Miles to go before we sleep
The euphoria around India’s growth has to be tempered with realism. Amid talk of superpower status, we need to remember that the country is beset with mind-numbing poverty, writes Abhishek Singhvi.india Updated: May 20, 2008 22:59 IST
After the ‘Shining India’ debacle, one is chary of using catchy acronyms — they have a nasty habit of embarrassing political parties. But when one speaks on India at international meetings, it becomes clear that you can romanticise, criticise and analyse India, but you cannot ignore it. Statistics unveil the positives: foreign direct investment (FDI) in India has increased from $4 billion to over $22 billion between 2001 and 2007 and the ratio of FDI to GDP, which reflects a nation’s attractiveness as an investment destination, has increased from 0.5 per cent in 1990 to 5.7 per cent in 2006. (China’s ratio decreased from 13 per cent in 2000 to 11 per cent in 2006).
India is a trillion-dollar economy and its per capita income has increased three times to $3,051 between 1980 and 2006. In purchasing power terms, we are now the fourth largest global economy, expected to replace Japan, which is in the third place, shortly. Confidence in India is at an all time high: we retain the second place on the Kearney’s confidence index for the second year running, with China remaining first for the last five years. A simple but telling statistic illustrates the growing confidence in India: in the 1970s, 60 per cent of the IIT graduates migrated to the US in less than two years; in 2007, only 3 per cent headed abroad. Big-ticket acquisitions like Arcelor, Corus and Jaguar are important but what is far more significant is the revolution in small and medium enterprises (SMEs) sector. Thousands of such Indian SME entrepreneurs are acquiring companies in Europe.
India’s strength comes from the fact that market-driven forces are powering its growth; it is a bottoms-up approach. On the other hand, China’s expansion has a top-down approach. As Harvard don Tarun Khanna put it incisively, a lot of earlier paradigms are changing. Our efficiency parameters are now cutting-edge and global — no more is the ‘Made-in-India’ tag a synonym for inefficient processes or defective goods. India is fast becoming a laboratory for innovation. For example, some of the best pediatric cardiac care is available here because doctors in India deal with more diverse and complicated cases per day than their counterparts in Europe. Finally, as Khanna points out, aspirations for Indians now, more than ever before, incorporate the twin goals of becoming rich but with a conscious element of social responsibility. Many private sector earners are chucking up their traditional jobs to contribute to the country in diverse ways.
But this euphoria has to be tempered with realism. Amid talk of superpower status, we need to remember that the country is beset with mind-numbing poverty and disparities. We will continue to live in an illusory world and worship false Gods unless we accept these sad facts: we occupy the 93rd position out of 119 slots on the Global Hungry Index; 35 per cent of our population (over 350 million people) get less than 80 per cent of minimum energy requirement; a humongous percentage of pregnant women are malnourished and only half of the school-going population completes eight years of school.
The architecture of growth has to be inclusive and the philosophy of development has to be empathetic. The invisible hand of the market, in the Indian context, cannot fulfill the supply-side constraints: it cannot provide water, sanitation, rural infrastructure and connectivity. Therefore, the role of the government in the Indian economy will remain very important. The pace, content and grammar of growth cannot be unidirectional; equitable growth is a must.Hence, unique programmes like the National Rural Employment Guarantee Scheme and the unprecedented increase in budgetary allocations in education and health are important. Equally important is Bharat Nirman: the government intends to spend Rs 1,74, 000 crore by 2009 on irrigation, drinking water, housing, roads and telephony. The unorganised sector Bill that seeks a health cover of Rs 30,000 for every unorganised sector worker living below the poverty line is also a move towards the dream of inclusive growth.
To talk about reform without placing it within the political structure is like talking of a situation without a context. Political leadership always influences the growth process. India’s growth trajectory has demolished myths like coalitions are anti-growth and unstable. In fact, India has never grown the way it did after 1991. Indeed, stable majorities are not necessarily better-poised to implement reform and thinner majorities can often spur greater developmental impetus. The other myth was that regional parties retard growth; we have seen some of the highest growth rates have been found in Tamil Nadu, West Bengal and Maharashtra.
Many feel regionalism and regional parties are cacophonous and chaotic. But regionalism does, often unnoticeably, act as a safety valve, especially in a diverse country like India. It manages dissent, dissatisfaction and discomfort at the local level and insulates the federal level from explosive consequences. It also enhances responsiveness and a far greater awareness of local aspirations. India’s Centre-biased Constitution in design has, in practice, by a remarkable evolutionary process of ‘unintended or inadvertent federalism’, arrested the Sarkaria Commission’s famous lament of “blood pressure at the Centre and anemia at the states”. The challenges for the future are many and diverse: we need to infuse new energy into the sluggish agricultural sector; invest over $350 into the infrastructure sector with innovative public-private partnership models; leverage our remarkable demographic dividend; combat corruption; usher in electoral and legal reforms and maintain the liberal and secular face of our democracy. We have kept many promises, but the list is not only long but also ever-growing. We have no option but to walk many more miles.
Abhishek Singhvi is MP, Congress National Spokesperson and Senior Advocate.