Special Reports
 
 


INDIA RISING:

HOW FAR, HOW FAST?

by

Dr Surjit Mansingh

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The process of rising from a lower to a higher level of performance can be measured by objective fact as well as by subjective expectation or perception. India’s emergence from the miserable pit in which it was left at the time of independence in 1947, to its present day status as second only to China in the magnitude of its economic miracle, is well documented as an objective fact. So is the international respect India currently receives as one of the shapers of the twenty first century, a member of the Group of Twenty (G-20) charged with helping to manage global finances and development, a possible permanent member of the United Nations Security Council, and a desirable strategic partner of every important state, including the United States of America (US). Subjective perceptions, however, vary according to individual experiences, expectations, and criteria of judgement, so that there are different answers - enthusiastic and cautious -- to questions about how far and how fast, India can continue to rise. We review briefly India’s economic, political and social record over the past six decades, and then consider contemporary factors that prompt optimistic or discouraging forecasts for the near future.

Background
Since ancient times, India was known as the land of fabled wealth and spirituality. India was a hub of transoceanic maritime trade from the eastern Mediterranean to the western Pacific, and a vital participant in the land trade across Asia, on roads collectively known as the Silk Road. Indian culture and ideas spread throughout this vast canvas and were correspondingly enriched. India attracted to itself adventurers, merchants, and seekers of Truth, as well as raiders, conquerors, and settlers. Northern India’s vast river valleys are fertile and the ratio of land to population was generous, until about three hundred years ago. Peninsular India’s geography is variegated but great wealth was produced there as well, expressed in magnificent temples and glittering markets. According to conventional wisdom, India around the year 1700 accounted for nearly 20 per cent of global produce; the name of the ruling dynasty of the time, Mughal, is synonymous with splendour.

Then came the Europeans, as travellers and traders, as evangelists and military adventurers, and finally as conquerors. The rule of the English East India Company in many provinces after 1757, transferred to the British Crown in 1858, resulted in a devastating drain of wealth. This left India with more than half its population existing well below the poverty line however measured, having a life expectancy of 20 years only, a death rate of 48.6 per thousand in the 1910-1920 period, and a literacy rate of less than 15 per cent by 1940. Deep stratifications by caste of a hierarchical society, were sanctified by the decennial Census and some nomadic groups were even classified as ‘criminal’. Social mobility was limited by custom as well as lack of economic opportunity. Numbers of Indians found greener pastures in far-flung parts of the British Empire and an urban elite, of whom many were educated in British Universities and Inns of Court, led a half century long struggle for freedom. As is well known, Mahatma Gandhi’s commitment to ahimsa (non-violence) and satyagraha (struggle for Truth) gave a unique flavour to the Indian national movement under his leadership after 1920. He also received financial support from the small but wealthy class of Indian industrialists emerging from the First and Second World Wars.

Britain finally delivered independence to India in August 1947 accompanied by the shattering blow of Partition. Partition resulted in more than a million dead and an immediate influx of about four and a half million Hindu and Sikh refugees ejected from newly created West Pakistan and more millions flowing in from East Pakistan subsequently. Vicious communal violence and a break down of law and order seemed likely. Surely the first ‘miracle’ in independent India was the sincerity and steadfastness with which Indian leaders, especially Gandhi and Prime Minister Jawaharlal Nehru, held the line against retaliation on the millions of Muslims who chose to stay in India. Communal violence remains a latent threat, often exploited by politicians seeking cheap electoral advantage. It poses as serious a challenge to social harmony and peace in India, as does open caste conflict in some parts of the country. Numbers of voluntary and official individuals and groups in civil society are dedicated to the task of building cooperation across caste and sectarian differences, in keeping with the traditions of India’s plural civilisation.

A Constituent Assembly led by eminent lawyers took up the task of drafting a Constitution for India as a Republic, comprising the most heterogeneous population of any country in the world. Several hundred languages belonging to four distinct linguistic families with entirely different scripts, are spoken and written in India; first 14 and later 18 major languages were listed as ‘official’ for educational and parliamentary use. Language was used as the basis for reorganising the political boundaries of Indian states in the late 1950s. Every major world religion is practised in India as well as any number of minor religions listed in Census reports under the category ‘other’. And the Census categories ‘Hindu’, ‘Muslim’ and ‘Christian’ explicitly encompass several distinct sects each. Adding to complexity was the variety of administrative practices juxtaposed in provinces of former British India, and the 550 plus Princely States, acceding to the Indian Union. Few people inside or outside India believed that the country could pass through dangerous decades and survive as a unified whole, after the first generation of national leaders had passed away. We see a second ‘miracle’ in the fact that no one today questions the continuing presence and growing influence of India as a democratic, secular (pluralistic) union of states, on the world stage.

