India: The Lumbering David
India’s growing economic prowess is a foregone conclusion. In the aftermath of the ’91 “L-P-G” reforms – and subsequent events – unforeseen levels of economic development were heralded in. India’s muscle in BRICS is in sharp contrast with once being called the “Third World”.
The Indian market, freed from (draconian) legislations such as the FERA and MRTP, are now (usually) thundering strongly and confidently. It is integrated, more strongly than ever before, with the global economy. The Indian stock market has a net worth to rival that of our most beloved nemesis, China. A growth rate of 7% is now “bad”, which is a far cry from the (ancient-in-public-memory) “Hindu Rate of Growth” (a deeply racist term, in my opinion).
Another indicator of a good economy is the size of secondary cities. Secondary cities faring well, as compared to the chief politico-administrative-economic centers, are usually indicators of good wealth distribution. Pune, Bengaluru, Hyderabad, Chandigarh and a host of other cities, when compared to the golden quadrate of New Delhi-Mumbai-Chennai-Kolkatta fare much better when one compares, for example, Vladivostok (or any other Russian city) with Moscow-St. Petersburg.
All of this would be cause enough for one to conclude that the current dismal economic situation is more of an anomaly than the norm, egged on by weakened global cues. This is in part right; the Indian “basics” are in order, but they are quickly approaching the point of becoming irrelevant. These “basics” have fathered a host of myths which are proving to be the cause for both complacency and disaster.
One such myth is that India’s demography is going to reap rich benefits.
Remember the famous “हम दो हमारे दो” slogan, plastered all across the red brick walls that line railway tracks all across the country (alongside posters marketing much more delicate and discrete “consumables”)? Remember how the Civics and Economics text books of in school would have chapters dedicated to the need of family planning? Remember the horror of the Sanjay Gandhi regime? Ever wonder why we see less of that these days?
Popular perception has now come to regard a large population as an asset, rather than a liability. With our population getting younger, we will have more people to work in our fields, mines, factories and IT parks. The greater the number of people who earn, the greater is the number of people who will pay taxes, thus filling the government’s coffers. Also, greater is the number of people who will put a part of their earnings into bank accounts, and make capital available to those who need it. Everything from agriculture laborers and blue-collared workers to the most sophisticated of analysts, ready to be deployed onto Wall Street (or perhaps Seoul), are available much cheaper.
After all, this worked for most of the Asian economies (the “Tigers”) in the post WW-II period – and the absence of a young population has several hurt nations like Japan. After all, if it was a success in beloved China – having the world’s largest population, it is bound to succeed in India too, right?
China succeeded because of the relentless reforms pushed by both Deng and Mao. The ocean of cheap labor that will be made available was rightly foreseen and put to use by China’s policy makers. Revolutionary decisions, such as the reform of the hukou system and incentivizing massive migration to the Pacific coast were instrumental in the blossoming of China. And reforms are precisely what India lacks.
The manner in which the Manmohan Singh-gang now executes reforms (or rather “pushes” them) is more of fire-fighting, rather than a thought-out and executed strategy. Each effort at modifying policy is the result of another crisis forcing the government’s hand. The nation, which largely works on the trickling-down of shares of the economic pie, or by slices of it being passed around by the fine benevolent philanthropists in New Delhi, needs to get out of the post-dot-com-bubble-burst honeymoon phase, and realize that pants need to be pulled up, and belts tightened. As one analyst has rightly pointed out, 7% is now the new Hindu Rate of Growth.
Each young (wo)man added to our work-force is an unemployment liability, unless (s)he has been educated and trained. As our school enrollment levels rise, so do school-dropout rates. There is a dearth of vocational training and expertise. Strategies like the NREGA (which has proved to be a failure) are largely irrelevant when positive contribution to the larger national economic scene is under consideration. Once the number of people eating out off the nation’s economic pie increases, while the number of those contributing to it decreases (or remains stagnant), the money left to finance everything from Food Security and Pension Schemes to money for our soldier’s ammunition starts running low. Once it is realized that this is in spite of a huge potential work force, public discontent will rise. Now discontent in India will probably not reach China-like flash points, but as the Anna Hazare movement has shown us, the People’s patience has reached the thin end of the wedge.
As population growth gently slows down to the replacement rate of 2.1%, policy makers have to realize that the impulse generated by the population growth is now over. The demography fair-tale is just one dimension of what is wrong with the country. Historically, every time India has turned inward, become complacent, and gotten too sure of Herself, disaster has struck.
What we need now is reform. Not just to exorcize myths, but to improve upon reality. And for that, the Crown of India, in Lutyens’, needs a stronger forehead to rest upon. Waiting, and praying, for the dawn of the reform that will be 2014.