Imagining India

When the results were out, there were many people around the country who heaved a sigh of relief.

A few months before the elections, when I asked people I knew who was likely to win - the people I questioned included elected officials, writers, NGO workers, political scientists - a good majority of them were pessimistic about seeing a strong government in power, and especially a Congress or BJP-led one. ‘Our days are numbered’, is how one Congress worker put it. A large number of people suggested (and this was a popular expectation in our media) that caste-based and regional parties would have a bigger clout post-election. ‘The next government will be a hodge-podge, and they’ll move quite sharply to the left,’ one senior policy planner guessed.

The Congress’ win is forcing a re-evaluation. Were the compelling factors for the victory the Employment Guarantee Program, concern about defense, a desire for a more empowered government, or dynastic appeal? People seemed to have voted for stable, equitable development. Its been pointed out that the Congress and its allies did well in places where the NREG Program and the rural electrification scheme were implemented effectively. The win/loss pattern across states is also telling: the UPA did badly in states where the opposition governments have been effective in bringing about development and growth - this included Bihar, Chhattisgarh and Gujarat.

Does this mean that the hand-wringing over voters’ preferences for caste and regional alliances was misplaced? I think so.  The rise of markets means that there is much more at stake for voters today - good governance and better access to the economy can bring about substantial improvements in jobs, income, and education for children. This wasn’t the case pre-1980, when opportunities were much fewer.  Voters are therefore far more demanding of their leaders, and and a failure in governance makes them far less sympathetic to the fact that a certain party is supposed to represent their religion, or caste.

So what will the government do with its expanded mandate? Will we get to see a smart mix of reforms and welfare policy? Will the government finally, attempt to tackle our broken subsidy systems and education reform? The next few years are going to be very interesting.

A few years ago, I visited my alma mater IIT Bombay, my first visit in decades. I walked around the campus and was astonished and saddened by its collapse - the buildings were in disrepair, the hostels grimy and stained, the infrastructure was crumbling: the place, it seemed, was falling apart. 

This began my efforts to get the campus back to the green, beautiful, well-tended place I remembered, and I funded various initiatives, with the help of the incredibly engaged director, Dr. Ashok Misra. I funded the renovation of my old Hostel 8, the setting up of a school for IT and a new IT incubation lab. The IIT management and I also co-funded a brand new pair of hostels to expand the cramped residential spaces, and these were built in record time—in less than two years. 

The result? Annoyance in the HRD Ministry, and questions from the then HRD minister on why such ‘lavish’ buildings were built.  Our top colleges and universities suffer tremendously from this perpetual second-guessing from the government and the bureaucracy, which demand permissions for the most mundane operations. Dr. Nayyar, the former vice-chancellor of Delhi University, often bemoans the complete loss of independence for the faculty, deans and senior management at universities. ‘Their actions hang on the utterances of our politicians. Everything is political.’ And in the midst of all this, the very purpose of the university, educating the student, has been entirely forgotten.

In recent years, Indian universities have seen a growth of funds from budget allocations, but they need much more than that for things to change. Simply providing our universities with more money is rather like buying new furniture for a condemned building.  Unless the government takes to more serious reforms - appointing a super-regulator to replace the present, confusing array of bodies from the AICTE to the UGC, encouraging more private investment on colleges and loosening the red tape on their entry, bringing in more transparency to standards and college administration, and giving government-aided institutions much more independence - the decay will go on, without pause. 

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.

Today is the day of the ‘people’s car’ launch, and its no exaggeration to say that this car is likely to transform the face of India’s traffic, both for better and for worse. The good: If creating widespread access to better services and products is the aim of free markets, then the Nano car is a triumph. It has made the dream of owning an automobile attainable for millions in India. The bad: The car will probably increase overcrowding on roads and pollution. But as long as our cities lack viable mass transit systems, people have no choice but to resort to private vehicles, and poorer Indians should not be denied a choice that the middle and upper classes have had for so long. 

For Indian companies, the Nano is only the most recent success when it comes to making products and services suited to the Indian market.  C. K. Prahalad has written about these low-cost approaches many Indian companies have adopted in his book The fortune at the bottom of the pyramid  - of companies targeting the poorest citizens and turning them into consumers, by selling them two rupee sachets of detergent and shampoo, bringing them internet access through community kiosks, providing loans through Self Help Groups and even providing low-cost health care, such as Arvind Eye Hospital. 

And as we weather the global recession, I think this approach is only going to gain steam - India’s countryside has not been as affected by the recession, and rural India is even showing signs of above-average growth. Hopefully, this will draw our markets into the villages,  help address our long-lamented ‘urban rural divide,’ and do its bit in empowering our rural poor.  

Photo credit: Carol Mitchell

The smell of elections is in the air. Both our newspapers and TV are inundated with extravagant promises from our politicians, and accusations and counter-accusations are flying over which party is the most corrupt, who is the most unconcerned about terrorism, who the most callous about poverty, and interestingly, who is allowed to play the current catchy movie tune.  

My area’s polling station is walking distance from my house, so casting my vote means just a short stroll in the morning. The queue is not very long, and I don’t find it a hassle. Many people I know however feel differently about voting, especially in the younger age-group. They tell me that they don’t bother to vote - ‘It doesn’t make a difference’, ‘I don’t support any among the field of candidates,’ are the usual answers I get. 

I had written earlier on this blog about Jaago re, and whether shifts in voting make a difference in the governance we get. Many of our problems are deeply rooted, especially in terms of corruption and interest groups, and it will take much more than small voting shifts to change that. But what can change to some extent with the literacy of the average voter is the transparency people demand from governance, and better answers on policy (more educated voters for example, demand to know where the money for government handouts and loan waivers is coming from). 

And only more informed voters can force political parties to shift to a higher standards in the quality and qualifications of their candidates. We are not in a pleasant place with regard to this. However much we boast about how educated our present Prime Minister Manmohan Singh is, its telling that he has never won a popular election.

How much of such reform is possible right now, if for instance, more of the middle class participate? The conventional wisdom has long been that this group lacks the numbers to make an impact. But these last few years tell us otherwise. The numbers in our middle class have ballooned in the last half-decade, even though we still feel like our effect on politics is that of a tiny minority. The Delimitation Commission’s recent reforms have also given the urban vote more power: for instance in Karnataka, Bangalore’s share of seats has now gone up from 11 to 28 - that is one tenth of the strength of the Assembly, which means that Bangalore (and Mumbai, Chennai, Calcutta, Hyderabad) now matters a great deal as a swing vote. With urbanisation only speeding up, and voters in urban areas skewing educated and informed, this is not good news for the unvarnished populists among our politicians. 

Is a tipping point emerging? And is a 300 million strong middle class enough to trigger a change in our standards?

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.

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.