India at 75: Lessons from the past, promises of the future

As I write this, Indians everywhere are beaming with pride and joy, celebrating 75 years of independence. Rightly, there is so much to celebrate, especially against the post-pandemic backdrop, with life finally finding a semblance of normalcy. After the celebrations, however, this critical juncture requires us to think about the past as well as the future of the country. Past because of the lessons we can learn; future because of the path we must choose. ?

?When I think about past lessons, the first that comes to mind is the partition of British India into two independent dominions: India and Pakistan. To this day, the magnitude of casualties, violence and displacement that occurred due to partition continues to be obscure. We don’t have to look farther than the partition for a lesson on the perils of haphazard planning. At the time, countries in Asia, including China, had comparable socio-economic conditions, such as rampant poverty, illiteracy, and high mortality rate. Fast forward to the present and the likes of China, Japan and South Korea have improved significantly across multiple parameters. ?

?While it is true that the food shortage in the 60s, wars with Pakistan and China, famines, and the caught-in-the-crossfire between the US and the USSR hampered economic growth, they pale in comparison to the damages caused by in-fighting and the ghosts of the partition. Although the Nehruvian statist self-sufficiency, underpinned by science and technology, did align the nation with the West to some extent, it did not find takers for long. At times I wonder what would be if Nehru’s governance had continued till the 70s. How would it impact the emergence of Jan Sangh as an alternative? Guess we’ll never know. ?

?If my memory serves me right, the 70s were the inflection point in India’s growth trajectory. On one hand, Indira Gandhi’s feisty leadership led to India declaring its nuclear capability, which later proved to be a bedrock for greater developments — as self-insurance against geopolitical risks. Yet the internal and external disturbances led to the imposition of Emergency, which I believe will forever be contentious. This is not to say there weren’t structural changes in the economy — changes that paved the way to India’s strengths today.?

?Notably, the services sector witnessed significant growth, surpassing agriculture as the chief contributor to the economy by 1980, just before Infosys was launched. The services sector’s contribution to the GDP currently stands at 55%. Such tremendous growth wouldn’t be possible if not for the decisive steps taken by the P V Narasimha Rao government during the Balance of Payments crisis. His tenure rendered the Nehruvian self-sufficiency model obsolete while embracing free-market capitalism. Even the dissolution of the Soviet Union in 1991 removed the last hurdles inhibiting India from globalization. ?

?In hindsight, it’s safe to say that free-market capitalism was instrumental to India’s ensuing decades of growth. Despite cycles of political uncertainties, weak governments, and civil strife, India made great headway in socio-economic development. This model also enabled Indians to harness their mathematical acumen, leading to an influx of engineers, who continue to make their mark around the world. The economic model, though not perfect, continued to find bipartisan support, with the likes of Vajpayee as its later proponents. ?

?While 21st-century India has witnessed meteoric growth, it has strayed from the fundamentals that enabled it. Polarization has been foregrounded in politics, the spill-over effects of which are evident in economic sectors as well. Any federal policy runs the risk of civil disobedience, which in turn affects commerce. The CAA-NRC is a good case in point.??

?While political parties continue their appeasements and fan the polarization flames, India is plummeting across important socioeconomic indices. India ranks 150 in the global per capita income. Its Human Development Index ranking, too, is a cause for concern. Although Indians find themselves at the upper echelons of global tech, the female labour force participation rate is egregiously low. India ranks 135 out of the 146 surveyed countries in the Global Gender Gap Index. ?

Instead of making sweeping reforms such as demonetization, for which we do not have supporting fundamentals like universal basic income, the government should focus on analyzing the root causes of gender gaps, unemployment, poverty, etc. The country’s vulnerabilities were laid bare during the pandemic when scores of labourers couldn’t fend for themselves without their menial jobs. Yet, the available employment data is extremely thin. A sizable majority of the economy is unorganized, with disguised employment increasing every year. The first step to tackle the scourge of unemployment is to have reliable employment data.?

The country is expected to soon become the most populated, which spells troubles if the economy continues to remain unorganized while divisiveness grows on religious and cultural lines. India’s growing stature globally will not mean much if civil issues continue to simmer. Its economy is likely to grow to $5 trillion by 2026-27 and the military budget is third-highest in the world — meaning there is so much to build on.??

?While the onus is largely on the government to steer the country in the right direction, even the citizens and the private sector have critical roles to play. India’s digital economy, for instance, is brimming with opportunities for better market organization, financial inclusion, affordable education, etc. Let the past be a reminder of the mistakes to avoid and the promising future an incentive for concerted efforts from all citizens. ?