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India at 60: The Road Ahead

January 26, 2010

India became a Republic on the 26th of January, 1950. We as a nation in free independent India are 60 years old. This is a milestone in any individual’s life as this is the year of retirement here in India for those in government jobs. For a nation, sixty years is a very short time. India has been a nation since times immemorial, but in modern Indian history, we became independent in 1947 and our constitution was enacted in 1950. In that we are a very young nation. The drudgery of foreign rule was a burden that was a hindrance to growth.  The infrastructure developed by the British like the railways, the judiciary and roads and buildings were to enable them to rule over this huge landmass. Rarely was it meant for the benefit of the people.

When we did gain independence there was euphoria all around. People’s expectations were sky high and their spirits were soaring. The 1948 war with Pakistan brought us down to earth, as did the mindless butchery on both sides of the border in the knee jerk partition – dismemberment of the country. Congress and the Muslim League should have anticipated the kind of havoc partition brought on the people on both sides of the border. Even if there was going to be a division, it should have been done amicably and with planning. The scars of displacement and resultant violence remain.

There was poverty aplenty and our founding fathers came to the conclusion that a socialistic economic development model would help us erase this ghastly scourge. What we went in for was what was called a ‘mixed economy’ – with an emphasis on state welfare as well as a market economy. What started off as a well thought out system became a drag as the state became more and more unwieldy and state’s interference in business and in all walks of life increased. Nehru’s Commanding Heights were an attempt at hastening the process of development and industrialization and perhaps at that time the country did need such a shot in the arm from the state to help get things moving. But socialism was being taken too seriously and government was seen as the emancipator. A government job was what everyone was looking for. This was untenable and unrealistic. Production fell as lethargy and incompetence in the public sector became a drag on the economy. The high rate of taxes made enterprise impossible. The bureaucracy became all powerful and those who were in industry and business found that they had to pander to the unending bureaucracy to get small things done. A babu (clerk) in any department was more powerful than many officers and businessmen. The Soviet model of development was being followed and that was the bane of our society of that time.

Fall in production, inevitably led to a scarcity and a resultant rise in prices. While the income levels remained stagnant the price rise pinched the common man. The 1962, 1965 and 1971 wars were a further drain on the exchequer. Corruption followed. Airlines, banks, hotels and many industries were taken over by the government. This was one area that the government should have refrained from entering, but it did not. Socialism remained an attractive slogan as the teeming millions were made to believe that their hope was a socialistic structure. The government believed that their ‘schemes’ could alleviate poverty. Nothing could be further from the truth.

By late eighties winds of change had begun to sweep the world. People like JRD Tata had been trying to impress upon the government, the importance of encouraging enterprise and to open up the economy since the seventies. Their cries went unheeded. Socialism was a slogan that worked and ‘garibi hatao’ and other such ear-catching political jargon caught the imagination of the people. Poverty remained.

Were it not for Ronald Reagan, Margaret Thatcher, Mikhael Gorbachev and the Mujahidden (later who became the Taliban) perhaps the Soviet Union would not have dismantled. A system lay in tatters and the cold war was a part of history. The fall of the Berlin wall was the end of the debate. Free market economy was the right way and perhaps the only way forward. Development by governmental economic injection as envisaged by the communist/socialist model was impractical and artificial. Human enterprise was the answer to the problems of mankind. Narsimha Rao and Manmohan Singh steered India away from the beaten path. What they started was taken forward by the successive governments and today, one can say with some conviction that India is on the right track. What is needed is further opening up and liberalization of the economy with fewer barriers and a rational tax structure. The good news is that the tax structure is being rationalized and the economy is opening up to help entrepreneurs grow. Private enterprise is the buzzword and some of the modern day icons of India like Mr. Narayan Murthy of Infosys, Ratan Tata of the Tata group and the Ambani brothers have become public figures because of their excellence in business. Business is not a bad word anymore.