Early Successes and Setbacks
The leaders of independent India aimed at bringing about both economic development and social justice through a parliamentary system based on universal adult suffrage. The Constitution itself outlawed discrimination on grounds of caste, creed or gender and made the longstanding practice of untouchability a criminal offence. It also provided protective discrimination for the most disadvantaged groups in society classified as Scheduled Castes and Tribes, through reservations for them in educational institutions and public services. Parliament debated and passed laws in the 1950s enabling radical land reform to erode glaring inequalities of ownership, and modernising Hindu personal law, so as to emancipate women. Nehru and his newly created Planning Commission tackled the enormous challenge of transforming an agrarian economy by choosing the ‘third way’ of a mixed economy, thus avoiding the violence and regimentation of a communist revolution, as well as the exploitation and disparities of capitalism. India’s industrialists formulating their ‘Bombay plan’ in 1948, also opted for a mixed economy combining the private and public sectors. The first and second Five Year Plans invested in the infrastructure of improving agricultural productivity and creating basic industries. Industrial policy evolved to protect private domestic industry in extensive areas, to welcome foreign capital and enterprise under careful regulation, and to give the public sector command of key existing and new industries of national importance. At the same time, traditional crafts were revived and cottage industries subsidised, to satisfy consumer demand through Gandhian principles of village uplift. This mix of approaches to nudging India’s existing low production and unequal distribution into a trajectory of high growth and egalitarianism, was termed a uniquely Indian path toward a ‘socialistic pattern of society’.

The 1950s was an exciting and invigorating decade. Self -reliance was the watchword. The best and brightest of India’s educated youth gravitated to public service, and carried out prodigious tasks averting famine, resettling refugees, maintaining law and order, carrying out land surveys, adjusting administrative boundaries, integrating Princely States, organising community development projects and, in short, doing whatever needed to be done at the district level to ease the lives of the population. Nehru called the new dams and hydroelectric plants being built the ‘temples of modern India’. New roads, new cities such as Chandigarh, were visible signs of change. Central Universities were created and dedicated to agricultural research, to science and technology, to medicine, to management. Traditional universities and colleges were multiplied. Free and compulsory primary education was inscribed as a fundamental right. Economists theorising stages of economic growth saw India on the verge of a take-off, pointing to self-sustaining growth.

Nehru commanded international prestige and his foreign policy of nonalignment, standing outside the two opposing military blocs formed during the cold war, won reluctant acknowledgement from the great powers of India’s independence, and friendly association from other medium powers and newly independent states. Wealthy countries on both sides of the global ideological divide, were willing to assist India’s modernisation and industrialisation efforts on Indian terms, with very few strings attached.

But India’s ‘third way’ did not solve the nation’s problems of production or distribution as expected, because it contained a fundamental paradox. Making basic changes in the traditional pattern of economic and social power relations, without making a direct attack on the existing social order proved to be impossible. The political power of nominally reformist parliamentarians depended on the support of local notables, adamantly opposed to overturning caste or gender hierarchy, in overwhelmingly rural constituencies. Neither industrialisation nor urbanisation proceeded vigorously enough, to appreciably alter the ratio of rural to urban populations of roughly seven to three, as documented in decennial Census Reports. Moreover, modest gains in national per capita income made in the first decades after independence, were neutralised by a demographic explosion over 25 years, so that a high proportion of the population remained below the poverty line and continue so.

