A Very Good Year
|2007 has been a very good year for the Indian economy.|
For the first time, the country slipped into the world’s exclusive trillion dollar club, comprised of just 10 countries with GDP (gross domestic product) in excess of a trillion dollars. India sprinted past South Korea, Russia and Brazil to make the top 10 global economies list.
Sixty years after independence, India has unquestionably arrived on the global economic stage, all trumpets blaring. International economists predict that much as the 20th century is heralded as the American century, by 2050 the 21st century shall belong to India and China.
While China’s economic ascendancy has been recognized for some decades now, India burst upon the stage only in the past few years. Global capital, never one to miss an opportunity, is clearly taking notice, so the new gold rush in India is clearly on.
But there are clouds on the horizon.
Economists caution that India’s economic miracle is built on stilts. The services sector, which includes its acclaimed information technology industry, accounts for half the national income. But fewer than 1.5 million Indians, or under 0.3%, of India’s 470 million workers, are in the IT sector. In fact, only 8 percent of the country’s workers even have a real job, i.e. work in the so-called organized sector, pay taxes, etc. – and over half of them work for the government. The remaining 92% – 435 million – are employed in the unorganized sector, ranging from day laborers in construction, farming, local halwai or kirana stores, to rickshaw drivers and domestic servants.
This sobering reality constitutes both a dilemma and an opportunity. The dilemma is whether the country has the broad skill and capital base to sustain its incredible growth. The opportunity lies in the vast potential of the untapped.
Since independence, the country’s economic policies have been fashioned around trickle down development thinking. India’s first Prime Minister Jawaharlal Nehru, for instance, focused on heavy industries like steel and preeminent engineering institutions like the Indian Institutes of Technology.
The success of Indian technology professionals in the United States is a tribute to Nehru’s economic vision. At the same time, The New Economist noted: “In a sense, he laid the foundations for an idiot savant economy that can do the impossible but fumbles the mundane. India turns out more scientists than far wealthier China, but cannot get all its children to school. While the country’s business houses prowl the world picking off weaker western companies, they cannot acquire land at home because villagers protest violently against forcible takeovers.”
To keep its economic powerhouse humming, India must expand opportunities beyond the 1 percent directly embraced by its present economy. A society on a trillion dollar steroid, but in which half its children are malnourished and uneducated and three quarters anemic is both unconscionable and unsustainable.
Sooner or later, social, economic and political forces in a democratic polity will impose correction and rectification in these imbalances precipitously, unless we act judiciously now. Remember, that famous Frank Sinatra melody “It was a very good year,” concludes somberly in the autumn years: “It was a mess of good years.”