 "Shadow Warrior | India’s economic prospects: Despite challenges, there is room for optimism")
One of the perennial problems India has faced is that of witheringly negative narratives in Western media. Unfortunately Indians have a tendency to seek approval from the West (decoloniality hasn’t quite happened here, unlike, say in China, which of course wasn’t colonised to the same extent) and therefore people aren’t ashamed of their country.
This is reaching a crescendo right now, and it is not coincidental. There is election interference. It is quite evident that there elements allegedly connected to the US Deep State that are feeding disinformation to media, which are in turn quite happy to broadcast them. The whole point is that Narendra Modi needs to be defenestrated and someone more pliable brought in.
Shashi Shekhar Vempati, writing on X (formerly twitter), provided a staggering (but surely incomplete) list of the kinds of recent stories published in the Western media about India, and I quote only a small percentage of his findings below:
“Will the outcome of India’s election increase intolerance” - Deutsche Welle
“Modification of India is almost complete” - TIME Magazine
“India’s election: fixing a win by outlawing dissent damages democracy” - UK Guardian
“Is India’s BJP the world’s most ruthlessly efficient political party?” - Financial Times
“‘Messianic spell: how Narendra Modi created a cult of personality” - UK Guardian
“Modi’s Sledgehammer Politics Are Battering Indian Democracy” - Bloomberg
“Billionaire Press Barons Are Squeezing Media Freedom in India” - Bloomberg
“Indian democracy developed east Asian characteristics - Voters are increasingly willing to trade political freedom for economic progress” - Financial Times
Impact Shorts
More Shorts“The ‘mother of democracy’ is not in good shape” - Financial Times
“Modi’s Temple of Lies” - New York Times
" Mr. Modi has remained deeply popular even as he has become more autocratic. He has paid little price — and even found support — for his effort to remake India into what analysts have called an illiberal democracy." - New York Times
“India Democracy in name only” - Le Monde France
“Narendra Modi’s illiberalism may imperil India’s economic progress” - The Economist Magazine
“Modi’s India Is Where Global Democracy Dies” - New York Times
“Modi’s Slide Toward Autocracy - How Modi Is Using Hinduism to Turn India Into an Autocracy” - Foreign Policy Magazine
“India Under Modi Is Becoming a Brutal Authoritarian State” - Haaertz Israel
“Authoritarianism Is Winning on Every Front in India” - Reason Magazine
The latest hit-job is the Washington Post story about an alleged plot to assassinate a Khalistani extremist in the US as Utpal Kumar noted . So there’s what might be called in the US a ‘full-court press’ to convince Indians about certain ‘self-evident truths’ and gently nudge them to vote in certain directions: classic election interference, presumably with the aid of a toolkit that has been circulated widely.
In the middle of this, though, there was a bit of a surprise. The Economist magazine, a British publication infamous for its imperialist mindset, and a veteran Modi-baiter, suddenly changed its tune, and published a series of six articles in its April 27th issue under the heading “The India Express”, right in the middle of the second round of voting in India.
Remarkably, it was also co-authored by an Indian-origin staff member, Arjun Ramani. PIOs are often the worst critics of India, and have attracted the title of “sepoy” from Rajiv Malhotra.
It also had a cover story as follows. This is a surprise, considering the magazine routinely endorsed Rahul Gandhi in previous elections.
I am not exactly sure what brought about this change of heart. I wonder, because I am a suspicious type, and journalism is one of the few things Britain has left to sell, but in any case, I will take whatever positive data they present.
What is even more remarkable is a series of charts where they quote Goldman Sachs et al. Let me reproduce a few of them below. The first chart shows the expectations about India’s GDP (nominal) by 2075. In the base case, it will beat the US by 2075; if it grows +0.5 per cent faster consistently, it will beat China as well. This is a startlingly optimistic picture of India’s development at the macro level.
I personally have long been saying India’s target should not be G3, that is one among the group of three superpowers atop the pyramid, but G1, the sole occupant. The very fact that this is being talked about as a serious prospect is notable. Of course, there are many caveats: nobody can anticipate possible perturbations (such as what was created by the COVID pandemic. In passing, as I write this, I read that Peter Daszak of EcoHealth Alliance will be testifying before a congressional committee looking into allegations about the virus having been deliberately created).
The second chart reminds us how much remains to be done before the average Indian can be said to be modestly affluent; but there are step functions; at a certain per capita GDP vehicle ownership takes off. At another point the demand for cleaner and more efficient cities goes up; and so on. It is because of its late start in liberalisation (1991 vs 1978 in China’s case) plus the handicap of not being able to bulldoze through needed reforms, India will still remain much less prosperous per person than China, the US or Japan, but close to Brazil.
The significant investment in infrastructure in the third chart is showing up on the ground: roads, railways, ports, airports; all this should ease trade and manufacturing. The extraordinary success of the UPI payment mechanism (fourth chart) is an indicator that the Indian State now has capability to provide Digital Public Infrastructure at scale, revolutionizing access by all segments of the population.
There is a damning epigram about Brazil: “It is the country of the future. And always will be”. That nation continues to disappoint those who look at its enormous endowment and wonder why it has not made its way out of the ‘middle-income trap’, including premature deindustrialization. Many have suggested the same will happen to India, even though it is still a low-income country.
