Imagining India

Photo Credit: Manjeet Bawa

When it comes to a key sign of our interest in community - the amount we give in charity - we Indians are among the most tightfisted in the world. The US has long been the most generous in terms of per capita donations and charity work; our giving on the other hand, pales next to Indonesia, Thailand, and most other Asian countries. 

Its not just our poverty that constrains us - its also our attitudes towards giving. “We don’t see as much concern among Indians for their broader community,” Rama Bijapurkar, my friend, colleague and market researcher told me, “What people say when we survey them is, ‘I’ll give money to my family if they need it, maybe my maid, but why should I give my money to someone I don’t even know?’” The exception is when calamity strikes - like the tsunami.

Its probably no surprise that  we lack a sense of responsibility beyond our circles of family and acquaintances. We only have to look at the lack of outrage in our collapsing public infrastructure, schools and cities - rather than confront these problems, we have retreated into gated communities, private schools and even private security. 

But people also respond to their environment, and much of our apathy comes because the state is itself apathetic. When governments are indifferent about the poor and about public welfare, citizens feel that there is little difference they can make on a personal level. Corrupt and indifferent bureaucracies and governments are difficult for citizens to change - its easier to retreat.

Are there signs that this is changing? One hope I see is in the rise of NGOs and civil activists who have in the past decade and a half, actually managed to jolt public policy awake in areas such as transparency of government, education and infrastructure. Madhav Chavan, the founder of Pratham comes to mind, as does Trilochan Sastry, who has helped make disclosures by legislators on their criminal records and finances much more transparent, and Shailesh Gandhi, the RTI activist who has recently been appointed the Central Information Commissioner.

Another trigger ( I hope) for growing community and social interest is the Indian government’s rising dependence on direct taxes for its revenues - income taxes paid by individuals. India’s revenues became more than 50% direct taxes (rather than indirect collections) for the first time ever in 2007-08. With the amount each of us contributes to the government kitty growing, we may become more conscious about where and how this money is being spent, and demand more accountability from the state. And we might start having a greater voice, and also concern, for public programs and the public sphere.

Indians have long admired China’s growth from afar, envying the highways, mass transit systems, airports and entire new metropolises that they manage to build in the time it takes us to get a few flyovers going. 

However, China’s growth does point to many untapped possibilities. In terms of the environment, China has done little more than follow the carbon-intensive growth pattern of the West, one that India has also referred. The consequences of this in a population-heavy country is already apparent in China, since they are ahead of us in the development curve: its cities suffer massive air pollution, such that the sun frequently disappears behind the smog; an entire village vanishes under sludge; the country is facing intense water shortages, and has seen development projects like the Three Gorges Dam turn into environmental catastrophes.

India - another populous country - ought to take our lessons from this. Besides an ‘environment-inclusive’ approach to growth brings with it both advantage and opportunity.  Its undeniable that putting a cost on the environment would have short-term negative effects on the economy, since we would be pricing something that was once free. When policy makers talk about pricing the environment, they usually mean pricing carbon, since carbon is present in the entire cycle - air, water (which absorbs carbon), soil (which can both absorb carbon, and release it when degraded), forests (which absorb carbon in their growth phase).  With carbon prices to consider, industries would have to budget for their factory emissions, for any pollutants that contaminate water, and  degrade land and forests. This would bring down revenues and profits, and slow industry growth. 

But in the longer term, I believe the benefits to GDP growth would be immense, simply because we would be using all of our resources more efficiently. Waste would be managed better, and whole industries will emerge around waste management, recycling and alternative energy use.

Besides, we are already paying for polluting our natural resources - except the cost is being disproportionately paid by the people who have lived closest to nature - the poor, the forest tribals, the farmers. Our farmers struggle with droughts and floods, and falling groundwater tables as well as degraded soil are bringing down harvest yields and income. Declining forests have hurt the livelihoods of the villages and tribes that depend on them. When common water sources are contaminated, its a select few who are able to pay for access to clean water.  Pricing the environment would mean sharing the burden of such pollution more equitably. It would be a shift to a fairer economy, and one with greater accountability. 

