Running out of time
When I attempted to chart the ideas and policies India needs to ensure stable, long-term growth, I was keenly aware that we have always responded best in crisis. Indian economists and policy analysts remarked to me time and again, of our lethargy unless we are faced with economic disaster. Our 1991 reforms were pushed through as the country teetered at bankruptcy, and after we had mortgaged our family jewels – our gold reserves – for emergency loans.
Since the global financial meltdown that began in September this year, there has certainly been a keen sense of urgency to frame better, smarter policy and regulation – an urgency that is visible both globally and in India. I am not happy about the meltdown – the world is almost certainly headed for a rocky, tumultuous period. But this now widespread sense of urgency might be the one silver lining during these turbulent times .
For India, this does not come a moment too soon. Our reluctance to push a reform agenda of expanding access has resulted in large and growing disparities when it comes to the opportunities available in India’s economy. Good education for example, is only accessible to the children whose families can afford private schools, and coaching classes to get into the top institutes. Public-funded education that the rest of India’s children rely on, on the other hand, is a miserable failure, with dropout rates over 90% despite initiatives such as the mid - day meal and the Sarva Shiksha Abhiyan. The result of this are children and teenagers who make their living as street hawkers, construction workers and factory labour. The unfairness of this is overwhelming.
Such disparities in access are all too visible across the country, and have greatly limited class and income mobility across India. While infrastructure in urban India has begun to show tentative progress, farmers lacking roads connecting them from their villages to markets have to rely on corrupt networks of middlemen to sell their crops. Transporting their produce across vast distances without cold chains means that they lose over a third of what they grow due to spoilage. Across rural India, caste relationships still hold sway, limiting the opportunities for backward castes and Dalits to own land and start businesses – to date, India has not seen a single major Dalit entrepreneur. Migrants who leave these harsh livelihoods and come into cities find that finding a home is a distant dream outside the slums that form urban India’s fringes, its messy and chaotic boundaries. Most of the poor in both the slums and in rural India lack reliable electricity and water supply, and the people who can afford it resort to private solutions in the face of such shortages – they buy their own generators, live in gated communities with private security, and use private sources for water.
When our markets seem ineffective in terms of providing widespread access, people turn to other solutions. As a result, India’s markets exist alongside a complicated structure of subsidies, loan waivers, hand-outs, tax exemptions and government sponsored jobs and reservations. And people who have watched the economic boom from the sidelines, see these concessions as their best options, and are hostile towards markets.
In fact, the global financial crisis that has erupted underlines why our issues of access may be our most critical challenge. Across countries, we have seen a populist backlash against markets when they have failed to address crises around access – such as in Europe during the 1920s and 1930s, and more recently in large parts of Latin America. Even the US, a country that supposedly holds the values of the free market close to its heart, is seeing a new rhetoric and anger against big business as income inequalities and unemployment rise across the country. It shows how easily a country’s economic mood can change – since the financial crisis has required over one trillion dollars of US taxpayer money to bail out American banks even as millions of houses across the US are foreclosed, even the staunchest free-market believers are expressing hostility against Wall Street. Governments clearly ignore such challenges of inequality at their peril. Without more reforms to create access, India’s entire progress will totter. For those Indian leaders ambivalent about reforms and who believe that they have only led to creating rich businessmen, now is the time to catch the bull by the horns and promote the reforms that drastically expand access to opportunity in education, jobs, incomes and markets for all.
Tags: challenge of access, education, global financial crisis, Indian economy, infrastructure, literacy, reforms, urbanization
November 24th, 2008 at 5:49 pm
It is totally unclear when it comes what Government can do and can’t do in social and economic development. Unless we get clarity on this we are not going to address the issues in hand.
Importantly, if any one economist had warned in India it is Professor B R Shenoy. If Nandan think any one “Indian economists and policy analysts remarked to me time and again”.
I am very interested to know about who are all these economists who had has warned against the bad ’socialist’ idea that ruined Indian economy and the people.
November 24th, 2008 at 5:56 pm
hi Nandan,
Taking this opportunity to thank you. Just listening to you has tremendously helped me structure my thoughts mingled thoughts. I hope we have much more of you on you tube. (On that note,,,, thanks to Shekar gupta for the walk the talk episode).. which had 30 minutes of pure Nandan talk ….
Regards,
Siddharth
November 25th, 2008 at 2:54 pm
Without more reforms to create access, India’s entire progress will totter. For those Indian leaders ambivalent about reforms and who believe that they have only led to creating rich businessmen, now is the time to catch the bull by the horns and promote the reforms that drastically expand access to opportunity in education, jobs, incomes and markets for all.
Very well said. Time to act and implement is now. This is def not the time to debate and argue (which we have been doing for years and years).
Just come to one consensus and set the wheels in motion!
