Dec
The Economist’s recent special report on India, “An elephant, not a tiger”, probes into the country’s economic, social, political, and geopolitical affairs, providing insight into how India will fare in her quest to become a superpower. Despite all its chaos, bureaucracy and occasional violence, India has had a remarkably successful past few years, but can we cope with the economic downturn? Shocking, depressing and hopeful at the same time, these are stories that most Indian are accustomed to. Nonetheless, it’s clear that India faces daunting challenges going forward and here are some highlights from the report.
POVERTY
- According to the World Bank, in 2005 some 456m Indians, or 42% of the population, lived below the poverty line. In 1981, by the same measure, the numbers were 420m and 60% respectively. The government’s own estimates are lower. But everyone agrees that poverty in India is falling much too slowly.
- The effect: India has 60m chronically malnourished children, 40% of the world’s total. In 2006 some 2.1m children died in India, more than five times the number in China.
LABOR
- Some 65% of Indians live on agriculture, which accounts for less than 18% of GDP. Therefore the biggest challenge will not only be to create more productive jobs but also to upgrade skills of the large labor force through education and training.
- Roughly 14m Indians are now being added to the labor market each year, and that number is rising. Half of India’s people are under 25 and 40% under 18. Therefore the pace of development has to be rapid in order to mobilize the youth population.
- The manufacturing sector has its own complexities; to escape throttling labor laws, Indian entrepreneurs tend to keep their operations small: 87% of manufacturing jobs are with companies that employ fewer than ten people.
EDUCATION
- By one estimate, which may be optimistic, only 20% of jobseekers have had any sort of vocational training. If India cannot find employment for this lot, poverty will not be reduced and India may face serious instability.
- India is already worryingly violent. A Maoist insurgency in eastern India, which Prime Minister Mr. Manmohan Singh has called “the greatest internal security challenge we have ever faced”, is an obvious ill omen. Where it is spreading, in poor, agrarian and broken places, the “invisible threads” that bind India, in the phrase of Jawaharlal Nehru, its first prime minister, are almost non-existent.
- A combination of all the above factors could lead to social unrest, starting out as mini-revolts that we’re beginning to see across the country. What is being termed as Fourth Generation Warfare (4GW), could be a serious threat to India’s stability if the Government does not implement bold reforms.
INFRASTRUCTURE
- As the River Ganges in Varanasi enters the city, Hinduism’s sacred river contains 60,000 faecal coliform bacteria per 100 millilitres, 120 times more than is considered safe for bathing. Four miles downstream, with inputs from 24 gushing sewers and 60,000 pilgrim-bathers, the concentration is 3,000 times over the safety limit. In places, the Ganges becomes black and septic. Corpses, of semi-cremated adults or enshrouded babies, drift slowly by.
- Besides the religious implications, this is a result of India’s execrable sanitation methods. By one estimate, only 13% of the sewage its 1.1 billion people produce is treated.
- India’s urban roads are choked: the average speed in Delhi has fallen from 27kph (17mph) in 1997 to 10kph.
POLITICS
- Of the 522 members of India’s current parliament, 120 are facing criminal charges; around 40 of these are accused of serious crimes, including murder and rape.
- In the 2004 election Congress and the BJP mustered only 283 seats between them, a record low and only 11 more than is needed for a majority. As a result, most energy is lost in keeping alliance members of the coalition government happy, causing friction and disharmony.
ECONOMY
- The RBI has already revised its forecast for GDP growth this year downwards, from 9% to 7.5%, and even that may be optimistic. Most independent forecasters see a further drop next year, possibly to 5.5%.
- The case for optimism: Until recently India’s investment splurge has mostly been covered by domestic savings: as a share of GDP, savings have risen from 28% in 2003-04 to 35.5% last year.
WHAT LIES AHEAD?
India has managed to grow rapidly for the last 5 years despite all these hindrances, but the global recession has caused the first net outflow from Foreign Institutional Investors (FII) in 11 years. This credit freeze will create complications in the Government’s ability to raise capital and sustain growth levels that are imperative for the 14m people joining the workforce every year. The need for reform is urgent and we need to do our part as citizens to instigate change.
Personally, I was extremely disenfranchised by our governance recently and wondered if it was worth voting in the upcoming General Elections of 2009. I wondered if change could really come about with no party challenging the status quo of corruption and incompetence. But that is foolish. We do have some intelligent leaders that care about India’s future but are constantly bogged down by bickering from alliance members. It’s time to set aside our regional differences and unite as one nation, recognizing that the right to vote is our greatest weapon in a democracy!
My feeling is that we have enough headroom to grow despite macroeconomics factors but we can’t afford another coalition government at this stage. If we can go out to vote in record numbers next year and either the Congress or BJP win a majority in Parliament, I’m confident we’ll start seeing reform from the Center.
Cast your vote, don’t vote your caste!