The 1960s brought two wars, the deaths of two prime ministers, three years of drought and an over dependence on food grain supplies from the US. Criticism of India’s development model came from many directions, and some liberalisation of price controls and licensing systems was attempted, briefly. The general elections of 1967 saw a proliferation of political parties and the end of Congress Party domination in States, or Parliament. Prime Minister Indira Gandhi countered challenges to her authority by adopting an increasingly radical rhetoric of ‘garibi hatao’ (remove poverty), nationalising banks, insurance companies, and key industries, and promulgating highly restrictive regulations on foreign exchange, as well as large business houses. What came to be known as the ‘permit, license, quota raj’, inevitably created a nexus of corrupt individuals across the political and commercial spectrum profiting from what one economist called ‘the political economy of stagnation.’ India’s share of world trade fell to one half per cent, and its overall rate of growth seemed stuck at a ridiculed 3.5 per cent. Thousands of educated Indians in the professions found more hospitable work climates abroad, creating a ‘brain drain’; (their stellar achievements helped alter Western perceptions of India, for the better). Successive Indian leaders in the late 1970s and the 1980s attempted to break out of this debilitating bind with only partial success. Their resort to deficit financing and commercial borrowing, resulted in the unprecedented financial crisis of 1991 that forced India to go to the International Monetary Fund (IMF) for a bail-out, to avert defaulting on its international debt.

India Unbound
The 1991 crisis kicked India on to a new playing field on which it has excelled. Prime Minister P.V. Narasimha Rao, Finance Minister, Dr. Manmohan Singh (currently prime minister of India), and a technocratic elite within the bureaucracy, introduced a bundle of reforms infused with a vision of India re-emerging as a major economic power, and re-integrating with the world. Spasmodically carried forward by succeeding governments of different political parties, these reforms opened the industrial sector and later the infra-structure, to private enterprise and foreign direct investment (FDI). Tariffs were systematically reduced, the Indian Rupee became convertible on the current account, market forces were allowed to supersede permits in domestic and foreign trade, the banking and financial sector was modernised, permitting private and foreign ownership in it, and major stock exchanges were linked to brokers all over the country and the world, while largely adhering to conservative fiscal and monetary policies. India ratified the World Trade Organisation Convention in 1995 and gradually brought its laws on patents and intellectual property rights into conformity with it.

Results became obvious within twenty years. Rates of growth for savings and investment moved upwards and India’s GDP rate of growth steadily went up to above five per cent, to above seven per cent, to more than nine per cent, from 2005 to 2009.

Direct and portfolio foreign investment increased from 103 million dollars in 1990-1991 to more than 61 billion in 2007-2008. At the same time, foreign exchange remittances from Indians working abroad - millions in the oil rich states of the Persian Gulf, rose from about two billion dollars to a current $55 billion. Despite running trade deficits with major partners, India was able to increase its foreign currency assets over the same period of time, from two billion to more than three hundred billion dollars.

Prudent financial management insulated India from the Asian financial crisis of 1997 but increased participation in globalisation since then, brought a corresponding vulnerability to its dark side. India’s GDP rate of growth has slowed to about seven per cent in circumstances of the severe global economic crisis since 2008.

Economic reform at home was accompanied by foreign policy initiatives abroad, summed up in the phrases ‘Look East’ and ‘Look West’ and facilitated by the end of the cold war. The isolationist underside of nonalignment was gradually replaced by multiple relationships, while maintaining strategic autonomy. India engaged with the dynamic economies of East Asia that it had formerly ignored, especially the Association of South East Asian Nations (ASEAN), South Korea and Japan, to enormous mutual benefit. Singapore had long looked to India as a second wing to lift ASEAN beyond over-dependence on China. Major South Korean companies began investing in India in the early 1990s, and shifted some of their production lines to India, after the Asian financial crisis of 1997. Bilateral trade increased 15 times in ten years and the two countries signed a Comprehensive Economic Partnership Agreement in 2009. Japan is the largest donor of official development assistance to India and the third largest source of foreign direct investment (FDI). Japan’s collaboration in infrastructure projects such as the successful Delhi Metro Rail system, and a high-tech manufacturing and freight corridor under construction between Delhi and Mumbai, are especially valuable. At the same time India and China have greatly expanded their commercial dealings, without resolving their political and boundary differences. A new East Asian Summit (EAS) signalling the shift of global economic vitality from the Atlantic to the Pacific and Indian Oceans, was created in 2005, with India as a member and the scheduled host for 2012. India is often touted as the ‘new Asian tiger,’ and by offering non-reciprocal concessions to its smaller neighbours, and holding the door to commercial interchange open, even to a Pakistan engaged in prolonged low-intensity conflict with it, India is trying to cement the fractious nations of South Asia into a growth oriented and cooperative regional association.