Photo credit: Daniel Bachhuber

There is a new change of tone in the already tense negotiations on climate change, if we look at the recent comments the European Commission has directed at India and China. The EC is now pitching for emission caps for both these countries. This is an approach that the Indian government has long said is off the table. Chidambaram has spoken before of India’s ‘right to development’ - that since India is still a developing country and has to address the critical issues of poverty and growth, it has to postpone any commitments to reduce emissions. 

Whether the EC’s tone gets sharper or not, depends on the US position on developing country emissions. I believe though, that India has a chance to set the tone of the emissions debate. So far, we have been backbenchers when it comes to global negotiations on climate change, responding only when we are forced to. But India as an emerging economy, has some precious flexibility when it comes to growth and emissions that both the US and Europe lack. 

As developed nations, both the US and Europe have high emission infrastructure in place as well as ‘high-emission habits’ - in terms of car ownership, consumption, polluting industries and agriculture approaches  - that will be difficult to break or change. India on the other hand, still does not have its infrastructure fully in place. Car ownership is still extremely low, and the high consumption economy is still not in place here. We consequently have a chance to carve a development path that is environmentally safer than the ones that developed nations have pursued. Such an approach ought to be pursued for its own sake, rather than because of external pressures. 

The big mistake of the developed world was in ignoring the impact on the environment during their high growth phase. For writers such as Charles Dickens, the smog of 19th century London- created by coal-burning in the city - was a consant theme in his novels about urban decay. Much of the West never considered that use of the environment ought to be ‘priced’ the same way other resources are. This however, was something that Indian environmentalists such as Anil Agarwal suggested as early as the 1980s, when they noted that GNP ought to be about ‘gross natural product’ rather than ‘gross national product’. With an approach that prices environmental resources, industries would have to pay for dumping untreated waste into our rivers; open coal mines could no longer pollute the surrounding land, turning our soil into unusable sludge. Razing down forests and building a coal-fired plant would have to be ‘compensated’ for, by funding a green project elsewhere. 

Who could such an approach benefit? And how much would it hurt us in our growth numbers? I have some thoughts on this, that I’ll follow up on in a second post.

Photo credit: Liz Jones

I came back from Davos with a fresh appreciation of the challenges that face India with the global downturn. As the US economy continues to falter, India will have to look inward for growth. But in doing that, we do have quite an opportunity before us. We are after all a developing country with a growing middle class and a vast, still-untapped domestic market. We’ve barely skimmed the surface when it comes to what we are capable of.

But then, opportunity has long been knocking on our door, and we have found ourselves locked in from the inside  - we have too many interest groups within the country limiting our chance to take advantage.

Recently, there’s been a Tata Tea ad airing on television with the slogan, ‘Jaago re’. It admonishes non-voters, and seems to be a message to the youth to wake up and vote for the ‘change’ they want. The message is certainly laudable. But what about the effectiveness of such voting in India? We seem to have a vast number of choices in political parties at our disposal.  But regardless of who wins our elections, how free is even the most well-intentioned goverment to pass reformist policies? How beholden is it to the pressures of our interest groups? 

The economist Mancur Olsen (whose ideas also came up in a recent, incredibly insightful article on the US economy) noted that as countries developed, the way their markets functioned slowly corroded. This happened as some groups gained more influence than others - in our case, that would be very large entrepreneurs, rich farmers, labour and teacher unions, and key caste groups. These groups demand policies that protect them at the expense of others - caste quotas trump open access and effective education policy (the Congress party has now included reservation in the private sector in its draft manifesto),  public schools limp along as teachers fail to turn up and students drop out, labour unions block reforms that would create more jobs, and loan writeoffs, like the kind Chidambaram offered in last year’s budget, primarily benefit the landed farmers. Olsen called the buildup of such preferential policies the ’silting up of the channels of economic progress’ - as access for all slowly gets cut-off in favour of access for a few groups.

The idea of quotas and favours for key interest groups has only caught on more strongly in past years, as we choose quotas, subsidies and tax holidays over better policy. And if this approach continues to replace our reforms, we are set to throttle our growth before it has properly begun.