Imagining India

I spent the last month traveling in the US, promoting the book. I did some TV shows, spoke to newspapers and did so many radio interviews that eventually it felt like one long period of time spent talking. It was interesting to meet so many people, and get the perspective of so many readers. (I am also grateful for the exposure I got - its not easy for writers to get media coverage for their work, and I was very fortunate). 

Used as I am to traveling though, I think this is one of the shorter breaks I’ve had back home in Bangalore before its time for another long trip. This time, I’m off to the UK for three weeks, in part to promote the book, but also on work. But I will keep updating here.

Reservations for backward castes in our jobs and colleges have become a seemingly indispensable part of our politics, and I think the big reason for this has been the process of inclusion of India’s backward communities into our mainstream. Indian political scientists such as Ashutosh Varshney have pointed out that as the Industrial Revolution took off in the West, backward communities were rapidly absorbed into the growing economy and the expanding factory system. The right to vote and political clout came later, after decades of urbanized living and jobs.

But in India, our progress has been the other way round. In a country where growth stagnated for decades, and development has only recently begun to make inroads into the rural countryside, backward communities have had access to political power before economic power. Hence the demand for reservations - the Dalit voters who support the Bahujan Samaj party for instance, see political power as ‘the master key’ that will open all doors.

Had economic access come first, we would have probably followed the pattern of other countries that had  caste hierarchies - Japan for example, had a fairly rigid caste system, and the most backward group, the burakumin, were highly ostracized. Development and urbanization however, helped absorb these caste groups into the general population (although the Japanese burakumin still face some discrimination). The rise of cities in fact, have been particularly powerful in dissolving caste barriers, as it becomes impossible to observe the silly notions of purity and untouchability in the anonymous, crowded city.

This has made our struggle in India with caste and backwardness fairly unique. And as our politicians balance the questions of better access for all versus more reservations, we are likely to see many more twists and turns on this issue.

The meme that the global recession might finally have bottomed out could be a little premature. Markets, including in India, have revived somewhat, but many are sceptical that this rally will last.

Also, if the steps taken in the US to deal with the financial crisis are not ambitious enough - and it looks increasingly likely that this is the case - we will see the financial crisis deepen a lot more before world markets recover.

Observers of the G-20 summit - whose tagline ’stability, growth, jobs’ acknowledged our ongoing global slowdown - didn’t expect much to come out of the meeting. Since it ended however, a wave of positive press has followed. One good thing that has come out of it is that the IMF is likely to change its composition to reflect the power of emerging countries like India, China and Brazil. There is also some applause surrounding the fact that leaders have pledged around $1.1 trillion towards fighting the recession, but of this, $500 billion is through the IMF, and half of that money was in the works before the meeting. 

Another big question is how exactly will such a money stimulus boost global growth. I’m somewhat sceptical of the ability of state-provided funds to drive extended growth in markets, if they are not accompanied by policy changes. Money flowing into an inefficient, badly regulated market system only strengthens entrenched interests and makes existing lobbying groups stronger and better-funded.

The Indian government for instance, has already funnelled stimulus money into the economy in 2008-09. without adding in policy corrections, and much of this cash has been aimed at extended  credit through already existing farm schemes (which typically favour farmers who own mid to large landholdings) and financing for existing SMEs and industry groups, while doing nothing to make business easier for new or innovative firms who struggle even more for capital and against red tape in a weaker economy.  Downturns and growth slowdowns cannot be patched with notes of cash alone - these will only drive cycles of boom and bust.

Simon Johnson, the former chief economist at the IMF, has penned a marvellous article, The Quiet Coup, that is now making the rounds among policy makers and analysts. It discusses the crony capitalism that lies behind most nations’ financial crises  (mainly in emerging markets and now in the US), and the difficulties in solving them. For us in India, it is a cautionary tale.