From 28 April to 10 May India will hold elections to vote for its fourteenth Parliament (Lok Sabha) since 1947. The country usually receives very little media coverage in Europe, and information about India is generally limited to a few stereotypes. On one hand, there are images of poverty and dramatic social injustice, and on the other, the country’s spiritual dimension. Both of these aspects contribute to the complexity of the country, but they are by no means the whole picture.
The Indian elites tend to be the victims of a basically similar blinkered vision: they literally overlook the existence of social problems in the country and focus all their attention on the effort for greater growth. What seems to attract their attention even more than economic development and improving living standards is acquiring international status as a superpower. Obsessed by the need to demonstrate at every step their cosmopolitanism, but also their original culture or ‘Indianness’, the well-off classes in the Indian population only see one India – the modern elitist country. The rest is overlooked, as if it didn’t exist.
Between these two extreme visions is the reall country of over one billion inhabitants (the second largest in the world), often also ignored because considered to be enigmatic or a sleeping giant unable to wake up. But over the last few years international interest in the country has suddenly been aroused, thanks to startling economic results and the even more impressive prospects for growth in the coming decades. At the Davos World Economic Forum, India was often at the centre of attention, along with its prospects for growth and hi-tech industry, while the alternative World Social Forum held in Bombay was a vehicle for those speaking out critically against that kind of development pattern.
In recent months in India a Goldman Sachs study has often been cited with a barely concealed triumphant tone. The study analyses the prospects of economic growth until 2050 for the four great emerging countries: China, India, Brazil and Russia. The conclusions of the study will surprise anyone used to looking at the world only through the lens of the present: extrapolating current and potential growth rates, these countries will spectacularly increase their economic importance and, therefore, their world influence in the coming decades. The figures are particularly important and significant in the case of the two Asian giants. In India they endlessly repeat that, according to the study, the GDP in India will be higher than in Italy by around 2016, and than in France and Britain by around 2020. India should thus rise to become the third largest economy in the world (after the United States and China) by midway through the century. Naturally everything ceteris paribus, i.e. taking for granted
that in this period growth rates will be similar to current rates (both in emerging countries and in the more mature economies).
The theories are thus fairly limiting, but equally, leaving aside the accuracy of the forecast as regards the precise moment of the ‘overtaking’, it seems difficult to argue against the overall trend suggested by the study. The world we are moving towards will be significantly different from today and in that context the little-known India will have a much different economic and geopolitical influence than at present.
The Goldman Sachs study quotes the absolute size of the GDP, not the per capita figure. In relative terms, in the 21st century the Chinese and Indian GDPS will remain well below those of the United States and Europe. But what will tip the balance towards Asia is the effect due to a combination of sustained economic growth and very high population levels: India and China together now have over 2.2 billion inhabitants. Even if their birth rates are dropping, as always in the presence of economic development, in a few decades time one inhabitant out of two in
the world will be Chinese or Indian!
China now receives a great deal of media attention. It is surely also worthwhile following a bit more closely Indian events to try and understand what kind of country we are talking about.
The parliamentary elections will last twenty days for the simple reason that the country is
immense and holding them simultaneously would require millions of electoral officials.
This is a reminder that India is in fact a democracy (China has no such problems) – the largest democracy in the world (a ‘vibrant democracy’, as they say here).
Since 1947 India has kept faith with this tradition. Except for a brief interlude in the days of Indira Gandhi (democratic guarantees were suspended from 1977-1979, leading to her immediate rejection by the electorate in the next vote), India has always functioned as a democracy. Some of the main aspects of this democratic system are debatable, such as the limit to certain economic and social rights, but it would be misleading to underestimate the scope of Indian democracy. It is an immense mainly poor country in which, however, authoritarian tendencies have never prevailed. There are no other examples in the world and this without doubt is an advantage, honouring the country and deserving credit.
Similarly, another aspect should also be stressed. Since the ‘Green Revolution’ in the 1970s, although hundreds of millions of people live in poverty, India is basically selfsufficient from the food point of view and today even exports farm produce.
Bearing in mind that famine was endemic in British India (with a population of less than 400 million inhabitants), today India manages to feed over a billion inhabitants with its own resources. This must be acknowledged as a remarkable achievement.
Democracy and self-sufficiency are key concepts in the Indian collective imagination and explain many of the political decisions made by the New Delhi governments over the years. Democracy is the outcome of a collective movement, which under the spiritual and political guidance of Mahatma Gandhi, won independence. A rare example in history of a combination of enlightened leadership and a pacifist movement ‘from below (today we would call it civil society), this movement was by nature democratic. Therefore to betray democracy would mean betraying the very roots of independent India.
