Modern India: 21st Century's Economic Power House


The pre-British, early 19th century Moghul India, described as caste-ridden, feudalistic and unmodern, was economically ahead of the rest of the world,including Britain and the US, according to S. Gururmurthy, a popular Indian columnist. The Indian economy contributed 19 per cent of the world GDP in 1830, and 18 per cent of global trade, when the share of Britain was 8 per cent in production and 9 per cent in trade, and that of US, 2 per cent in production and 1 per cent in trade. India had hundreds of thousands of village schools and had a functional literacy rate of over 30 per cent. In contrast, when the British left, India’s share of world production and trade declined to less than 1 per cent and its literacy was down to 17 per cent. And yet, in 1947, India had large Sterling reserves, no foreign debt, and Indians still had an effective presence in such trade centers as Singapore, Hong Kong, Penang, Rangoon and Colombo.

For decades after independence, however, the Indian economy remained moribund. While Nehru's Congress party government made significant investments in higher education under Education Minister Maulana Azad by establishing institutions of higher learning such as IITs (Indian Institutes of Technology), the pervasive License Raj hampered the entrepreneurial spirit of India. Fortunately, that began to change with the reforms initiated in 1991 by then Indian prime minister P. V. Narasimha Rao and his finance minister Manmohan Singh (now prime minister) in response to a balance-of-payments crisis. These reforms limited the scope of the License Raj (investment, industrial and import licensing) and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors. Subsequent governments of both major parties sustained and extended the reform process and accelerated India's economic growth.

Early investments by Nehru administration are now beginning to pay dividends. India has a large pool of English speaking college graduates. The nation is second only to the United States in production of doctors, engineers, and PhDs. Many of the world's top CEOs and business leaders are alumni of India's prestigious institutes of technology and management. With the large presence of IIT graduates in places such as Silicon Valley, India has become a highly respected brand name as a source of top talent around the world. What began as the massive but temporary Y2K work for India around the turn of the century, the country has now become a preferred destination for high-tech and business process outsourcing from the United States and Europe.

The economic reforms in India have unleashed the talent and the energies of its people at home and abroad to help build its economy and restore its place in the world as a major force. Many entrepreneurs of Indian origin (NRIs) are now setting up shops in India to do heavy-duty research and development as well as some manufacturing. With them, they are bringing US foreign direct investments ($13b in 2007 and growing) from large investors and Fortune 500 corporations to their home country, which helps create jobs and sustain the virtuous cycle of intellectual and economic development. Last year, the Indian GDP grew 9% and it is expected to grow another 7% this year, in spite of the current global economic crisis.

A recent Indian government advertisement in Fortune magazine explains the reason why India's economy has remained relatively unscathed by the global economic crisis. It says: India has taken a generally conservative approach to globalization, moving slowly to open its markets to the rest of the world. Moreover, the domestic Indian market has remained strong. The ad quotes Ron somers, president of US-India Business Council, as saying, "India's internal market is so massive that it can sustain shocks better than many countries." The fact is that India's economy does not depend much on exports to the rest of the world. It is, therefore, relatively less connected to the problems in the developed world. In fact, it stands to benefit from a dramatic reduction in commodity prices, such as oil, due to the world-wide economic slowdown.

While the Indian advertisement and government leaders present a very rosy picture of India's prospects, it is important for Indians and others to understand that there are significant risks in India. For example, the extreme Hindu Nationalists are continuing to stir up trouble in many parts of India. According to All India Christian Council, the 2008 violence has affected 14 districts out of of 30 and 300 Villages in the Indian state of Orissa, 4,400 houses burnt, 50,000 homeless, 59 killed including at least 2 pastors, 10 priests/pastors/nuns injured, 18,000 men, women, children injured, 2 women gang-raped including a nun, 151 churches destroyed and 13 schools and colleges damaged. The violence targeted Christians in 310 villages, with 4,104 homes torched. More than 18,000 were injured and 50,000 displaced and homes continued to burn in many villages. Another report said that around 11,000 people are still living in refugee camps.

