Tags:
Journalism of Courage
If you have ever been touched by the humour of my hometown Hyderabad, you would appreciate the jibe 8220;oopar sherwani, undar pareyshaani8221;. It is difficult not to be reminded of that Hyderabadism when faced with the 8220;India Shining8221; campaign!
There is no doubt India is doing better today than ever in the past and there is no doubt that a sense of self-confidence felt in the fifties has come back in the nineties. If things go well at home and in our neighbourhood the next decade could well be ours. But for things to go well there is more homework to be done.
But when I talk about the easing of the 8220;external constraint8221;, I am not just talking about our neighbourhood, nor indeed of the foreign exchange constraint, the easing of which was underscored last week by our foreign exchange reserves soaring beyond US100 billion. This is a consequence of wise external sector policies pursued in the last decade. When former Reserve Bank of India governor Bimal Jalan famously declared in an interview to The Financial Express that 8220;there is no longer an external constraint to growth8221;, he was drawing attention to the comfortable foreign exchange position. As an economist, Jalan was saying that shortage of hard currency was no longer an important constraint on growth.
A major pre-occupation of post-war development economics literature was the difficulty experienced by developing economies in securing access to foreign savings, markets and technology. In large measure this constraint has eased for a variety of reasons that I will not now elaborate in this column. Suffice it to say that we have discovered an upside to globalisation and have found that we, too, can benefit from a more open economy. Like China, India can also gain from a more open global trading system and a global economy that is open to the free movement of capital and people.
The so-called Indian 8220;diaspora8221; consisting of first generation and n-generation migrants has become a reservoir of opportunity for India that has further eased the external constraint on growth. So easier access to external savings, external markets and external knowledge power has altered the nature of the external environment for India8217;s growth.
However, when I say that the external constraint to development has eased for India I mean it in a wider sense. It is not just the economic constraint that has eased. The political constraint has eased as well. In the colonial era that political constraint was direct and manifest. In the post-colonial period it was shaped by the politics of the Cold War and the sovereign choices we made about who our friends were and who we would ally with.
The Western world was slow to come to terms with the end of the colonial era and used many means to impose constraints on our growth process. When that began to change, we were slow to recognise the process of change and make use of the new opportunities like much of East and Southeast Asia did. The end of the Cold War woke us up to this new reality. But what has really changed in the nineties is that the developed world has also woken up to the new reality of India.
India8217;s growth acceleration in the past quarter century, with near 6.0 per cent growth in 1980-2003 after thirty years of 3.5 per cent growth and half a century of zero rate of growth, the rise of the professional middle class, the new entrepreneurial class and our willingness to be a more open economy have altered global perceptions about India. Something else has also happened.
India8217;s emergence as a stable democracy, a capable military power in southern Asia and the Indian Ocean region, India8217;s record of secularism, in the face of grave provocation and grievous attacks at home from religious fundamentalists among both Hindus and Muslims, have altered Western and Eastern perceptions about us.
The world8217;s most powerful economies want us to do well. In a prosperous, democratic, secular, liberal and stable India they see an ally and an opportunity. Be it the United States or Japan, European Union or Russia, there is no doubt that they would all like India to do well. There is a willingness to help. Sure, this is neither charity nor altruism. It is driven by self-interest, as it should be. Which is why it is even more re-assuring. It is today in the self-interest of the Great Powers that India should 8220;rise and shine8221; so that it offers a market for business of a billion people and a liberal, secular democracy that is militarily capable of ensuring peace and stability in this part of the world.
This is the sense one gets from a wide range of interactions with policymakers, academics, analysts and commentators in different parts of the world over the past five years. I am convinced that the external environment for India8217;s economic growth has never been more favourable than it is today. This also enhances our political standing. There are gaps and part of that gap is in our neighbourhood where fences need mending.
The bigger gap, however, is in what we are doing to sustain and accelerate the growth process. Not enough. Basic human development indicators still mock us. A nation of 200 million poverty-stricken, 500 million illiterate, marred by inequalities of all kinds, caste, class, gender, region, cannot shine bright for too long. The external shine can wear off when the external environment turns hostile. The one that truly shines, shines from within. The real challenge for us is at home. It is a developmental challenge of Himalayan proportions. If addressed, it can turn this century into ours.
