Thursday, July 06, 2006

India Superstar!!

These days we read about how India is on the verge of becoming an economic superpower and how Manmohanics has turned around this country!

Along with numerous reports that India would become one of the top four economies in the world by 2035, these ideas are further strengthened by the booming IT industry in cities such as Bangalore.

Are we really to become a global power? Is this century going to be an India-China dominated one?

This article in the NY Times answers some of the questions. Though there is nothing new in this report, I loved this particular paragraph in it...

INDIA is a roaring capitalist success story." So says the latest issue of Foreign Affairs; and last week many leading business executives and politicians in India celebrated as Lakshmi Mittal, the fifth richest man in the world, finally succeeded in his hostile takeover of the Luxembourgian steel company Arcelor. India's leading business newspaper, The Economic Times, summed up the general euphoria over the event in its regular feature, "The Global Indian Takeover": "For India, it is a harbinger of things to come — economic superstardom."

This sounds persuasive as long as you don't know that Mr. Mittal, who lives in Britain, announced his first investment in India only last year. He is as much an Indian success story as Sergey Brin, the Russian-born co-founder of Google, is proof of Russia's imminent economic superstardom.


I wondered why such huge hue and cry was made about Mittal-Arcelor deal and why the Indian government was persuaded to influence the Luxemburg government on the merits of this deal.

Anyway, there are also some facts mentioned in this article (again, nothing new) that I would mention here.

Recent accounts of the alleged rise of India barely mention the fact that the country's $728 per capita gross domestic product is just slightly higher than that of sub-Saharan Africa and that, as the 2005 United Nations Human Development Report puts it, even if it sustains its current high growth rates, India will not catch up with high-income countries until 2106.

Nor is India rising very fast on the report's Human Development index, where it ranks 127, just two rungs above Myanmar and more than 70 below Cuba and Mexico. Despite a recent reduction in poverty levels, nearly 380 million Indians still live on less than a dollar a day.

Malnutrition affects half of all children in India, and there is little sign that they are being helped by the country's market reforms, which have focused on creating private wealth rather than expanding access to health care and education. Despite the country's growing economy, 2.5 million Indian children die annually, accounting for one out of every five child deaths worldwide; and facilities for primary education have collapsed in large parts of the country (the official literacy rate of 61 percent includes many who can barely write their names). In the countryside, where 70 percent of India's population lives, the government has reported that about 100,000 farmers committed suicide between 1993 and 2003.


Emphasis mine.

Manmohanamics has _not_ helped the nation as a whole. It has just helped the rich to get richer at the expense of the poor.

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9 comments:

Someone said...

very true...it amazes me to see that how we can relate ourselves to any success that may be even remotely Indian.

I dont know when we will stop dreaming about ourselves being as the future superpower and start working towards it.

Good that you pointed out otherwise media and politicians show us a fake coin with a fake polish and show it to us as India Shining.

Atlantean said...

Pankaj Mishra did get his facts correct but he seems to be implying that the move towards a more capitalist economy has not worked. This view is wrong. I would like him to present an alternative. He seems to be spreading his views everywhere. You can read this article here on the Guardian where he more or less wrote the same stuff. He wrote one in TIME too.

The only solution we have is a capitalist economy. The old socialist economy served no purpose but to stagnate India. There was unequal distribution of wealth during the socialist era as well. Nor did literacy levels show major improvement. In 1951, the literacy was 18.33%. It grew to 52.21% by 1991 - a growth of a mere 0.847% per year (on average). But from 1991 to 2001, it grew to 64.80% from 52.21% - a growth of 1.259% - which is about 50% faster than during the the socialist era.

About wealth distribution, remember that in 1991, about 75% of Indian people were below the poverty line. Now, the number has gone down to 25%. Millions of Indians have been brought out of poverty by using the fruits of a liberalised economy - which would not have happened with a socialist economy.

If many people in the countryside are poor, that should not be blamed on the shift towards a capitalist economy. That is because even if our politicians boast of it, we have not liberalised enough to allow free market principles to have enough effect. Elements of the old Fabian socialist setup of Nehru still remain largely and it is this that is preventing the poor to move forward. That's because of the kind of obstacles that the socialist setup places in the way of private enterprise. For ex., no radio station can air news other than All India Radio. Read this. Had Raghav been allowed to continue, he'd have done so much for his village people. Radio acts as an empowering medium but sadly Nehru's license raj prevents it from being so. The only way -> continue dismantling the socialist setup and move forward with a capitalistic one.

Shashikant said...

Have been a silent reader of your blog for a while.

I'm sick of this India-is-next-Superpower thing. The state of financial capital with 200mm rain tells us we are still a third world country. As the article pointed out, on socio-economic parameters India scores poorly. Nevertheless, our media, politicians and tycoons want us to belive that we are moving swiftly towards achieving the Superpower status.

Secondly, success of Indians outside India is touted as India's arrival on global scene. Come on, give me a break.

