Is India Really Shining ?

The Economic Times, 30, Dec 2003

Indians have good reasons to feel confident. Our economy has grown 5.9 percent per year since 1980, making it the fifth fastest growing major economy in the world over a 23 year period; this is not a case of one swallow making a summer. We may be well behind China, but remember that the West created its Industrial Revolution at a 3 percent growth rate over 100 years. More recently, our population growth has begun to slow, and in 1998 it was down to 1.7 percent compared to its historic 2.2 percent growth rate. Literacy has also begun to climb—it reached 65 percent in 2000 compared to 52 percent in 1990, with the biggest gains taking place among women and the backward states. More than 200 million Indians have risen out of destitution since 1980 as the poverty ratio has declined to 26 percent. And we may have finally found our competitive advantage in our booming software and IT services. Finally, all this has happened amidst the most appalling governance; imagine, what might happen if governance improved.
If our economy continues to grow at this rate for the next three decades—and there is no reason why it should not—then the majority of the people in half our states should be middle class in the first quarter of the century and the other states should get there in the second quarter. At that point poverty will not vanish, but the poor will come down to a manageable ten percent of the population, and the politics of the country will also change.

I travelled widely across India in 1995 and discovered that the nation’s mindset had changed in the nineties, especially of the young, whose minds had become decolonised. This became one of the premises of my book, India Unbound, and I felt this mental liberation would be a powerful force in national regeneration. I also wrote that for all Indians to benefit from our recent prosperity we needed to reform agriculture and education. We are on the verge of a second green revolution, which like the first one will be labour intensive and will be based on a technological breakthrough (this time, on the new GM seeds.) For that to happen we need extensive agricultural reforms and move away from peasant farming to agribusiness. Equally, we must drastically improve our government schools in order to offer some hope of equality of opportunity.

Our national weakness is governance. We have to recognise that our past failures were due less to ideology and more to poor management. Hence, we have to focus on the reform of our institutions more than even of policies. This is a much tougher job. Let’s take heart from the institutions that do work—Indians admire the armed forces, the Supreme Court, the Reserve Bank and the Election Commission. (Curiously, except the Election Commission, these are the same institutions that Americans admire most in their country.) So, it is possible to have good institutions in India. If we can reform telecom we should also be able to do the same with our institutions of electric power. India Shining will have a hollow ring unless we sustain vigorous reform of our institutions, including the control our disgraceful fiscal deficit.

National confidence is a good thing; it makes ordinary people do extraordinary things. Ask a historian of Rome, and he will testify to its amazing power. Or of post-Meiji Japan, or 19th century Britain, or even current day China—they will all bear witness. Ask a CEO and he will tell you that a sustained positive feeling among employees often separates success from failure. To be sustained, however, confidence has to be based on performance, not on bombast. Also, confidence can easily degenerate into chauvinism, arrogance and militarism, and these are bad things. Finally, the truly confident know they are good; they are ‘quietly confident’ and don’t need to proclaim it in ‘India Shining’ campaigns.

To India’s entire political class Brutus’ famous words in Julius Caesar (about ‘a tide in the affairs of men’) should be a timely warning: that we stand at a crucial moment in our history when the stars appear to be on our side. If we do not seize the moment and improve our governance and accelerate the reforms, then history will not forgive us.