India recently passed two milestones: the 52nd
anniversary of its independence and, by some estimates, the birth of its
billionth living citizen. The latter event was accompanied by a lecture
from Lester R. Brown and Brian Halweil (''The Billion Mark Should Be a
Sobering Feat for India,'' IHT, Aug. 11) about the need to spend on health
care and primary education rather than on defense.
Virtually unremarked on Independence Day, amid the focus
on military matters and next month's national election, was the fact that
India's real GDP has sustained a compound annual growth rate of 6.5
percent for the last six years - a performance that makes its economy the
fastest growing among the world's democracies.
Indian software exports have increased at an annual rate
of 65 percent over the same period, and agricultural production by 4
percent - well ahead of the 1.8 percent pace of population growth. Food
grain output has trebled in the last 30 years.
It is also worth celebrating what India is not. It is not
seeking handouts from the rest of the world. (Net inflows of foreign aid
amount to considerably less than $1 per person.) Nor is it among the 42
highly indebted poor countries for which debt forgiveness is now being
worked out. In fact, India has never had to undertake a rescheduling of
its external debt.
Better on her own:
During 190 years of British colonial rule, India was
regularly afflicted by famine. Since independence it has had none. And
despite some serious religious and ethnic conflict, India has remained
In 1947, India inherited an economy that had grown at an
annual pace of 0.7 percent in the previous 50 years, less than the rate of
population increase. It had an adult literacy rate of 14 percent and a
higher education system oriented toward producing a narrow elite of
By contrast, South Korea and Taiwan at that time had
adult literacy rates in excess of 50 percent (a level that India achieved
only at the beginning of this decade). They had, after all, been ruled by
a country, Japan, which was the first after the United States to achieve
universal literacy, and so paid special attention to education. That
difference in the initial endowment of human capital (plus massive
infusions of external aid per capita in the early years) goes most of the
way toward explaining the faster trajectory of their initial growth.
But India can and must do better. The untapped potential
remains enormous, especially when you consider the talents and
achievements of India's diaspora in business, technology and the
For approximately 200 years, India has had a larger
number of illiterate and poorly nourished people than any other country on
the planet. Presumably it was not always so. According to the Yale
historian Paul Kennedy, India accounted for about 24.5 percent of world
manufacturing output in 1750, a share that fell to 1.7 percent by 1900 as
the per capita level of industrialization declined sevenfold.
Never before in human history has there been an attempt
to lift a population of even 150 million, let alone 400 million, out of
abject poverty within a democratic system. India is making that valiant
attempt and, ever so gradually, beginning to succeed.
The point is that in the case of India, the achievement
of the whole is greater than the sum of its flawed parts. Despite
stresses, its society remains secular. Its prime minister may be a Hindu,
but the creator of its nuclear bomb and its richest entrepreneur are
Muslims, the creator of its recent economic miracle is a Sikh, and its
defense minister is a Christian.
India's judiciary is lumbering and slow, but it maintains
a genuine check on both the legislature and the executive. Parliament
appears chaotic, but it unfailingly produces laws that are humane and
faithful to the country's secular tradition. The executive is overstaffed
and almost always poorly led, but it can never function arbitrarily
because of the checks and balances in the democratic system.
Despite a ponderous state, economic growth has
accelerated from the 3.5 percent of the first three decades of
independence to 5.5 percent in the 1980s and 6.5 percent in 1990s.
Inflation has rarely reached double digits, while current account deficits
have usually been less than 2 percent of GDP. Only on fiscal policy have
there been serious slippages in the past two decades. Adult literacy has
risen from 52 percent in 1991 to an estimated 65 percent today.
Need to re-deploy:
As a democracy with functioning institutions and a
vibrant capital market, India has been the great, if largely untold,
success story of the 1990s. Where Russia failed, India succeeded in
completing a rapid transition away from quasi-socialism. With its vast
army of professionals and its abundance of labor at every level of skill
and creativity, it can achieve more in the decade ahead.
What remains is for the talents of the vast rural
population to be effectively deployed in labor-intensive exports, and for
urban infrastructure to improve without further increasing the budget
Then, perhaps, a decade from now, India will begin to
benefit fully from the return of what the late Prime Minister Rajiv Gandhi
called its overseas ''brain deposit,'' and become again the economic
beacon that once attracted the European explorers Christopher Columbus and
Vasco da Gama.
Since this piece with the following note appeared, Dr.Prasenjit Basu has visited GNI and wrote approvingly of it. He also consented to the article appearing here.
A Special Note:
This stirring piece first appeared in the
International Herald Tribune on August 20, 1999. The writer Prasenjit Basu,
was then chief economist, Southeast Asia, for Credit Suisse First Boston
in Singapore. He was responding to an earlier pontificating article by
Lester Brown and Brian Halweil.
This piece caught the imagination of many
lovers of India. It has since been republished, cited in newsgroups and
attached to emails.
When goodnewsindia .com
wanted to publish it, serious attempts were made to contact the Tribune
and Mr.Basu without success.
article therefore, appears here without express permission of either.
this article belongs here as an ornament to the site. Help and
counsel is sought from readers in answer to these questions: Do they have
the necessary email addresses? Is this a serious copyright issue? How does
one go about getting permission?
meantime, if anyone points to a serious rights violation , the article
will be taken off - most reluctantly.