The Trouble With Meteors
This seems to be India's moment in the sun.
The economy is booming with GDP growth topping 8 percent. Its stock market recently scaled 11,000, galloping 17 percent so far this year, after gaining 42 percent last year. Bullish foreign investors poured $11 billion into Indian stock in 2005 and the country, which once ran a foreign exchange deficit, now boasts $144 billion in reserves. Things are looking so good that the government is proposing easing convertibility of the long-sheltered Indian rupee.
India is being clubbed with China as the new emerging economy, which has not gone unnoticed in the land of the dragon. Last month almost 200 Chinese corporate executives, led by the Commerce Minister Bo Xilai, descended upon Mumbai to explore business opportunities in the country. “We believe the economic potential of India will continue to grow,” Xilai said. “That’s why Chinese businesses are paying attention.”
India’s flourishing economy even lured domestically shell-shocked U.S. President George W Bush to travel to India in early March and the highly favorable nuclear agreement that India struck with the United States was made possible in no small part by the Bush administration’s eagerness to tap into the country’s robust economic growth.
It’s truly astonishing how in less than one decade the image of India in the global psyche has transformed from a malignant nation of poverty and misery to an economic and high tech powerhouse. The economic boom, jumpstarted by the technology sector and to some degree by Indian technology workers in the United States, has cascaded far beyond that sector. A visit to the new India can be jolting to Indian immigrants who have not been home for a few years. The construction boom, the easy availability of the latest consumer gadgets, as well as the money to lap them up, is nothing short of extraordinary. We are even witnessing a reverse migration of many Indian immigrants and Western expatriates to India, all salivating over the prospects of business killings to be made in the country.
India’s meteoric rise and the constant media drumbeat can be so tantalizing as to blind one to the precarious ground on which this success rests. The country’s infrastructure, even in the hot spots of Bangalore, Hyderabad and New Delhi is abysmal and groaning under the strain. Wired magazine noted recently, “Modern India is a morass of corruption and poverty — and awash in email and cell phones.” The country was ranked 92 with a score of 2.8 out of a possible 10 on Transparency International’s 2005 Corruption Perception Index. Fully a fifth of all Indians live in abject poverty without adequate access to food or shelter. That is an astonishing 200 million people. The country’s law enforcement and judicial system is notoriously corrupt and inefficient.
Corporate India is also beginning to sound an alarm on the engine behind India’s spectacular rise — its hierarchical, rote-rewarding, innovation-repressing, risk-averse educational system that churns out hundreds of thousands of drones annually to service the call centers and back room operations of the thriving BPO (business process outsourcing) sector. At February’s annual convention of India’s software trade association, Nasscom, several business leaders, including Azim Premji, chairman of Wipro, bemoaned the singular lack of innovative spark in Indian professionals and the country’s educational system. “We are becoming a nation of aspiring programmers and sales people,” lamented Jerry Rao, CEO of MphasiS.
Even as we celebrate India’s meteoric rise, we need also to begin tackling its fundamental problems of poverty, infrastructure development and educational reform if the country is to maintain its continuing edge in the decade ahead. Otherwise we may well learn an enduring cosmic lesson — the trouble with meteors is that they burn out fast.