The Power and the Potential of India’s Economic Change
By WILLIAM GRIMES (nytimes.com)
All eyes are on China as it races to become the world’s next great power. Smart bettors would be wise to put some money on India to get there first, and Edward Luce explains why in “In Spite of the Gods: The Strange Rise of Modern India,” his highly informative, wide-ranging survey.
Mr. Luce, who reported from New Delhi for The Financial Times from 2001 to 2005, offers an Imax view of a nation so enormous that it embraces every possible contradiction. Always it seems to be teetering on the edge of either greatness or the abyss. Right now the future looks inviting.
India’s dizzying economic ascent began in 1991, when the government abruptly dismantled the “license raj,” a system of tight controls and permits in place since independence in 1947. Mr. Luce, as you might expect from a Financial Times reporter, does a superb job of explaining the new Indian economy and why its transformation qualifies as strange.
Unlike China, India has not undergone an industrial revolution. Its economy is powered not by manufacturing but by its service industries. In a vast subcontinent of poor farmers whose tiny holdings shrink by the decade, a highly competitive, if small, technology sector and a welter of service businesses have helped create a middle class, materialistic and acquisitive, along with some spectacularly rich entrepreneurs.
“If Gandhi had not been cremated,” Mr. Luce writes, “he would be turning in his grave.”
Mr. Luce, notebook in hand, matches faces to trends as he tours India from the affluent, relatively well-governed south to the poor, hopelessly mismanaged north, where the age-old problems of illiteracy, poverty, government corruption and caste divisions persist.
Much of the book consists of interviews and colorful vignettes intended to illustrate the myriad statistics that, out of context, can numb the mind. The blend of anecdote, history and economic analysis makes “In Spite of the Gods” an endlessly fascinating, highly pleasurable way to catch up on a very big story.
As Mr. Luce dryly observes, “India never lacks for scale.” This is a country where 300 million people live in absolute poverty, most of them in its 680,000 villages, but where cellphone users have jumped from 3 million in 2000 to 100 million in 2005, and the number of television channels from 1 in 1991 to more than 150 last year.
India’s economy has grown by 6 percent annually since 1991, a rate exceeded only by China’s, yet there are a mere 35 million taxpayers in a country with a population of 1.1 billion. Only 10 percent of India’s workers have jobs in the formal economy. Its excellent engineering schools turn out a million graduates each year, 10 times the number for the United States and Europe combined, yet 35 percent of the country remains illiterate.
Despite its robust democracy and honest elections, India faces the future saddled with one of the most corrupt government bureaucracies on earth. Mr. Luce encounters a woman in Sunder Nagri, a New Delhi slum, whose quest for a ration card entitling her to subsidized wheat and other staples involved bribing an official to get an application form. The form was in English, which she could not read, so she had to pay a second official to fill it out. When she turned up to claim her wheat, it was moldy and crawling with insects. The store owner had evidently sold his good government wheat on the black market.
In the northern state of Bihar, Mr. Luce writes, more than 80 percent of subsidized government food is stolen. Most ration cards are obtained through bribery, by Indians who are not poor. It’s the same story in nearly every area of an economy touched by the groping tentacles of a government that “is never absent from your life, except when you actually need it.”
As a former cabinet official tells Mr. Luce, corruption is not simply a nuisance or an added burden on the system. Rather, he says, “in many respects and in many parts of India it is the system.” Mr. Luce, traveling the country’s rickety rail system, covers an enormous amount of ground. He inquires into the Kashmir dispute while dissecting India’s fraught relationship with Pakistan; marvels over New Delhi’s spanking-new subway system; describes the middle class rage for megaweddings; pays a visit to Bollywood and, in some of his most absorbing chapters, analyzes the changing caste system, the status of India’s Muslims and the alarming rise of Hindu nationalism.
All this and a visit to C2W.com, a Mumbai company that markets brands through the Internet, cellphones and interactive television shows. Its founder, Alok Kejriwal, is still in his 30s, and to Mr. Luce represents the new India. “I am greedy,” he tells the author. “I have no trouble admitting to that.”
At one point, Mr. Luce ponders India’s constant state of chaos and compares it to a swarm of bees. From inside the swarm, things look random, but from the outside, the bees hold formation and move forward coherently. Sometime in the 2020s, at current growth rates, India will overtake Japan to become the world’s third-largest economy. Greatness lies within its grasp, Mr. Luce argues, if it can figure out a way to restructure its inefficient agriculture, put millions of desperately poor people in jobs that pay more than a pittance, wake up to a potential H.I.V.-AIDS crisis and root out government corruption.
Mr. Luce takes a cautiously optimistic view. “India is not on an autopilot to greatness,” he writes. “But it would take an incompetent pilot to crash the plane.”
Jan 19, 2007
The Power and the Potential of India’s Economic Change