European countries, especially Britain, France and Germany, were also stimulated by India’s economic liberalisation to intensify their economic and political relations with it. Without doubt, the most dramatic transformation took place in the US. The Clinton Administration began paying serious attention to a ‘new emerging market’ in the mid-1990s, and swung from severe condemnation of India’s belated nuclear tests in 1998, to dialogue and engagement. The Bush Administration in 2005 announced its intention to help India become a global power, and signed several long-term agreements of partnership in fields ranging from commerce, to defence, to education. The US-India Civil Nuclear Cooperation Agreement of 2008, symbolised this almost unimaginable new relationship, and opened the doors to international participation in building energy-hungry India’s nuclear power industry. Emerging economies in the huge continents of both Africa and Latin America are as eager to engage with India, as they are with China. It is becoming increasingly clear that the future of the world will be mainly shaped by the BRICS—Brazil, Russia, India, China and South Africa.

The world took note of India. Billboards extolling ‘Incredible India’ appeared in Davos Switzerland, and elsewhere. Indian public diplomacy proclaimed the country as the ‘World’s Fastest Growing Free Market Democracy.’ It often seems as if ‘Eternal India’ is also ‘India Everywhere’. What a Harvard professor termed ‘one billion entrepreneurs’ are moving into the top slots of international business, and Indian brand names such as Tata, Infosys, Mahindra, Mittal, Ranbaxi and Reliance are known world wide, and now make foreign acquisitions. As is well known, Indians excel in the sciences, and the pharmaceutical and information technology industries have led the field, though newer industries such as automotive parts, now figure in India’s exports of goods. Moreover, because Indian economic growth in the last two decades has been based on domestic consumption rather than exports, and because the Indian consumer at the most numerous but least affluent end of the scale is very price sensitive, frugal innovations such as a $2,500 Nano automobile and a $37 Aakash equivalent of an iPad have made headlines, justifiably. Further path breakers can be expected from the self-confident younger generation of Indians. About half the population is 25 years of age or under, so that projections emanating from authorities such as Goldman Sachs, that India would be the world’s third largest economy by 2040, gain plausibility. And no other large country in history has attempted to make such an immense transformation within a democratic system. Numerous accounts penned by economists, journalists, scholars and travellers, describe how ‘India Unbound’ had once again ejected a cork bottling up the creative energies of its people, and the results have been another ‘miracle’, with caveats.

Caveats
The first and weightiest obstacle to India’s rapid rise is the way in which democracy is mocked by the inability to reach consensus in coalition governments, and by all-pervasive corruption or criminality in the political class together with steeply declining standards of competence and probity in the civil services. If excessive government can crush enterprise as it did in ‘the licence, permit, quota raj’, the absence of good governance now prevents the completion of badly needed infra-structure projects, and delays environmental clearances and other necessary decisions, beyond the tolerance level of even the most dedicated investors such as Korea’s Pohang Iron and Steel Company, envisaging steel production in the underdeveloped state of Orissa.

One corruption scandal after another broke into the news in 2010-2011, from the theft of billions in procurements made for the Commonwealth Games, to the billions lost in the sale of 2G telecom licenses, to the enormous sums siphoned off by middlemen from the rural employment and public distribution schemes, designed to nourish and help those at the bottom of the socio-economic heap. Such publicised episodes of corruption on a grand scale—which have led to the arrests of major figures--do not dwarf the insidious and demeaning features of day-to-day corruption, reported by people demanding performance of the simplest and most of necessary public services. Transparency International ranked India 87 out of 178 in a 2005 index of corruption perceptions. A nationwide, middle class, non-violent movement of protest against corruption, led by an aged Gandhian figure, Anna Hazare, erupted in the first half of 2011. Parliament is expected to legislate on some of his demands by the end of the year. More effective, perhaps, is public monitoring of tenders, contracts and projects through resort to the 2005 ‘Right to Information Act’, the introduction of ‘e-governance’ in certain states such as Gujarat, and the use of information technology by non-governmental bodies, as in Rajasthan.

Most tragically of all, failures of leadership and abdication of governance made room for the eruption and continuation of internal insurgencies. The Maoist-inspired ‘People’s War Movement’ that now disrupts a broad swathe of districts running through the centre of India, is the direct result of corruption, non-implementation of electoral promises, high-handed expropriation of land and the demoralisation and evisceration of local police forces, over past decades. It would be difficult to calculate the economic and moral cost to the nation of such negligence.

