The Post-American World: Release 2.0 (18 page)

“The statistics don’t capture the shift in mentality,” says Uday Kotak, the founder of a booming financial services firm. “The India I grew up in is another country. The young people whom I work with today are just so much more confident and excited about what they can do here.” The old assumption that “made in India” means second-rate is disappearing. Indian companies are buying stakes in Western companies because they think they can do a better job of managing them. Indian investment in Britain in 2006 and 2007 was larger than British investment in India.

And it’s not just business. Urban India is bursting with enthusiasm. Fashion designers, writers, and artists talk about extending their influence across the globe. Bollywood movie stars are growing their audience from its domestic “base” of half a billion by winning new fans outside of India. Cricket players have revamped the game and are working to attract crowds abroad. It is as if hundreds of millions of people had suddenly discovered the keys to unlock their potential. As a famous Indian once put it, “A moment comes, which comes but rarely in history, when we step out from the old to the new, when an age ends and when the soul of a nation, long suppressed, finds utterance.”

Those words, which Indians of a certain generation know by heart, were spoken by the country’s first prime minister, Jawaharlal Nehru, just after midnight on August 15, 1947, when Britain transferred power to India’s Constituent Assembly. Nehru was referring to the birth of India as an independent state. What is happening today is the birth of India as an independent society—boisterous, colorful, open, vibrant, and, above all, ready for change. India is diverging not only from its own past but also from the paths of other countries in Asia. It is not a quiet, controlled, quasi-authoritarian country that is slowly opening up according to plan. It is a noisy democracy that has finally empowered its people economically.

Indian newspapers reflect this shift. For decades their pages were dominated by affairs of the state. Usually written in cryptic insiders’ jargon (PM TO PROPOSE CWC EXPANSION AT AICC MEET), they reported on the workings of the government, major political parties, and bureaucratic bodies. A small elite understood them, everyone else pretended to. Today, Indian papers are booming—a rare oasis of growth for print journalism—and overflowing with stories about businessmen, technological fads, fashion designers, shopping malls, and, of course, Bollywood (which now makes more movies a year than Hollywood). Indian television has exploded, with new channels seeming to spring up every month. Even in the news business, the number and variety are bewildering. By 2006, India had almost two dozen all-news channels.
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There’s more here than just glitz and glamour. Consider the response to the 2005 tsunami. In the past, the only response in India worth noting would have been the government’s, which would have involved little more than coordinating foreign aid. In 2005, New Delhi refused offers of help from abroad (one more indication of growing national pride). But the more striking shift was elsewhere. Within two weeks after the tidal wave hit, Indians had privately donated $80 million to the relief effort. Four years earlier, in 2001, it had taken a year to collect the same amount of money after a massive (7.9 Richter) earthquake in Gujarat. Private philanthropy in Asia has typically been a thin stream. When the rich give, they give to temples and holy men. But that seems to be changing. One of India’s richest men, Azim Premji, a technology multibillionaire, has said he will leave the bulk of his fortune in a foundation, much as Bill Gates has. Anil Aggarwal, another self-made billionaire, has donated $1 billion toward setting up a new private university in Orissa, one of India’s poorest regions. Private and nonprofit groups are getting involved in health care and education, taking on functions that should be the responsibility of the state. By some measures, more than 25 percent of schools and 80 percent of the health system in India now lie outside the state sector.
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The software firm Infosys Technologies has started its own corporate foundation to provide rural areas with hospitals, orphanages, classrooms, and schoolbooks.

All this sounds familiar. In one key regard, India—one of the poorest countries in the world—looks strikingly similar to the wealthiest one, the United States of America. In both places, society has asserted its dominance over the state. Will that formula prove as successful in India as it has in America? Can society fill in for the state?

The Necessity for Government

The Indian state is often maligned, but on one front it has been a roaring success. India’s democracy is truly extraordinary. Despite its poverty, India has sustained democratic government for more than sixty years. If you ask the question “What will India look like politically in twenty-five years?” the answer is obvious: “As it does today—a democracy.” Democracy makes for populism, pandering, and delays. But it also makes for long-term stability.

India’s political system owes much to the institutions put in place by the British over two hundred years ago. In many other parts of Asia and in Africa, the British were a relatively temporary presence. They were in India for centuries. They saw it as the jewel in their imperial crown and built lasting institutions of government throughout the country—courts, universities, administrative agencies. But perhaps even more importantly, India got very lucky with the vehicle of its independence, the Congress Party, and its first generation of post-independence leaders, who nurtured the best traditions of the British and drew on older Indian customs to reinforce them. Men like Jawaharlal Nehru may not have gotten their economics right, but they understood political freedom and how to secure it.

The fact that a political and institutional framework already exists is an important strength for India. Of course, pervasive corruption and political patronage have corroded many of these institutions, in some cases to the point of making them unrecognizable. India has a remarkably modern administrative structure—in theory. It has courts, bureaucracies, and agencies with the right makeup, mandate, and independence—in theory. But whatever the abuses of power, this basic structure brings tremendous advantages. India has not had to invent an independent central bank; it already had one. It will not need to create independent courts; it can simply clean up the ones it has. And some of India’s agencies, like its national Election Commission, are already honest, efficient, and widely respected.

If the Indian state has succeeded on some dimensions, however, it has failed on many others. In the 1950s and 1960s, India tried to modernize by creating a “mixed” economic model between capitalism and communism. The product was a shackled and overregulated private sector and a massively inefficient and corrupt public sector. The results were poor, and in the 1970s, as India became more socialist, they became disastrous. In 1960, India’s per capita GDP was higher than China’s and 70 percent that of South Korea; today, it is just a quarter of China’s. South Korea’s is sixteen times larger.