There have also been serious structural problems: for instance, poor industrial policy.. In 1947, at independence, India was a relatively industrialized country, but confused leadership ensured that India kept missing opportunities. In the seminal 2003 paper, “ Dreaming with BRICs: The Path to 2050”, Goldman Sachs brought both the promise and the heartbreak of India’s tragic underperformance, which forced millions to suffer from malnutrition and poverty.
The paper also forecast that India would do rather better in the timeframe, up to 2050, that they considered.
I analyzed that paper in 2004 in “ The Nehruvian Penalty: 50 Wasted Years”, and concluded that the dead hand of Nehruvian Stalinism, including the dirigiste State occupying the “commanding heights of the economy”, had condemned 500 million Indians to misery. It was appalling to see how far-less well-endowed nations, such as South Korea, handily beat India. In 1947-48, both were at the same level. Now South Korea is 15 times more prosperous!
Now, 20 years later, it is possible to ask how well the BRICs paper’s projections have come true. Without going into details, here’s the macro picture, from the World Bank. If you draw a trend line, it looks like India has managed 6 per cent plus real GDP growth over this period to 2022, barring the disruption of the Covid years. This is a lot better than the Nehruvian Rate of Growth of 2-3 per cent over the previous decades. Certainly a big difference.
The hope is that there has been a point of inflexion, perhaps engendered by two things: the 1991 crisis that finally forced a navel-gazing India to open up and end the oppressive License Raj, and the 2004-2013 misrule by the Congress (high inflation, high NPAs in banks, India in the ‘Fragile Five’ economies) that resulted in their ejection and the rise to power of Narendra Modi. And you do have to give a lot of credit to Modi.
Interestingly enough, in the Economist’s verbiage, although they have liberally used all their proforma style-guide condemnation of Modi—Autocratic! Authoritarian! Hindu-nationalist! Erosion of democratic institutions! Illiberalism! Rebarbative! Lee Kuan Yew or Erdogan? —there is a sneaking admiration for that singular metric: 6.5 per cent growth consistently at a time when the rest of the world is struggling.
Now the next suggestion is that, in keeping with the famous Raghuram Rajan conceit, India cannot be a manufacturing power, and that it will, and should, confine itself to services. As in many of the nostrums eagerly put forward by its economists (I am always reminded of trade theorist Jagdish Bhagwati’s tart comment that “India’s curse is its brilliant economists”), this is also likely to be wrong.
India must industrialise, because its agricultural sector, and even its celebrated IT sector, are simply not able to absorb the ‘demographic dividend’ of large numbers of youngsters entering the workforce every year.
The economist and historian Sanjeev Sanyal, an advisor to the prime minister, wrote a magisterial piece combining both his strengths, a history and forecast for the Indian economy titled: “ India in the World Economy – Its Rise After a Thousand Years of Decline”.
Referring to Angus Maddison’s official history of the world economy commissioned by the OECD, he points out the fact that things are only reverting to the mean: Asia, and in particular India and China, were by far the biggest economies in the world until the time of European colonial adventurism and loot put paid to both of them. In India’s case, the decline began with Turkic invasions, and despite the glittering courts of the Gurkaniya Timurids, the rot had set in.
The ingredients for success are there: the cleaned-up banking system, the increasing availability of credit for businesses at reasonable interest rates, openness to foreign investment, a nascent culture of risk-seeking startups, the Production-Linked Incentive system.
The missing ingredient has been focused leadership, which the Modi government has provided: see its steady stewardship through the Covid crisis.
Besides, India has managed to pull up most of its people from below the poverty line. At least 400 million have escaped from extreme poverty in the last few years. The provision of basic services like electricity, drinking water, roads, toilets and cell phone and internet access to large numbers of people will have a lasting impact on the quality of life and on citizen welfare.
There are deficiencies, too. The inefficient judiciary, corruption and the vestiges of bureaucratic red tape, poor education, and a rather broken political system that often means that doles and ruinous give-aways, not good governance, is rewarded. The education system is increasingly broken, and produces, to put it bluntly, functional illiterates in many cases.
States that pursue frankly insane policies, or pressure groups that hold up sensible reform, as in the case of farm laws, end up forcing the national government to bail out delinquents at taxpayer expense.
There is also a glaring problem in Research & Development. The private sector invests practically nothing, preferring to coast on government R&D, which is not all that well funded either. The result is that India is falling behind in technology: it is far behind in AI, its presence in semiconductors is very low (although growing), there is virtually no work on quantum computing, and so on.
Besides, as a consequence of India being open, Western technology firms are able to plunder Indian data (very much the opposite of China’s firewall). India does not yet have the framework to manage this threat, as I wrote in “ Generative AI creates threats in Intellectual Property and epistemology”.
Lastly, there are determined enemies including countries that shall remain unnamed that foment dissatisfaction, distrust and splittism (to use a well-trodden Chinese phrase).
But then these are problems that are much better to have than those of wrenching poverty, famines and misery, the trademark image of India in the last couple of centuries. Finally, after a thousand years of decline, India is beginning to move towards being the ‘sone ki chidiya’ (golden bird) of old. This is to be celebrated. The elephant, not only the dragon, is rising.
The writer has been a conservative columnist for over 25 years. His academic interest is innovation. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.
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