Stop denigrating India’s rise

Such is the cynicism in politics that India’s steady rise as an economic power is met with derision and not appreciation. The World Bank’s data has placed India at rank six with GDP of $2.597 trillion, slightly ahead of France with $2.582 trillion for 2017. The top five are US ($19.39 trillion), China ($12.23 trillion), Japan ($4.87 trillion), Germany ($3.67 trillion) and UK ($2.62 trillion).

India is within striking distance of being in the Top 5 now even as it predicted to be among the Top 2 if it maintains growth rates. For a population of 1.3 billion, the per capita income is still very poor. The per capita of $1,940 is lower than its neighbours like Sri Lanka and nowhere close to China’s $8,826.

Where India is today is better appreciated when one considers where it has arrived from. Let’s take a look at all the shackles that the Indian economy had to endure and still does. For over 200 years of British rule, there was activedeindustrialisation. The British government proactively destroyed India enterprise in ship-building, textiles and overseas trade. To ensure total economic dominance, the Indian economy was forced to go on its knees.

The 70 years of Independence allowed India to rebuild its economic infrastructure to a level that helped it stand on its legs. Self-reliance as a motto allowed it to create domestic manufacturing and engineering prowess. However, this was hobbled by the unwanted and catastrophic spirit of nationalisation. The focus on government-run companies and a command economy kept India’s growth at poor levels.

The last 25 years of economic reforms launched by former Prime Minister Narasimha Rao helped accelerate India’s growth. The Indian economy continues to endure severe many challenges that are holding back growth. Some are created by legacy and many by internal dynamics. India continues to suffer under a bureaucratic system created to oppress and dominate a people. Petty politics and poor leadership has avoided administrative reforms that could be built on trust and not distrust. As a result of this, governance structure continues to stifle enterprise and entrepreneurship. The licensing mindset is more focused on the process than the outcome.

Take the reforms for driving licence for instance. The new law of the Motor Vehicles Bill 2016 that will be sent to the Rajya Sabha in the next session of Parliament is more intent on punishment than preparedness. Instead of focusing on preparing drivers to earn the responsibility of manning a vehicle, the bill places more emphasis on penalties. In most countries, citizens have to go through a rigorous training process to earn a license to drive. The chaos on Indian roads is squarely because of poorly trained drivers with no self-discipline or civic sense.

The same lack of civic sense is visible in petty politics that encourages undermining of institutions and rules. Actively encouraging illegal residential areas and challenging city planning norms is just one of the many such examples.

This lack of trust and sense of apathy encouraged crony capitalism. For decades Indian enterprise was run on access based licensing rather than competitiveness and merit. If India has not grown fast enough, it is largely because of industry leaders who have led the war against creating an open, competitive, merit-based economy.

Slowly, transparency is replacing opacity and a discretion-based system of approvals for both individuals and institutions. The animal spirits of the Indian economy are straining at the leash. The focus on ease of doing business and Make in India by the Narendra Modi government is an attempt to change the mindset of a bureaucracy which eyes every enterprise with suspicion.

Much needs to be done to improve education, health and social infrastructure. Governance models have to change to ensure higher momentum of growth. Indian leaders in politics, business and governance have to invest in the future of India.

The figures from the World Bank depict how new engines like India will power global growth. Between 2017-19, the $75 trillion global economy will grow by $ 6.5 trillion. Much of this growth will come from Asian countries. China will contribute 35 per cent to the growth. India (8.6 per cent), Indonesia (2.5 per cent), South Korea (2 per cent) and Japan (1.5 per cent) will be the other main contributors from within the circle. The US with a contribution of 17.9 per cent is almost half of China. And the European Union with 7.9 per cent contribution is a shade less than India. There is a bigger global role awaiting India, if it can prepare for it.

For the moment, let us celebrate what has been achieved against much odds. There is a long way to go, but it appears that our trajectory has improved. Proactive optimism should overcome lazy cynicism.

The author is an economic analyst and author of Kranti Nation: India and The Fourth Industrial Revolution. Views are personal.