MUMBAI (BOMBAY), India — Is the Indian economy retreating back into “the Hindu rate of growth” which characterized the stagnation of four decades when New Delhi ran the economy with its imitation of Soviet planning?
A returning former resident finds more than a touch of Calcutta’s notorious chaos and poverty in this city which was once one of the most cosmopolitan in the world. It was the home of an historically and internationally recognized entrepreneurial community, the most important in the whole Afro-Asian world. Its activity and commercial leadership were the beacon for India’s aspirations as an independent nation after 1947.
But now the question of the hour here in India’s commercial capital is whether the recent spurt of the economy is ended. It comes as independent researchers are questioning government promises that a falling gross national product will be in the 5 percent annual growth neighborhood. One has only to look at the annual increase in population – now estimated as about to pass China’s 1.3 billion as the largest in the world – which is running at 1.7-8 percent a year. Decades of public and private population control policies have largely failed. Still, with the only major country in the world with a population getting younger, that could be an economic booster promising new vigor.
The overarching problem is that the babus [government clerks] with their huge quiver of paper weapons are inhibiting economic activity at every turn. And they seem to be winning in their constant struggle – inherited from their Mogul and British predecessors – to demand a torturously created “chit” for every public transaction.
Foreign visitors who have to struggle with pages of visa applications get a taste of this; even Beijing’s Communists have decided to permit a 72-hour stopover without a visa in order to encourage the use of their capital city and Shanghai air travel hubs matching Hong Kong.
Infrastructure – roads, ports, industrial parks – all face constant bureaucratic barriers to implementation. The Indians, for example, inherited the process of eminent domain from British common law. But legal battles over factory sites much less new expansion of public service infrastructure can take decades, often ending in the abandonment of investment. Federal government red tape is often further snarled by state bureaucracies.
“The East India Company” syndrome is also alive and well, hostility to foreign investment seen in the context of the former British company that blossomed into the 350-year long colonial rule by London of the British Indian Empire. In fact, to many, there is nostalgia for the old British Indian days. One cynic told me in British times the standard corruption payment was 10 percent; but now it is 30-40 percent or more for any transaction.
Comparison with the old days is, of course, on many levels totally irrelevant. When I lived and reported here in the 1960s, the calculation was for 500 million Indians. The near tripling of the population in this historically relatively short time demonstrates the enormity of all problems, whether economic, political or social.
At the moment there is a general assumption that India may be on the verge of the end of a political era and the inauguration of a new one. The ruling coalition headed by the Congress Party is so shaky that it could be forced into elections at almost any moment.
Sonia Gandhi, the Italian housewife widow of a martyred husband and mother-in-law, and her coterie of advisers supposedly calls the shots of the government of Prime Minister Manmohan Singh. Singh, in his 80s is an old planning bureaucrat, converted to market economics by the implosion of the Soviet Union when he presided as finance minister over the beginnings of a move away from state capitalism under Prime Minister P. V. Narasimha Rao [1991-96].
But this incredible dominance of the family of the sainted first and long-serving Prime Minister Jawaharlal Nehru may be drawing to a close. Neither Sonia’s son nor daughters, Nehru’s great-grandchildren, seem to have the stuff of political leadership despite their genes. That could mean the end of the once all encompassing India National Congress which led India to independence under Nehru and Mohandas Gandhi, a former South African lawyer who transmogrified into a traditional Indian holy man to lead the mass movement for independence.
Now the political scene has fractured into a vast array of regional parties, almost all of them based on an appeal to elements in India’s unique caste system of economic, social, ethnic and linguistic divisions. That seems to demand coalition governments but Indian experience with coalitions is even grimmer than in most other parliamentary states that have had to resort to them.
As Singh’s government treads water and the economy sinks, the Congress’ principal national competitor for power, the Bharatiya Janata Party [BJP] is caught in a peculiar dilemma. Its leading leadership candidate is Narendra Damodardas Modi, chief minister in the western state of Gujarat. By all accounts Modi has curbed corruption, streamlined the old bureaucracy, and made massive contributions to his state’s prosperity. In fact, that may have as much to do with the traditional character of this language group who produced a large crop of national leadership including Gandhi and whose remittances from migrants to East Africa, Britain and the U.S. helped produce its development.
But Modi also presents a critical problem for the Indian voter. In 2002 when communal riots broke out between Hindus and Moslems in Gujarat, Modi refused to act to end the slaughter of more than a thousand, especially victimized Muslims. He has, in fact, been banned from the U.S. for human rights violations and until a few weeks ago when the European Union lifted its ban for his alleged participation in the episode.
Modi’s relations with India’s estimated 250 million – more than either neighbouring Pakistan or Bangladesh, Muslim majority countries – is a crucial factor in India’s domestic politics.
The Congress, goes back to Mohandas Gandhi’s support of the so-called Caliphate Movement [against Turkish reformer Kemal Attaturk’s elimination of the religious basis of the Ottoman Empire]. The Muslim Family Law which set up special criteria for Islamic family relationships was another effort to court the Muslim voters when Pakistan seemed a competing loyalty.
“The vote bank” as Congress’ hold on the loyalties of the Muslims has been an important part of the political scene during the independence era and remains so even today.
With the infection of Islamic radicalism sweeping the whole Islamic world from Morocco to the Philippines, the Indian government and non-Muslim leadership likes to believe Indian Muslims are immune. But there are indications that the Indian Establishment deliberately obscured participation of their own Muslims in the horrific 2008 Bombay Massacre. New Delhi believes Pakistan intelligence was directly involved in a demonstration of the terrorists’ power to create chaos in this city that had been largely immune.
Whether, indeed, Modi could bring his Gujarat economic and political streamlining to the central government were he to take office, may be moot. Most observers do not now see the BJP with a clear majority and Modi, too, would have to put together an equally fragile combination as the constantly shifting present Congress-led government.
But, as in so many things, Indian development and economic prosperity is waiting – on that slow moving clock which cynics long ago named Indian Standard Time, always taking unpredictably longer than similar movement elsewhere.