Poverty still abounds, but there are winds of change. With a growing population, one would have thought that the number of poor would increase. But with a rational economic developmental approach, poverty is on the decrease and only some 20-25% of the population is under the poverty line as compared to more than 45 to 50% during the 70’s and the 80’s. Rural development is not a mirage but a reality. Media and communication have played their role. There is greater awareness than ever before. Television has reached the villages and cable TV is available even in the remote corners of the country. Cell telephony is common and communication has become very easy. This helps people gather information and farmers can get better price for their produce. The sahukar/middleman culture is receding and farmers are getting fair price for their produce. TV journalism has turned to activism in a country like ours and there is more accountability than ever before. Cut throat competition between the various TV channels has resulted in all and sundry looking for issues that could increase their viewership. The political class has become aware of the need to be better administrators and better communicators. Riots have become a thing of the past as TV and internet reach to the remotest corners of the country and the landmass has shrunk considerably. Greater emphasis on development and enterprise has meant more movement of people from South to North and from North to South and from East to West and from everywhere to everywhere else. The country suddenly does not look like a sub-continent that it is anymore and communication and media and ease of travel has meant greater interaction between the people of all regions and cultures. There is greater cohesion in the country than ever before and there is empathy among Indians for each other. We have begun to think like one and that is no mean achievement for a nation as big as ours and as diverse as ours.

Education levels have gone up. The explosion in mass media has meant greater awareness and the poorest of the poor have access to radio and TV. This has resulted in greater hunger for information and the realization among the poor that their emancipation or nirvana lies in their ability to read and write. Education has become a demand of the common Indian and not a luxury that only a section indulged in. The state can do only so much and therefore private educational institutions have spawned in a big way. Education ‘mafia’ has taken over. This was inevitable in a way. From dishing out less than ordinary education at exorbitant price, the demand of the people is to insist on quality education that will help the youth of India tackle their problems ensuring employment and facing life in more meaningful ways. More and more seats of higher education are now collaborating with some of the leading universities and schools of the west. The onus should be on developing an education system which not only ensures that young minds can go out in the world and find a place for themselves but also to inculcate the time honored Indian values and traditions that make us what we are. A course on Indian history and culture must be made compulsory in all institutions regardless of their vocation. Young must also be encouraged to learn Indian languages, especially the mother of all Indian languages – Sanskrit. The good news is that education is becoming a way of life and the uneducated are fewer in number than ever before.

Science and technology is also growing by leaps and bounds. India has found its place in the field of technology – especially computer technology. This does not mean that we can afford to ignore basic sciences. There needs to be greater emphasis and investment in the field of basic sciences. Marketing of Indian goods and services is an important ingredient in the success of any enterprise. While it is indisputable that a good product will find its own niche, it is also true that to make it a viable business proposition, effective marketing is a must. Innovation is important and where there is free thinking, the human mind can think beyond the routine. This is what creates brands and that is where the real business is. Patents and copyrights need to be infused in a system that creates excellence. We are getting there but Indian products need to be branded. A good example is the fashion industry. Our designers are perhaps as good as any in the world, but they are not branded as are some of the European and the American brands are. This must change. For that we Indians need to take pride in our own products, especially those that do not compromise on quality. If we start endorsing our own goods and stop hankering for foreign brands, the world will take us more seriously.

