West’s Discovery of India

Jawaharlal Nehru wrote his seminal history, The Discovery of India, during the British Raj. But now we have a very different Discovery of India by the western media. Time magazine has a cover story on India in its US edition with the blurb “Why the world’s biggest democracy is the next great economic superpower.” Earlier, The Economist, UK, came out with a 15-page survey of India concluding that the Indian elephant had learned to fly. In the 1990s, India was seen as a chronic underperformer. Then the rise of Indian computer software created a new image. India was first projected to enter the big league by the BRIC report of Goldman Sachs in 2003, which predicted that India would have the third largest GDP in the world by 2050. Then came the CIA vision report for 2020, predicting the rise of China and India as economic superpowers. These reports were initially greeted with scepticism. China had a proven track record but not India. Indeed, India’s GDP growth dipped to 5.5 % per year in the Ninth Plan (1997-2002), down from 6.7% in the Eighth Plan. However, soon afterwards India began exceeding BRIC projections. GDP growth averaged over 8% in the three years 2004-06. Indian manufacturers, earlier terrified of Chinese competition, suddenly took off. Indian software companies showed that they were not just low-wage players but could rise up the value chain. Indian pharma and auto companies started acquiring companies across the globe. They even invested in China. Growing competitiveness translated into surging profits and a stock market boom. The Sensex rose from 2,900 in 2003 to 12,700 by May 2006. Investment guru Marc Faber said that if forced to invest all his money in either the USA or India, he would choose India. The Bush-Manmohan Singh agreement of July 2005 was diplomatic recognition of India’s new status as a rising power. I am gratified by the West’s Discovery of India. Yet much of this is unwarranted hype. India has a thin veneer of world-class people. But beneath this lies a cesspool of injustice, corruption, poverty, and callousness. The impressive outer layer is thickening, but much too slowly. The most significant indicator of the rot is that 150 of India’s 600 districts are now affected by Naxalite violence. The rot is worsening, not improving. Can such a country really become an economic superpower? In every miracle economy, success has been made possible by a joint effort by the government and private sector, with each doing what it does best. The Government has provided a good business climate plus good human and social investment that enables ordinary people to take advantage of new opportunities. Private business has flourished in such conditions, growth has accelerated, and poverty has declined. This has happened to some extent in India. Yet it seems laughably short of what is required to become a superpower. The police-judicial system has collapsed. The Jessica Lal and BMW cases confirm that anybody with money, muscle and influence is effectively above the law. Criminals move into legislatures and cabinets to ensure they cannot be prosecuted. The confidential report on the Narmada dam oustees portrays astounding official callousness compounded by brazen lies. Time magazine reports that 3,500 travelers per year die falling off overcrowded trains in Mumbai, more than the deaths caused by the Godhra riots or Union Carbide disaster at Bhopal. Primary education, health and water supply are supposed to be provided by the government, but its performance is pathetic despite enormous expenditures. Teachers teach only half the time. Only one in 14 children in classes 3-4 can write their names without private tuition (Pratichi report 2002). Health clinics are typically shut, or have no medicines. Private providers of education, health and water are filling the gap, a saving grace, but the poor can least afford these. Huge subsidies for irrigation and fertilizers benefit mainly larger farmers, and huge urban subsidies benefit the richer half of the population. Child malnutrition is worse in India than in Africa. The share of children getting full immunization is down from 52% in 1998-99 to 44.6% in 2002-03. India now has the most AIDS cases in the world (5.7 million). The poverty ratio has fallen to 22 %, a good achievement, but 242 million people are still below the poverty line. Democracy provides some avenues for redressing grievances. But the steady rise of Naxalites shows how limited this benefit really is. Democracy without rule of law is a weak institution. Yes, India does have a growing world-class business community. But unless the state is transformed from a callous exploiter into one that actually serves citizens, unless we get a half-satisfactory police-judicial system, unless we create incentives that reward desirable behaviour of officials and politicians and penalize undesirable behaviour, I doubt if India can become an economic superpower. .

What do you think?