Food self-sufficient is important because colonialism was a painful stage in the past which deeply marked India. Still mainly rural (around 700 million people live off the land), it suffered from the vested interests of the colonial power suffocating any attempts at independence. Colonial India produced what was convenient for the British Empire and, in turn, imported British manufactured goods on trading terms decided by London.
Even in the years after independence, chronic food shortages led to conflicts with the big powers (the United States and Soviet Union), which often used this arm to extend their influence. This explains the Indians’ hypersensitivity towards anyone trying to use economics as a form of pressure. Since the early days of independence India sought to develop an economy and industry firmly in national hands, and to eliminate any dependence on
foreigners in terms of investments and food imports.
Today foreign investments in India are much lower than those in other emerging economies, and foreign trade is a much lower share of the GDP than more developed countries or even developing countries. This is an ambivalent feature of the Indian economy: on one hand, it has preserved India from the painful cash crises besetting Latin America or other emerging countries, but on the other, it partly curbs the potential for growth in technological terms.
The nationalist development model, dating back to Nehru, was pursued by subsequent governments, but then abandoned in 1991, when the Rao government was forced to make a U-turn in terms of economic openness: the currency reserves had almost touched zero and growth had become weak, partly because of the high levels of control and regulation, typical of a planned economy like the Indian system with its permits and licences (the so-called ‘Licence Raj’).
A decade of economic reforms (privatisation, streamlining bureaucracy, liberalisation of the economy) led to a notable acceleration in growth rates, which reached levels unknown before the openness policy and led to a euphoria unthinkable in the past. In a far from brilliant international economic context, the Indian economy grew from six to eight per cent yearly and the accumulation over time of this growth became truly significant, especially bearing in mind the enormous gap between the 250 million Indians, part of the modern world economy, and the rest of the population.
Having said this, the Indian economy is still strongly agrarian (agriculture accounts for around a quarter of the GDP). In recent years there has been a remarkable rise in services, especially the production of software and outsourcing, thanks to remarkable Indian competitiveness in this sector: the population has a very high levels of education (several million graduates per year) perfectly at ease in English and with the use of high technology, and cost much less to employ than the international average.
This explains why half of the world’s software is produced in India today and most of the multinational technological development centres are in India, especially on the Bangalore-Hyderbad-Pune axis. Moreover, in the United States and Europe many companies in the sector are owned by Indians or include many Indian engineers in their staff.
This aspect should not be underestimated: most of India still lives on the sidelines of development, especially in the ‘Hindi belt’, basically most of Northern India, but the country has a very strong presence in sectors with most value added.This is not only a question of transferring low-cost jobs, but also in the conception and development of new products. India has a future, and a part of India is already in the future.
Of course high-tech industry can’t provide a billion Indians with jobs, but it does represent a crucially important development. India is a very unusual case in economic history: there are no other examples of developing economies in which the two main pillars are agriculture and services. To consolidate the prospects for growth, India must reinforce the industrial sector, also required to satisfy the growing demand for goods from the new middle classes, in the same way Italy did in the 1960s.
Today Indian manufacturing industry is on a vast scale, but in most cases is still unable
to produce quality goods able to compete on the world markets. This explains the Indian
governments reluctance to make significant reductions to the customs tariffs, currently
the highest in the world. This is a negative spiral, because many imports are required to
modernise manufacturing structures. The contradictions between India’s global ambitions and its ultra-conservative attitude as regards trade protection is still one of the issues to be solved in the near future. Future Indian governments will also have to tackle a number of other ongoing issues:
- – The modernisation of agriculture. Today Indian agriculture is still mainly at subsistence level, although relatively well mechanised (a legacy of the ‘Green Revolution’). There are still many limits to the free circulation of farm produce from one state to another, and enormous problems in financing and organising markets. Once the problem of food self-sufficiency has been solved, the next challenge will be modernising the sector, with an inevitable reduction in jobs.
– The consequent population flow towards the cities will create considerable problems of sustainability. The Indian urban conglomerations are among the largest in the world, but their infrastructures are wholly inadequate. Further urban immigration will inevitably be a huge burden for the already unliveable cities lacking in clean water, electric energy, transport and housing.
– The further economic development of India could be slowed down by inadequate infrastructures. Modern India is held back by its roads, electric energy, ports and airports. Significant progress will not be made without serious attempts to remedy these shortcomings.
