawharlal Nehru and his group of economic planners in the late 1940s and early 1950s got many things wrong, but none perhaps as badly wrong as the decision to ignore automobiles as a sector with great industrial potential. Their view on automobiles was refracted through their lens of socialism — automobiles were considered a luxury item, not worthy even of a state led enterprise. So the sector, for the better part of four decades was left to a tightly controlled private sector — with severe limits on shat could be produced, in what numbers and with what technology.

The industry, instead of being a driver of the economy, became the most potent and visible symbol of the disastrous licence-permit raj. It brought out the worst combination of bad government policy and protected private sector enterprise which delivered profit to both government and the private players concerned, but much misery to the masses — few cars, expensive cars and poor quality — socialism in perverse: in policy but not in outcome. The Nano, born out of private enterprise in the context of a fiercely competitive and globalised market, will finally reverse that.

... contd.