"The Unempowered Asian", 'The Hindu', July 25, 2013.
India’s founding fathers had a clear idea where she was to stand in the comity of nations. They were quite sure that India’s place was in Asia. There was nothing parochial to this vision. It sprang from a certain understanding of world history and Asian culture. And the culture itself they had thought of as not something essential but having evolved with time and adopted through reasoning. As they saw it, at the end of the Second World War, almost all of Asia had been at the heel of the Europeans for close to two centuries. However, while acutely aware of this, they saw the sloughing–off of the colonial yoke as the mere beginning of a meaningful journey. They set themselves the far more ambitious task of building an Asia so prosperous that it could provide a balance to Western hegemony. On a busman’s holiday to the East of us an Indian economist sees that in the rest of Asia much of this grand vision has been realised. For instance, Seoul in its north-eastern extremity an urban marvel. Its network of expressways, efficient public transport, pedestrian-friendly streets and glorious public services leave you in a state of shock and awe. And the best is yet to come, as it were. To the naked eye there is no poverty visible on its streets, nor any great inequality. Instead, food stalls abound and everybody is gorging on their stuff while clutching at their Gucci bags when its is not their Samsung Android phone. Having once been the champion of the Asian voice in the United Nations, India now languishes as its poor cousin. It’s GDP per capita is pitiably low compared to that of the Asian powerhouses, the price of food too high in relation to capita income and the fruits of its much-vaunted high growth in recent years poorly distributed. From having convened the Asian Relations Conference even before gaining independence to later inspiring Bandung, India has lost its leadership role mainly because it has been left behind in the race to develop the economy. The rest of Asia may admire India as the original home of some profound philosophies, but it is unlikely to capture their imagination as an economy. This has less to do with the size and growth of India’s economy but to do with the fact that India is clearly out of line with one central aspect of the Asian development model which is the wide spreading of the fruits of growth. India has by now overtaken Japan as the world’s third largest economy in purchasing-power-parity terms but the backlog of poverty in India is overwhelming even when the bar is set low. China does have high inequality but has far lower poverty levels that India. In any case, restricting ourselves to the income criterion misses an important element when it comes to evaluating the standard of living. Beyond higher per capita incomes the economies of the east have a vast stock of well-functioning public infrastructure. We refuse to acknowledge how important this is in enabling people to lead a dignified life.
But has India lost the plot for all time? Are these hardships necessary? Not at all. However, we need to recognise how the rest of Asia has done it, and grasp the opportunity to make a course correction when required. At core of the Asian model is the wide provision of health and education by the state. The human capital thus created contributes to high productivity growth which alone can drive growth in the long run. Economics as a discipline has by now progressed sufficiently for us to recognise the centrality of this mechanism to prosperity. Western art has identified the ‘vanishing point’ as the destination to which parallel lines appear to converge. Reversing the gaze, we can think of productivity growth as that source from which flow the two parallel currents that undergird a dynamic economy. Thus, oOn the one hand it generates the demand needed to sustain growth and on the other it releases the resources necessary to provision it. But human capital in the form of an healthy and educated populace is per se inadequate to the task to production. This requires physical infrastructure without which a population is powerless. Countless Indians are unable to improve their lot due to the paucity of electricity, water supply, transportation and sanitation. From this point of view, the ‘economic reforms’ launched in 1991 are limited in their scope. One can only remain sceptical of promises of “more reforms” that do not at the same time provide a road map for releasing the economy from the infrastructure constraint. All over the east governments started out creating human and physical capital in tandem, as either one is of not much use without the other. It is this strategy that yielded them the success of export-led growth. In Indian policy circles there is the tendency to construe the eastern experience as the inevitable outcome of maintaining an openness to trade which India certainly did not do. But we did not build enough of the two types of capital necessary. By now the industrial-tariff rate in India is lower than in South Korea but growth has slowed considerably and we can see why. It is also significant that in the east it is the state that actually built this infrastructure because the private sector cannot be expected to build is on so vast a scale.
Recognising the importance of physical infrastructure would alert us to what must constitute the core of the public discourse on the future of India. The political class speaks of “inclusion” and “empowerment” but does not walk this talk. It has confined itself to promulgating rights. These count for less than an abundant physical infrastructure in empowering the poor. The Right To Information Act may reveal important details of a road project, especially regarding finance, but it can do little to ensure that the road is built well leave alone well-maintained. Their significance is close to that of the Fundamental Rights enshrined in the Constitution. While they are not without value their role in economic empowerment is remote. On the other hand the Directive Principles enjoin upon the state to act as a facilitator but they are not justiciable. The current trend in Indian politics is for the political class to legislate more and more while withdrawing from building the public goods that is physical infrastructure. It is important to understand why it persists with this strategy. First, legislating rights and plying the populace, including to the well-off, with subsidies buys short-term gains. With political parties facing a five-year electoral cycle it matters to them less that subsidies crowd out the public finances needed to create infrastructural assets. High inequality heightens the symbolic value of such fiscal transfers. To this extent politics as practiced in India today has a vested interest in the maintenance of inequality. Secondly, there is an aspect of physical infrastructure that has gets less attention than it deserves. This is that it matters less how much of it you have than how well you put it to use. So the benefits we may expect to flow from what we have built is only as good as the management of it that we are able to ensure. While this is true as much of privately owned as it is of public infrastructure it so happens that, almost everywhere in the world, the core physical infrastructure is in the public sector. Thus the infrastructural services that are generated depends upon the accountability enforced in the public sector. This is by no means a battle lost. Anyone who has travelled by Air India of late can see how well its services compare with those in the private sector, only it comes at an unacceptably high cost. We need an understanding of public life in which elected representatives are held responsible for the quality of infrastructural services and the cost at which they are delivered to the public. In fact, this should be deemed their principle task. In time for the general elections of 2014 the discourse on democracy in India needs to be radically altered. Arcane debates in the Cold War mould over the relative merits of capitalism and socialism detract us from the serious task of building infrastructure that confronts us. Till such a time as India has this infrastructure its people will remain the unempowered Asians.