– To effect such enormous investments will require great efforts being made on modernising and moralising the political system. India has an unsustainable annual public deficit of ten per cent, mainly due to uncontrolled public spending, the outcome of the nepotistic management of public finances by a paternalist political system, dramatically anachronistic with regard to the needs of modern India. Unlike other emerging countries, although India has no need of a constant flow of foreign capital to boost its balance of payments, obviously mortgaging public resources in unproductive spending is not in the country’s interest.
Another great issue is the little attention paid by public authorities to what experience has shown to be the main pillars of development: education and health. In India there is a remarkable gap between the highly educated cosmopolitan elite, citizens of the world, and the great mass of the wretched poor, whose living conditions would be intolerable in the developed world. The Indian government dedicates almost negligible resources to public health and primary education, thus failing to close the ever-widening gap between the two Indias. Is this a sustainable situation for a country wishing to consolidate its growth?
There are no prizes for guessing that the next election will see an easy victory for the coalition led by the BJP (Bharatiya Janata Party, the Indian People’s Party). The National Democratic Alliance (NDA), consisting of around twenty parties, but under the clear leadership of the Hindu Nationalist Party of Prime Minister Atal Bihar Vajpayee, will reap the benefits of five years of economic achievements, the growing wealth of the middle classes (the main pillar of the BJP), and the modernisation of the country.
Although a more open economy was introduced in 1991 under the Congress government (the Finance Minister was Mahoman Singh), a large part of the dividends were due to the fact that the BJp persisted with the reforms. The BJp’s political project is ambivalent and must be seen to the background of its origins: the main leaders in the party are members of the Rashtriya Swayamsevak Sangh (Rss – National Volunteer Organisation), an ultra-nationalist movement with quasi-fascist leanings. To move from the almost insignificant position at the time of Rajiv Gandhi (in the early 1980s) to the majority rule of today, the party’s ideologists could also rely, however, on the physiological decline of the Indian Congress Party (or simply ‘the Congress’) – the legacy of the Gandhi-Nehru political tradition.
But they also stressed the ‘Hindu aspect’ in their language in order to create a new popular movement among the Indian masses, disappointed with the Congress and attracted to rally round the ‘saffron colour’ political agenda of Hindutva (‘Hindu-ness’), preaching the supremacy of the Hindus over other Indian communities (Muslim, Sikh, Christian, Buddhist and Jain).
Today the BJP pursues a political project apparently contradictory in Western eyes: it combines economic liberalism with a conservative social agenda aimed at perpetuating the original nature of Indian society, founded on the irremovable caste system and the mechanism of agreed marriages by families within the same caste – a very effective way of hanging on to privileges and power.
The Western experience suggests that economic transformations will pave the way to social transformation. But on observing India, this trend is much less obvious, which is in line with the BJp’s political project, currently the winning option. This aspect of BJP policy strikes at the heart of the key Congress notion of ‘secularism’, i.e. equality between the various religions in India. Although in different ways, both Gandhi and Nehru were convinced of the idea of a tolerant secular India, where the fact of being an Indian citizen should prevail over all other considerations. After the inevitable split with Pakistan, the Congress always pursued a policy of ‘secular unity’, albeit at times with difficulty (the clash with Sikh fundamentalism cost the life of Indira Gandhi) But the BIP has a different view of the matter.
For them the equality between communities is neither feasible nor advisable: the 850 million Hindus are the ‘real Indians’, while the 130 million Muslims, 40 million Christians and Sikhs are ‘less Indian’ compared to their Hindu counterparts.
This explains the existence of an ultra-Hindu agenda whose content seems improbable to outside observers: the controversial claims over Ayodhya (where the Hindu fundamentalists destroyed a mosque in 1992, accused of being built on the putative birthplace of Rama, one of the most important figures in Hinduism); a ban on butchering cattle (the sacred animal of Hinduism, but eaten by Muslims and Christians), the elimination of a specific civic code for Muslims, and a ban on religious conversions.
Even when there was a policy with a secular approach, conflicts between the various communities (a phenomenon called ‘Communalism’ in India) have periodically broken out since 1947. The growing references to a strictly Hindu policy preached by the BJP cast disturbing shadows on the future of the country, which has every interest in focusing all its energies on the other problems afflicting it, rather than putting up new barriers and sowing future conflicts.
The tragic events in Gujarat in 2001, when more than 2000 Muslims were slaughtered and the state failed to do its duty and stop the killing, is an example of the India horribilis that could prevail, if sectarianism was to gain the upper hand over the principle of peaceful co-existence.
Although the current coalition government is tackling this basic contradiction, the opposition, led by the heirs of the All India Congress, the party that governed India for most of the period from 1947 to 1999, seems incapable of proposing a credible alternative.