People like Shiv Sena chief Bal Thackeray, BJP leader L.K. Advani and Gujarat Chief Minister Narender Modi represent the ugly underbelly of Indian democracy and a threat to India's secular constitution. Modi is currently in power in Gujarat, in spite of overwhelming evidence of his participation in 2002 anti-Muslim riots resulting in the massacre of thousands of Muslims. Mr. Advani has been held responsible for the destruction of Babri mosque and subsequent anti-Muslim riots. Mr. Thackeray is considered responsible for major anti-Muslim riots in Mumbai and continues to terrorize any one who disagrees with him.

The BBC reported yesterday on the "Hindu Terrorist" plot involving Indian military officers, a female priest and a little-known Hindu outfit called Abhinav Bharat (Young India).

The report said: It was in the aftermath of the 29 September bomb blast in the predominantly Muslim town of Malegaon in the western state of Maharashtra that the term "Hindu terrorism" or "saffron terrorism" came to be used widely. That was because the state police's Anti-Terrorism Squad (ATS) arrested 10 Hindus following the blasts and has said that it wants to arrest several more.

One of those detained was a female priest, Sadhwi Pragya Singh Thakur, aged 38, who has been accused by the ATS of being involved in the Malegaon blast. Her detention shocked members of the faith. So too did the arrest of a serving Indian army officer, Lt-Col Prasad Srikant Purohit, who the ATS says is the prime accused in the case.


According to an Indian writer Yoginder Sikand, some in India's Muslim minority have been radicalized by the actions of the Hindutva groups and their allies in the state and local governments. America's 'global war on terror' has provided a convenient cover to these Hindu groups and to fiercely anti-Muslim elements within the Indian state machinery to launch a concerted campaign of terror against Muslims. Large numbers of Muslims in various parts of India continue to languish in jails on trumped-up terror charges, suffering brutal torture as well as routine insults to their religion by police officials.

A rudimentary study of world history suggests that if the Indian political system can not find a way to marginalize and isolate Thackeray, Advani, Modi and other fanatics like them, India will continue to face threats to its secular constitution, its political stability, and its economic growth.

Prime Minister Manmohan Singh himself has called the Maoist insurgency emanating from the state of Chhattisgarh the biggest internal security threat to India since independence. The Maoists, however, are confined to rural areas; their bold tactics haven't rattled Indian middle-class confidence in recent years as much as the bomb attacks in major cities have. These attacks are routinely blamed on Muslim militants. How long will Maoists remain confined to the rural areas will depend on the response of the Indian government to the insurgents who exploit huge and growing economic disparities in Indian society.

In 2006 a commission appointed by the government revealed that Muslims in India are worse educated and less likely to find employment than low-caste Hindus. Muslim isolation and despair is compounded by what B Raman, a hawkish security analyst, was moved after the most recent attacks to describe as the "inherent unfairness of the Indian criminal justice system".

According to Pankaj Mishra, the author of Temptations of the West: How to Be Modern in India, Pakistan and Beyond, the names of the politicians, businessmen, officials and policemen who colluded in the anti-Muslim pogrom in Gujarat in 2002 are widely known. Some of them were caught on video, in a sting carried out last year by the weekly magazine Tehelka, proudly recalling how they murdered and raped Muslims. But, as Amnesty International pointed out in a recent report, justice continues to evade most victims and survivors of the violence. Tens of thousands still languish in refugee camps, too afraid to return to their homes.

Based on a quick review of India's current status and great potential, including its strengths and weaknesses, I strongly believe India is clearly on the road to greatness it deserves with its rich heritage as one of the oldest civilizations on earth and the world's largest modern democracy. India's challenge will continue to be in how well it negotiates the obstacles and potholes created by internal strife from growing religious and ethnic fanaticism, ongoing regional insurgencies, and increasing economic disparity.

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