Why the faces of Indian men welcome shift to free market

For years Indian men had no choice but to scrape their faces each morning with razor blades made by a firm with a government monopoly. That sometimes meant scratching as well as scraping, according to a leading financial journalist from India. The blades, he maintains, were of poor quality.

But now Indians have a choice of blades. The government decided to permit competition in the industry. Wilkinson began producing blades some months back in a plant in India. Soon Gillette will be starting up production at a new plant , and, the journalist says, shaving is becoming a smoother affair.

This is one sign of two economic trends in India:

* For practical reasons, the government is subtly shifting the mix in the economy away from state-owned corporations and toward private enterprise and genuine competition.

* India's economy, partially because of this change, has been growing rapidly for a number of years. It is no longer being left behind in the economic contest with China.

In an interview, Finance Minister Pranab Kumar Mukherjee apparently did not want to talk much about the shift toward free enterprise. In India, democratic socialism remains popular and it would be politically difficult if not impossible for any broad party to embrace Reagan-style capitalism.

''We cannot allow everything to be a free-for-all,'' said Mr. Mukherjee during a visit here to attend the joint annual meetings of the World Bank and the International Monetary Fund.

Referring to President Reagan's strong endorsement of capitalism in his address to the joint meeting, the finance minister said that ''free enterprise is not the only answer'' to the economic problems developing countries face.

However, he did note that India has a ''mixed economy'' with both government and private enterprise. In the five-year plan that will draw to a close at the end of next March, he pointed out, public sector industry would invest $97 billion and the private sector some $175 billion.

Further, he maintained that foreign investment is welcome, and that the government has removed some of the obstacles to new investment or expansion by foreign investors. But the government does insist on being selective in accepting foreign investment.

Government corporations are concentrated in the infrastructure, such as power , transportation, and communications, but are also active in heavy industry and hold a virtual monopoly in oil and gas.

At this time, though, there is a public debate as to whether private oil companies should be allowed to violate the monopoly of two government entities in exploration and development.

With the discovery of the Bombay High offshore field some years ago, the country's production of crude oil has increased from 11.8 million tons in fiscal year 1979-80 to 26 million in 1983-84. Mr. Mukherjee said it should reach 29 million tons next year.

However, barring discovery of a major new field, Indian oil output could start declining in about five years. Imported oil, which filled some 65 percent of domestic needs in 1980-81, now supplies only about one-third of domestic consumption. If that ratio starts to grow again, it would be a serious burden to the nation's balance of payments.

So, for pragmatic reasons, the Indian government has been considering whether it would be wise to sell licenses for exploration and development to foreign companies.

Indian socialism, which stems from the Fabian socialism which thrived in British intellectual circles early in this century, calls for government ownership of industries and resources. It will be a break with that traditional thinking if India permits foreign oil companies - usually regarded as the epitome of capitalism - to poke about in India's oil garden.

There are other signs of economic pragmatism. The government has decided that telecommunications should be a ''joint sector.'' Electronics does not thrive in the stuffy atmosphere of most government companies, certainly Indian ones, many suffering heavy losses. So the government now permits telecommunications companies to be 25 percent owned by a private company, and most important, run by private managers, with the government taking 26 percent, and the remainder of the shares sold to the public.

Private companies are allowed to enter high technology. Government utilities are buying some equipment from private companies for their nuclear power plants (apparently the equipment is of higher quality). The government a few years ago allowed privately owned Tata Iron and Steel Company to expand and modernize, enhancing its competition with the government steel company. Tata had been prevented from doing so for years. There is even discussion of whether the private sector should be allowed to subcontract in the defense industry.

As for the Indian economy, it has been growing at an average annual rate in real terms of 5.4 percent over the past four years. Agriculture has done especially well, with food grain production rising from 110 million in 1979-80 to 152 million tons in 1983-84. With India's population of 700 million growing at 1.8 percent per year, the average individual is enjoying a real rise in his or her standard of living, the finance minister claimed.

Visitors from abroad, returning after some years of absence, see the economic improvement even in the villages, Mr. Mukherjee said.