November 26th, 2008 at 12:59 pm
Although Prof Amartya Sen has portrayed our passion for arguments in a romantic way in his book, I think anything is useless unless there is a result at the end of it. Our arguments simply go on endlessly with no result in sight. And when those arguments are about our fundamental positions - e.g whether the economy needs to be opened up or whether we really need high growth - then it is very counter productive. And as mentioned in your book, the time is upon us to act. I think this downturn is an opportunity for India to put up its hand to be counted, as we will probably be one of the least affected major economies of the world. When so many other countries are going to be looking inward with their heads down, to put their houses in order, we should rise as one to provide an engine of growth so we can catch up with others. Obviously, some major tuning will be required to attain high growth rates as the tiger we were riding for growth so far - easy money - is gone now. We will need to find better ways to attain high growth. We can do it only if we stop arguing about the fundamental premises and focus on the nitty gritty of the process.
November 26th, 2008 at 4:32 pm
Nandan,
At the outset let me congratulate you for the book!
“I am not happy about the meltdown – the world is almost certainly headed for a rocky, tumultuous period”.
Is there a way one can know how long this crisis is going to last? Regarding India, I think it is important to keep a simple perspective in mind. We are primarily a agricultural country. Our most of the efforts should be in the direction to promote agriculture, to keep it and farmers alive. I have no issues with modernisation and industries, we certainly do need industries, but cannot ignore rural India.
People committing suicide in rural India, migrating to cities does not depict the picture of developing India..atleast not for me!
I am severely disappointed by the role of media, English and vernacular alike. English and Hindito a larger extent coz of the vast reach it has. Media can make or break the country, but what we see today is, media being hellbent on breaking the nation. All the agendas, discussions , news are predetermined by the media, as is the conclusion at the end of discussion with any panelists.
Its a shame and we indeed are unfortunate not to have a educated media to bank on in the country!!
Jai Hind.
November 26th, 2008 at 10:50 pm
You have an almost childish faith in markets. Let me emphasize that markets are not concerned about access and inclusion, even if in the long term that could translate into increased demand for goods and services, as more people get educated.
Markets are not concerned about democracy either -Chile had free markets under Pinochet’s brutal miltary dictatorship backed by big business.
Markets are too concerned about short-term gain.
Access will come if government spends on providing this access, and the trickle down can be huge from such expenditure. The recovery after the Great Depression was Keynesian and not monetarist.
However, for government to spend the money that is required, without most of the money leaking out of the system through corruption, we need societal change.
We need to change our politicians, by us changing our attitudes and values. For starters people should stop worhipping wealth and power, and praying at this altar are a lot of business leaders and intellectuals who love to hobnob with politicans and even vie for quasi-political positions.
Today people are respected for their power and money, even if that was obtained by corruption. Money has no memory, said John Steinbeck. Unless this is changed, that is we change as people, and corruption is uprooted, markets and governments and pundits can solve nothing.
November 27th, 2008 at 3:37 pm
True. Disparity in the Indian society has been around for along time and has taken deep roots. And as we focus towards a better economy I think we need to pay attention to overall development of the country including the less fortunate people who don’t have access to the best of education and employment. We have a long way to go.
What use is local optimum if it does not contribute to the global optimum.
Growth of urban areas does not indicate a better life for the rural population or the common man who earns to make both ends meet. And the country is made of all these people too.
December 5th, 2008 at 6:55 pm
Hi Nandan,
I haven’t yet read your book. But I watched your interview with Rajdeesh Sardesai. I am pretty much in line with what you visualised, ‘People, what we thought a burden to India 30 years back, actually can be made into an Asset.’ I believe the next 10-15 years is going to be exciting for India.
I liked your concept on ‘Vertical’ Dividers like Religion, Caste, Regionism, being bridged by ‘Horizantal’ Parameters like Education, Employment, Cultural Mix ,etc (which I believe the Knowledge revolution has already started it and going in speed).
Also, Your view on Politics and its frequently associated words like Corruption and other Politicised Issues that all these issues would be eradicated by the bottom of the pyramid. Your analogy on ‘Anti-English States’ changing as People demanded fits perfect.
Looking forward to read the IDEAS of the Problem Solver!
Praveen
December 7th, 2008 at 6:37 pm
I have started reading your book that I received a couple of days back. I’m 47 and for the past 20-odd years have been talking to people to support a programme to recruit school dropout and create opportunities for them and their families. When you talk about taking demographic advantage I was immediately reminded of the project. Well, many of us have safety net of ideas for our country but only a handful have the probabilities working for them. Being a part of the larger set of ‘have ideas but not resources’ people, I urge you to use your IT framework to net the school dropouts and use the human capital. I’m sure you have all resources to figure out ways and means to create the infrastructure that would serve both our democracy and industry. Your ideas have a sense action to them. Hope to see you at the Calcutta book launch.
All the best,
Debu
December 15th, 2008 at 2:00 pm
Other serious problems in villages are:
A) Division by Political Parties - people are so much polarised by political party affiliation, it creates a strong divisio - much more stronger than caste equation
A) Money spend for drinking alcohol is typically much more than money spent for family.
December 18th, 2008 at 6:23 am
Very usefull post.
Thanks.
P.S. I like your writing style.
December 18th, 2008 at 5:17 pm
First of all congratulation for such a great site. I learned a lot reading article here today. I will make sure i visit this site once a day so i can learn more.
June 11th, 2009 at 3:44 am
I have the view that depression is a disease which comes from total identification with one’s thoughts and emotions and have found teachings like that of Eckhart Tolle to help me recover. What do you think?