Perhaps most depressing is India’s score on the United Nations Human Development Index, which gauges countries not just by income but by health, literacy, and other such measures as well. India ranks 119 out of 169 countries—behind Syria, Sri Lanka, Vietnam, and the Dominican Republic. Female literacy is a shockingly low 48 percent. Despite mountains of rhetoric about helping the poor, India’s government has done little for them, even when compared with the governments of many other poor countries. It has made too few investments in human beings—in their health and education—and when budgeted, the money has rarely been well spent. In the 1980s, Prime Minister Rajiv Gandhi estimated that, of every ten rupees that was supposed to be spent on the poor, just one actually got to the person in need.

Can these problems be blamed on democracy? Not entirely. Bad policies and administration produce failure whether pursued by dictators or by democrats. Still, certain aspects of democracy can prove problematic, especially in a country with rampant poverty, feudalism, and illiteracy. Democracy in India too often means not the will of the majority but the will of organized minorities—landowners, powerful castes, rich farmers, government unions, local thugs. (At one point, nearly a fifth of the members of the Indian parliament stood accused of crimes, including embezzlement, rape, and murder.) These organized minorities are richer than most of their countrymen, and they plunder the state’s coffers to stay that way. India’s Communist Party, for example, campaigns not for economic growth to benefit the very poor but rather to maintain the relatively privileged conditions of unionized workers and party apparatchiks. In fact, India’s left-wing is largely opposed to the policies that have finally reduced mass poverty. In all this ideological and political posturing, the interests of the 800 million Indians who earn less than two dollars a day often fall through the cracks.

But democracy can also right wrongs, as India’s democracy has done on one crucial issue. In the 1990s, an ugly Hindu nationalism raged through the country and captured its politics, through the Bharatiya Janata Party (BJP). It whipped up Hindu animosities against Muslims and also exploited the stark political reality that India’s Muslim population is disempowered, almost by definition. Since those areas of British India where Muslims were a majority became Pakistan and Bangladesh, Muslims are almost everywhere in India a weak minority. Over time, though, the BJP’s incitement of hatred and violence produced a backlash. A thoroughly secular government came to power in 2004, headed by Manmohan Singh, the former finance minister who opened up India’s economy in the summer of 1991. In an act of wisdom and restraint, Sonia Gandhi, who led the ruling coalition to victory in the polls, chose to appoint Singh prime minister rather than take the job herself. As a result, quite unexpectedly, India’s chaotic and often corrupt democratic system produced for its head of government a man of immense intelligence, unimpeachable integrity, and deep experience. Singh, an Oxford Ph.D., had already run the country’s central bank, planning ministry, and finance ministry. His breadth, depth, and decency as a person are unmatched by any Indian prime minister since Nehru.

But Singh’s stellar credentials and character haven’t helped the country much. The pace of India’s reforms has disappointed its well-wishers. Ever since the initial burst of reforms in the 1990s, governments in both New Delhi and in the states have been cautious in eliminating subsidies and protections. Nor have they pushed new pro-growth initiatives such as the creation of large economic zones or infrastructure projects. They have sometimes proposed new programs that look suspiciously like programs that have had little success in the past. But this paralysis cannot be blamed entirely upon the government. A change in the ruling party will not bring about Chinese-style reforms. Economic reforms produce growth, but they also produce dislocation—and those hurt by change always protest more loudly than those who benefit. Add to that the messy politics of coalitions—someone, somewhere can always block a proposed reform—and you have a recipe for slow movement, one step forward and three-quarters of a step back. It is the price of democracy.

Despite the lack of far-reaching new policies, there is a quiet determination in both the public and the private sectors to keep moving forward. Behind the cacophony of Indian politics, there is actually a broad consensus on policy among the major players. The major opposition party, the BJP, criticizes the Singh government on two fronts—economic reforms and pro-Americanism. In fact, it took exactly the same positions as Singh when it was in government. The arrow may be moving slowly, but it moves in the right direction. Every week in India, one reads about a new set of regulations being eased or permissions being eliminated. These “stealth reforms”—too small to draw vigorous opposition from the unreconstructed left—add up. And India’s pro-reform constituency keeps growing. The middle class is already 300 million strong. Urban India is not all of India, but it is a large and influential chunk of it. And the vibrancy of the Indian private sector compensates in some measure for the stasis in the state sector.

In any event, there is no other way. Democracy is India’s destiny. A country so diverse and complex cannot really be governed any other way. The task for a smart Indian politician is to use democracy to the country’s advantage. In some ways this is already happening. The government has recently begun investing in rural education and health, and is focusing on improving agricultural productivity. Good economics can sometimes make for good politics—or at least that is the Indian hope. Democracy has also been broadened since 1993 to give villages greater voice in their affairs. Village councils must reserve 33 percent of their seats for women, and there are now one million elected women in villages across the country—giving them a platform from which to demand better education and health care. Freedom of information is also being expanded in the hope that people will insist on better government from their local leaders and administrators. It is bottom-up development, with society pushing the state.

Will the state respond? Built during the British Raj, massively expanded in India’s socialist era, it is filled with bureaucrats who are in love with their petty powers and privileges. They are joined by politicians who enjoy the power of patronage. Still others are wedded to ideas of Third World socialism and solidarity. In these views they are joined by many intellectuals and journalists, who are all well schooled in the latest radical ideas—circa 1968, when they were in college. As India changes, these old elites are being threatened and redoubling their efforts. Many in India’s ruling class are uncomfortable in the modern, open, commercial society they see growing around them.