Democracy has strengthened over the years. The new refreshing trend over the past few elections is the focus on developmental issues away from the caste and class issues that decided the future of candidates. People have made it clear now that they want a stable government that performs. There are no short cuts. Liberalization has meant that the common Indian has tasted the fruits of development and such hackneyed slogans as caste and religion have little meaning in the new India. People want amenities and growth. People want roads and clean drinking water, the right price for their crops, jobs and education. They will settle for nothing less. New faces on the Indian political landscape like Rahul Gandhi, Sachin Pilot, Jyotiraditya Scindia, Pallam Raju, Navjot Siddhu, Shahnawaz Hussain, Shashi Tharoor, Varun Gandhi, Omar Abdullah and others have given politics in India a refreshing change. The mantra is – perform or perish. The not so young Nitish Kumar of Bihar has shown that development is possible even in such states as his which was considered a basket case. Development is infectious. If one village gets a road and a tube well, the villages around it insist that they should not be left behind. Rural India is changing and that perhaps is the greatest sense of hope for modern India. Big business houses like ITC, Reliance, Bharati and Tata’s have realized that were they to ignore rural India, their own future and their competitiveness will be in jeopardy. Besides, agricultural income even today, in India is tax free. This is incentive enough.

Science and technology has also made a change for the better. We have established ourselves as one of the nations in the world that has conquered the space. Our satellite launch vehicles are reliable and cheap and therefore western nations prefer ISRO to the European space agency or the American NASA. ISRO is becoming economically viable. The baby satellite that orbited the moon, Chandrayaan (moon vehicle) found traces of water there. A man in space – an Indian space center is perhaps the next logical step. Satellite imagery has helped us in agriculture and fishery as also in forecasting of natural calamities and landscape monitoring. Science has become a vehicle for growth and development, as it should be. Defense and security is a major area of concern. The state is investing heavily in this area but ultimately, private enterprise will have to step in if we were to compete with the best in the world. DRDO is doing a fabulous job but has its own limitations. Private enterprise in defense equipment manufacture should be a priority area as India is one of the highest spenders in the world, thanks to our strategic location in today’s world. Imports of defense equipments make us dependent and we need to be able to manufacture a good proportion of equipment for greater independence in foreign affairs. Internal security also needs to be beefed up and the bogey of such extreme organizations as the Maoists must be called. The media needs to play a proactive role and stop playing soft with these anti-nationals who are out to weaken the country.

Has corruption gone down? From the reports of international bodies, it is clear that we need to clean up our bureaucracy much more. One way is to trim it down. The state must interfere in the lives of ordinary Indians to the minimum. That is happening and divestment of some of the important industries by the government has again started. This is a welcome step. The NDA government lost mandate because of its vigorous policy of divestment. The insecurity of the millions of employees in the state run enterprise saw the demise of a government that had done fairly well on other fronts. In a democracy, human rights are generally taken care of. But in India’s case, because of the widespread poverty and ignorance, human rights are not as big an issue as they ought to be. Education and better standards of living will lead to awareness and perhaps then we may be able to implement such norms as blanket ban on child labor, compulsory education and sanitation. The mid-day meal scheme at government run schools was a masterstroke and that brought many children to these schools. The implementation has left a lot to be desired. The biggest challenge for modern India will be as to how we are able to implement the schemes that the state floats. Again, private initiative will be critical for the success of many of these schemes and perhaps, the ultimate solution will be the lead taken by these private business houses, as a better standard of living will mean more business for them. It pays to invest in society. While there are some who understand this adage, there are others that turn away from such fundamental initiatives. Were the big businesses to decide to spend even 2 to 3% of their turnover on social initiatives like education, healthcare and clean drinking water, they will stand to gain disproportionately in the longer run. It is a matter of will and foresight. Sanitation has become the buzzword in rural India and people refrain from giving their daughters in families that do not have lavatories. That is a big change and a giant leap for society in rural India. Much as we lament the problems of rural India, urban slums are as much a cause for concern. You cannot throw these people out. Cheap housing with all basic amenities is the need of the hour. Again, this can happen in a big way only if this becomes a viable business model. Tatas have started this in outskirts of Mumbai. Other towns need to emulate. This is a good business opportunity. The increasing size of towns is inevitable in a country that is developing and where the population is growing. Better planning is required to make these cities livable and not become an eyesore.

