India knows it has something to celebrate Wednesday, the 60th anniversary of its independence from Britain. That may sound obvious, but it isn’t, because 10 years ago many people said they were not sure what there was to be proud of on the 50th anniversary.
People bemoaned the country’s failure to get to grips with endemic social and infrastructure problems, especially poverty, education, health, roads, and power. There had been a spate of economic reforms after a humiliating international financial crisis in 1991, but they had sputtered to a virtual halt. Business was not doing anything very dramatic, and there were only glimmerings of the information technology-led boom and more recent manufacturing renaissance.
Today, many of the problems — especially social — are little improved. Vast proportions of the country’s 1.1 billion people are undernourished and hungry, as well as poorly educated and illiterate. Blighted by a lack of drinking water and proper sanitation, many are plagued with poorly-treated ill health.
But the country’s overall self-confidence, and its economic performance, is being transformed. In the past four or five years, a spirit of “can-do” has inspired businesspeople — big and small, ranging from names like Ratan Tata, Mukesh Ambani, Azim Premji and the Infosys founders to small niche players — who invest, manage, deliver, and grow both at home and abroad. Funds are more often than not raised legitimately, rather than via a friendly politician’s influence on a pliant public sector bank.
Companies operate in a mostly open market, knowing that they must manage efficiently and deliver quality or fail. Many of the names at the top of the business league tables have changed in the 10 years from old Marwari trading caste families, which thrived in a controlled economy, to new entrepreneurs. Family control of companies is still widespread, but the newcomers have an ambition to succeed in India and abroad that was previously often lacking.
That has been shown most dramatically by the recent surge of takeovers overseas, spearheaded by the Tata group and by IT and pharmaceutical companies. Similarly, the growth in the number of executives from abroad who are prepared to work in India — foreign as well as of Indian origin and not just on lucrative postings — reflects both the availability of internationally competitive salaries and a more conducive working environment.
Consequently, economic growth has risen in the 10 years from around 6% to almost 10%. The Mumbai stock market’s Sensex index has gone from under 3,500 to a peak last month of over 15,800. The rupee has recovered a decades-long slide and is now strengthening against world currencies (not just because of the declining dollar), and foreign exchange reserves have rocketed from $26 billion to around $230 billion.
India is also earning new respect as an international player, not least with the United States, which is on the brink of signing a nuclear deal that will transform the two countries’ diplomatic and business relationship
One the flip side, some things are getting worse. The quality of governance is declining, especially in the states, because many politicians and bureaucrats are becoming more corrupt and self-serving. Parts of the country are appallingly run, especially Uttar Pradesh and Bihar, which for years have been almost as bad as Pakistan in terms of political failure — and their economies are worse. Maoist Naxalite rebels control vast areas of other states.
There is little urban planning or respect for regulations: construction of new buildings takes little account of environmental standards or the need, for example, for adequate drainage and other services.
Even more seriously, the economic boom is leading to intense pressure on land in a country where 70% of the population relies on it for its living. In the next ten years, it is quite possible that social unrest will be caused more frequently by land disputes than by traditional religious and ethnic differences.
Despite these problems, India is on the move. When Jawaharlal Nehru, the first prime minister, made his famous “midnight hour” independence speech on August 15, 1947, he referred to India’s “tryst with destiny,” and called on people “to work and work hard, to give reality to our dreams.”
Ten years ago that work ethic had not materialized. Today it is operating in the private sector, generating most of the successes.
Think what could be achieved if the politicians, bureaucrats and public sector did the same.