The defence of secularism from the rise of religious-based programs is a firm principle for the Congress, but it seems unable to halt the saffron-coloured tide of the BIP.
The Congress is also riddled with contradictions: it is still very dependent on the Gandhi family. Currently led by Sonia (Rajiv’s Italian-origin widow), who is attacked by the nationalists because as a foreigner she is deemed unfit to become Prime Minister, the party is still antiquated, badly organised and lacking in any coalition-building capacity – a necessity in a country characterised by an extremely fragmented political scene with regional parties becoming increasingly important.
The debate on whether Sonia Gandhi is Italian or Indian is just a pretext. She is an Indian citizen and therefore can lawfully stand for any public office, including the highest in the country. It is up to the electorate, as in any other democracy, to decide her fate. Sonia is very careful to behave as an Indian: she always wears a sari, often speaks in a good Hindi (although it is obviously not her native tongue). Seen from an Italian point of view, Sonia Gandhi is now objectively much more Indian than Italian.
Her political presence genuinely seems more to do with the need to keep the Nehru-inspired party united rather than any personal ambitions. In fact the candidacy of her thirty-three-year-old son Rahul in the next elections seems to foreshadow his future leadership of the party (his sister Priyanka, thirtyfour, could also have political ambitions).
Naturally we wonder if it is logical for a party with such a glorious past as the Congress Party to be led generation after generation by a member of the Gandhi family. But the concepts of family and dynasty are very important in Indian culture. An even more serious problem besetting the Congress Party is their vague program: the economic agenda is very similar to the BJP, albeit with a different perception of the social and farming problems in the country, but has been elaborated very little in the programs and speeches.
Nehru’s grand party still seems reluctant to undergo the streamlining required to stand as government force (this has been the case for decades), and the forthcoming presidential election holds little in store for them.
India is also facing a great change in its foreign policy. Traditionally jealous of its own independence and with the ambition to be the leader of developing countries, recently the government has moved away from some of its longest-standing traditional principles.
The usually tricky relationship with the United States has become much easier since the days of Clinton (although the nuclear tests in 1998 temporarily complicated matters). A new generation of Indian politicians who studied in the USA rather than Europe looks favourably to American society and wishes to emulate the economic behaviour, but not the social models. From the strategic point of view, the post-11 September scene gives India a key role insofar as it is a large democracy with ‘nuclear’ arms in a key strategic position between the crises-torn
Middle East and China, a great emerging power.
In the past closed off and little inclined to economic integration, India is now looking Eastwards with great interest: the traditional relationship of diffidence and competition with China is being transformed into an attempt at a strategic economic alliance between the two great emerging Eastern powers. As regards South-East Asia, India has changed its own reluctant position as regards trade liberalisation and has undertaken an ambitious cycles of trade negotiations with all of its neighbors (ASEAN, Thailand and Singapore).
To open up to the world, India needs to improve its relations with its closest neighbors, especially its traditional adversary, Pakistan.
Two years ago they were verging on a conflict with unpredictable consequences. Today the climate has improved considerably and the recent South Asian Association for Regional
Co-operation (SAARC) Summit at Islamabad (2 January 2004) opened up the prospects of a dialogue between New Delhi and Islamabad that had become an absolute necessity.
There are still many clouds hanging over on the relationship between India and Pakistan, which is being strongly encouraged by the United States and the European Union. The main obstacle is the perennial issue of Kashmir, a complicated question also due to the contrast between opposed fundamentalisms (making an Indian change his mind is no easy undertaking, and Pakistanis are first cousins).
There is also the interesting advent of a new South-South bloc, stretching from Brazil, through South Africa to India, which emerged forcefully at the Cancún Ministerial Conference. The G20 seems to be a summit updated by the non-aligned, but suited to the context of a globalised world. The fact is the alliance between the large emerging countries has enhanced the international scene and it would be a serious mistake to underestimate its importance and potential.
In this picture, the European Union and India have at times run into difficulty in coming together: but recent developments have revealed that both understand there is a mutual interest in developing synergies. The annual Eu-India Summit, now in its fourth year, is beginning to acquire more content and meaning. The Eu is India’s leading trade partner and investor, and has every interest in being involved with a country that will undoubtedly be a protagonist, albeit with many contradictions in the twenty-first century.
For its part, India has every interest in not underestimating its ties with Europe, which is gradually learning to appreciate many aspects of Indian culture: its spirituality, inventiveness, music, cuisine and cinema.
The forthcoming elections will not change these basic trends. But anyone who still believes that India is only a sleeping giant is seriously misguided.