MadHat said...

@someone: people did buy that 'India Shining' crap and they still will when it makes a return a couple of years from now. I remember having this long newsgroup discussion arguing against it with a whole bunch of otherwise intelligent people who bought into it.
The truth is people will always believe in things that sound rosy. "you will outlive all your relatives" as against "all your relatives will die before you".

@shashikant: are you the same shashikant I know from iitk? I am not really sure... anyway, nice to hear your comment.

@atlantean: hmm.. you go off topic there but I will briefly try to answer your assertions.
first of all, let me ask to you think about these questions..

1. do you support communism?
2. do you think china has become a huge economic success?
3. what do you think of the effects of the communist government in west bengal?

From your comment, I derive that you would abhor communism, right? But china has become a greater economic power than India despite having a communist government! How about that? You are right to abhor communism. Any political movement that comes up with something like the 'Cultural Revolution' is deplorable.

Most people in India deplore the state of West Bengal. But do you know that West Bengal has one of the highest literacy rates in India, Calcutta has one of the lowest crime rates and the most equitable land distribution amongst the people. If you remember history, land distribution was one of the primary aims of our newly independent country. The fact that after fifty years (or till 1991), it hasnt been made possible in the rest of the country suggest something seriously went wrong with our socialism.

Of course, those years of socialism were not without fruit. Remember the Green Revolution? It made us self-reliant with respect to food.

When you say that socialism did not help India, do you realise that it is possible that the vision of a futuristic India may have been ruined by the corruption of our politicians and countrymen?

There was unequal distribution of wealth during the socialist era as well.

Absolutely, there is no denying that.

Nor did literacy levels show major improvement. In 1951, the literacy was 18.33%. It grew to 52.21% by 1991 - a growth of a mere 0.847% per year (on average). But from 1991 to 2001, it grew to 64.80% from 52.21% - a growth of 1.259% - which is about 50% faster than during the the socialist era.

You know, statistics is a powerful tool and is often misused. Using the same stats you have used, I could very well argue that the rate of growth of literacy has stagnated post 1991. Do you want me to do that?
Secondly, I would argue that rate of growth of literacy is proportional to the literacy rate. So, the more literate people there are, the faster literacy rate would grow. Analogous to crystal formation. The initial seed of the crystal takes quite a while to develop but after that, it just grows faster and faster till some other factor starts acting. Need I say more.
Statistics just give you numbers. One can very easily make false inferences based on these numbers. In fact, it happens more often than you can imagine.

About wealth distribution, remember that in 1991, about 75% of Indian people were below the poverty line. Now, the number has gone down to 25%.

Some people disagree and there is some truth to that.
http://www.wakeupcall.org/administration_in_india/poverty_line.php
http://www.indiaresource.org/news/2006/1024.html
Amartya Sen has a slightly different stand on this -- http://www.india50.com/abni/aksI09.html
http://www.epw.org.in/showArticles.php?root=2005&leaf=01&filename=8115&filetype=pdf


Free market, eh? You know, it is a myth! There could never be a truly 'free' market. You could have that _only_ when all the people have the same opportunites, wealth, access to education, etc, etc. Free market really is something that was invented to re-colonise the 'third world', to exploit them anew and to help the rich make more money. Quite frankly, this is too huge a topic to be handled in one comment. I will write more on this later.

In India, bureacracy is a problem, yes. bureacracy exists even in capitalistic countries like the UK and the US. That does not mean socialism is a problematic/failed principle.

Shashikant said...

Yep... From IITK.

gaddeswarup said...

In continuation of what MadHat said, there are a couple of articles in:
http://www.bankresearch.org/economicpolicyblog/2006/02/raghuram_rajan_.html
which seem to put pre 1980 results in perspective. They do not address the problems raised by Pankaj Mishra.

MadHat said...

@shashi: sent you a mail..

@gaddeswarup: thank you so much. that was indeed helpful.

Amit Srivastava said...

hmm.. i don't agree that manmohanamics hasn't helped the nation. anyone who read even a bit in around 1990 would be happy with where we currently are. Even though I was quite young during that time but it scared me to know where we were heading then (my father being a pro-reform economist). Most of the political/social thinkers were not ready to get out of the old mindset which was killing India (some of them are yet to change). Quickly, googled for some article about the conditon of indian economy during those years. check out this one http://www.gatago.com/sci/econ/9840333.html
You can find many more.
Read them and you'll feel how lucky we are to be whereever we are.

MadHat said...

@amit: There is no doubt that a lot of things have improved since 1990. For starters, the IT industry and the amount of jobs it has generated.
But the point is that there are a lot of things that have gotten worse and there are a lot of things that still needs to be changed.
A blind march towards neo-liberalistic and free-marketish economy is just not the right thing to do.
The article basically points out that the other side of the stone that is hidden from view because of a gung-ho press and a bullish market.

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