Saturday, April 21, 2012

India 2020: Being A 'Developed' Country

India's leaders, at least some of them, proclaim that the country will attain the 'developed' country status soon, may be by 2020. This is indicative of the confidence in continued growth of India. At the same time, this may be slightly worrying if being 'developed' is perceived to be the end of the process of 'development'. Such misgivings aside, the goal of being developed may be ambitious and even noble, as this will mean the end of poverty and manifold improvement in the lifestyle and possibilities for millions of people, bringing about the next wave of profound change in the world after the rise of China earlier this century.

It is worthwhile, therefore, to interrogate the idea of India as a developed country and how this could be attained. It is also important to remember that growth of the countries is a fragile affair: Alan Beattie, in his fascinating False Economy, goes on to show how Argentina slipped from its promise shown early in the Twentieth century and went on to become a backward country compared to United States, which was in a comparable state at the time but went on to become the dominant superpower only in few years' time. There is a tendency, among Indian leaders and other thinkers to assume that India is automatically destined to achieve the developed country status, indeed a preeminent position in the world. This enthusiasm, stoked up periodically by one Emerging Fund or the other in search of investors, and a subtle fatalism drawn from various works of history such as Angus Madison's work on the World Economy, overlooks the realities such as the faltering Indian government at the current time and the very existential dangers reckless regional politicians are posing to the country.

Being 'developed', in India, is equated with shiny buildings and airports, but much of it is to do with creation of jobs and opportunities and lifting half the country out of poverty. For all the noise, this is yet to happen. But time is running out to make the big leap. Ruchir Sharma, in his otherwise indifferent Breakout Nations, worries that while China has more billionaires than India, India seems to have more people with 10 Billion than China: It seems that there is an opportunity problem right at the top in India. But this is besides the point: The key point the book makes is that emerging nations are not all emerging at the same pace, some are not emerging at all, and we may be collectively approaching that point in history where winners and losers are determined, just like Argentina and United States in the last century, or England and Spain two hundred years before that.

In a sense, that interesting billionaire conundrum tells something about India. Developed nations became 'developed' by providing opportunities to its people, not by creating Tycoon economies like Mexico, a path Philippines seems to be following in all earnestness. India's development, though large and more diverse compared to either of those countries, is happening right on the fault line of Tycoon trap. The important thing to remember here is that tycoons usually hinder, not help, the development of the country as a whole, as underdevelopment then becomes central to their growing wealth and influence. Indians who take the Ambani brothers making into the Forbes Rich List as the country joining the big league may actually be bitterly disappointed in the end.

There is also a cultural issue at stake here. A particularly Euro-centric view, that of Max Weber's, has dominated development thinking for the last fifty years or so. Max Weber put the cultural influences of Protestantism, 'rational and active', in contrast with the other dominant world religions - Islam (Active but Irrational), Confucianism (Rational but Inactive), and Hinduism (Irrational and Inactive) - to explain why certain countries in Western Europe (and their American cousins) got ahead of the game. The tenets of Hinduism deeply influences India's business culture, despite the claims on the contrary*. Being 'developed', if this is to happen quickly, it will mean dealing with these hidden demons. This can indeed be tricky: Our tendency to see Indira Gandhi, once popular Prime Minister, in her grand-daughter, Priyanka Vadra, for example, springs perhaps from our deep belief in reincarnation, and this encourages dynastic politics and seats for life and posterity, undermining the meritocracy and competition for ideas that a democratic political system could deliver.

Finally, in its quest to become 'developed', India is pursuing a winner-takes-all model, but without shedding any of its baggage. The underlying assumption seems to be that if this has worked for America, this will work for India. However, the two countries are vastly different: Indians are born to their stations and remain so, while America developed its own jungle capitalism amid an army of migrants, who were self-selected to participate in the scramble. For Indians, they are only very unwilling participants, mostly slaughtered in the churning. Human tragedies aside, this may lead to alienation and non-participation by the majority in India's quest for development.

The point perhaps is that one can't impose development, but can only do the right things - create a secure sphere of opportunity, provide good education and infrastructure and encourage enterprise and innovativeness. So far, despite the rhetoric and claims that India is shaking off its centuries old, millennium old by one account (See Sanjeev Sanyal's The Indian Renaissance), the imposition of dreams of 'being developed' and attendant inconveniences isn't pushing the country forward. If anything, these may be creating barriers in India's quest for better life.

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