A second and equally grave caveat to a narrative of India’s rise, is the number of people excluded from its benefits. More Indians have been lifted out of the poverty mire in the last ten years than in the previous fifty, so that the percentage of the population subsisting below the poverty line has steadily fallen from 50 per cent to 30 per cent to below 20 per cent, according to official figures. Yet a recent affidavit submitted by the Planning Commission stated that 400 million persons were inscribed as recipients of the public distribution scheme, and are probably undernourished. This dismaying fact has much to do with a lack of energy in pursuing the UN Millennium Development Goals, as compared to China, or even neighbouring Bangladesh. India’s growth has been led by the services sector located in urban centres, and employing relatively few people. India has not invested recently in agricultural research and development, or in systematisation of agricultural property rights. Agriculture contributes only 20 per cent to national income, but accounts for more than two thirds of employment. According to recently released figures of the 2011 Census, the rate of population growth had declined more steeply, but out of a total of 1,210,193,422 persons 377,105,780 resided in urban areas and 833,087,662 in rural areas. These ratios have hardly changed since independence.

A third major caveat is the absence of any coherent national strategy to enhance comprehensive national power. Almost all decisions are ad hoc, subject to the expediency of the moment. There is a wide variance of education, income and performance among the 22 states of the Union, with Gujarat and the southern states scoring higher than those located in the Ganges valley. Thus, would-be investors Indian and foreign alike, complain about the appalling infrastructure, which has been highlighted as a priority ever since 2004. Similarly, though the National Knowledge Commission laid out ambitious new plans for new central universities, as well as vocational training for 160 million youth by 2020, Indian students flow outwards by the thousands, usually at their own expense. And while free primary education to age 14 is an inscribed fundamental right, more and more parents at the lower end of the social scale choose to invest in private education for their children. Social mobility has undoubtedly increased and is reflected in the number of first generation millionaires and billionaires, as also in the person of Mayawati, an unmarried woman from a family formerly classified as untouchable, now ruling the state of Uttar Pradesh with a population close to 180 million.

Conclusion
There are no simple answers to subjective questions or expectations about India’s rise; only the fact is indubitable. For every criticism and disappointment, there appears to be a corresponding ray of hope. For example, Indian and foreign businessmen expect, indeed demand, acceleration of liberalising economic reforms. But globalisation carries its own risks of widening disparities that strain the social fabric - as one high official put it, “there is a strong consensus for weak reforms” in India. There are loud complaints about the weakness and aged leadership of the Government of India and a Parliament gridlocked for almost a year. But many Indian states show remarkable vigour in pursuing social justice and high rates of economic growth; even the laggard Bihar has been scoring high for almost a decade. The plight of debt-ridden farmers is pitiable and agriculture cries out for reform, but there is enough talk about new technologies and a second green revolution in the making, to ignite hope. And the empowerment of women through targeted literacy programmes, the tireless work of voluntary agencies, and Panchayati Raj (local democracy); requirements that one third of all village heads be female, is palpable.

In short, the boundless energy and confidence of the Indian people drawing on the wellsprings of their civilisation, commands respect.

India is sometimes depicted as an elephant, in contrast to the Chinese dragon. The metaphor is evocative. Indian elephants have long memories and very long lives. They are immensely strong with great endurance and astonishing resilience. They are capable of very hard work under minimal guidance, as is evident in the forestry departments and great temples that still maintain elephants. Elephant herds have strong kinship links with easy means of communication, and are mainly managed by older females. Indian elephants are usually gentle; they are different in both appearance and temperament from African elephants. Multiple stories in India highlight an elephant’s capacity for forgiveness - one might comment on India’s policy of strategic restraint, without pushing the metaphor too far. But historians remind us that elephants were once the equivalent of modern armoured divisions in the armies of powerful pre-modern Indian kingdoms, and medieval rulers sometimes condemned their enemies to death by a trampling elephant. Elephants can move over great distances, as accounts of Hannibal’s army crossing the Alps with elephants illustrate and in a final, telling evocation, Elephants tread not fast, but softly and surely.
 
 

Dr. Surjit Mansingh was formerly Professor of International Politics and Chairperson of the Centre for International Politics, Organisation and Disarmament, at Jawaharlal Nehru University, New Delhi; with a specialisation in Indian foreign policy, especially in respect to China.

She now teaches at the American University, Washington DC. She has previously contributed articles to Newnations: "The Chindia Project" (Feb. 2009); " Prospects for Peace: India and Pakistan" (Feb 2010); and "US President Barack Obama and India" (Dec. 2010).