Energy security cannot be overemphasized for a developing country like ours. Clean energy should be our priority. But that does not mean that we can afford to stop using thermal power for our energy needs. The Krishna-Godavari find is a major encouragement as is the Bikaner Cairns project. Our energy needs are only increasing by the day. Increasing our refining capacity is as important as new oil finds. Energy needs should be one of the priority areas, as our future growth will depend largely on this. Rural electrification is expanding. Solar options need to be explored more vigorously especially in rural India. Villages can be self sufficient economic entities, something that Gandhi envisioned. Organic farming is the obvious choice, and that is the only way to ensure adequate food grains and vegetables, away from the chemical fertilizer based agriculture being pursued now. Dairy farming on industrial scale, something on the lines of Amul in Gujarat will become a necessity in the years to come. Exports are important and that should transcend the usual information technology and bio-engineering as well as machine tools. Were we to expand our agriculture, we could be the source of food and vegetable to the region east of the Nile. A little planning will go a long way.

Our relation with our neighbors affects us very fundamentally. The belief that a ‘concern’ for the other leads to better relation is not necessarily true. National interest should be given precedence over everything else. Talking from a position of strength is the only way to better relations all across, and that includes not only our geographical neighbors but also our strategic allies across the globe. India needs to be taken seriously by our friends and allies as much as those who have evil intentions against us. Our security, both physical and economic must be our primary concern.

While India in the past couple of decades seems to have found its way, the road ahead is long and arduous.  The problems and issues that confront this beautiful country are numerous. It is true that most of Asia and Latin America has seen a rise in their economic fortunes. India therefore must not let this small success become a source of exaggerated sense of achievement. The good news is that India has become a pivotal player in international arena. That is welcome development. India and we Indians need to work harder, more diligently and with greater sense of purpose. The challenges are many and it is ‘miles to go before we sleep’ as said Robert Frost. Sleep we cannot, the only way forward is to know where we are and where we have to go and how we are going to reach there. Gandhi remarked that India of his dreams was when all had enough to eat, clothes to wear and a place to live. We are yet to get anywhere near that.  The biggest challenge facing modern India is the dichotomous growth pattern in which a section of the population has been largely left behind. It will take a serious concerted effort from all sections of the society to ensure that this widening gap is bridged. That will lead to a holistic, real and meaningful growth that remains sustainable. This will fuel the economy, not only of India but of the world.

Update 29.01.2010: President Barack Obama in his State of the Union address pointed out the need to revamp the economy and to make it more competitive as according to him ‘China is not waiting, Germany is not waiting and India is not waiting – they are moving forward’. The mention of India has seen Indians rolling with delight. I guess the President was being too generous to bracket India with Germany and China. Media saw this as American’s loosing their sleep over Indian ‘progress’. Nothing could be further from the truth. We need a reality check. The turnover of a couple of US conglomerates like GE and Exxon-Mobil is more than the combined GDP of India. India is no threat to anyone. We will be content if we could feed our millions of hungry bellies and make sure there is no loss of life due to rains and floods and heat stroke and cold. We are still struggling to survive – the US or any western nation cannot contemplate of India being a threat to them, economically or otherwise. President Obama was keen to press the issue of jobs not flying overseas and perhaps that was the only reason he mentioned India.

The recent UN report points out India’s problem of overcoming poverty and has this to say:

“In recent years, economic growth has been relatively high in three largest countries in the region, India, Bangladesh and Pakistan, which recorded annual growth per capita above 5 percent in 2000-2006,” according to “Rethinking Poverty” report of the UN’s Department of Economic and Social Affairs.

“As a result, the sub-region saw the proportion of those living in extreme poverty decline in relative terms, from a high of 59 percent in 1981 to 40 percent in 2005,” it said.

“However, such growth has not been sufficiently inclusive and pro-poor to reduce the absolute numbers of people living in poverty. Income inequalities have grown steadily in India since the 1980s, in borh urban and rural areas.”

Notice that we are still being bracketed with Pakistan and Bangladesh!!!

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