[Reader-list] The myth of the new India - Pankaj Mishra

[Rana Dasgupta]

The myth of the new India
Pankaj Mishra The New York Times
THURSDAY, JULY 6, 2006


LONDON "India is a roaring capitalist success story." So says the latest 
issue of Foreign Affairs; and last week many leading business executives 
and politicians in India celebrated as Lakshmi Mittal, the fifth richest 
man in the world, finally succeeded in his hostile takeover of the 
Luxembourgian steel company Arcelor. India's leading business newspaper, 
The Economic Times, summed up the general euphoria over the event in its 
regular feature, "The Global Indian Takeover": "For India, it is a 
harbinger of things to come - economic superstardom."

This sounds persuasive as long as you don't know that Mittal, who lives 
in Britain, announced his first investment in India only last year. He 
is as much an Indian success story as Sergey Brin, the Russian- born 
co-founder of Google, is proof of Russia's imminent economic superstardom.

In recent weeks, India seemed an unlikely capitalist success story as 
Communist parties decisively won elections to state legislatures, and 
the stock market, which had enjoyed record growth in the last two years, 
fell nearly 20 percent in two weeks, wiping out $2.4 billion in investor 
wealth in just four days. This week India's prime minister, Manmohan 
Singh, made it clear that only a small minority of Indians will enjoy 
"Western standards of living and high consumption."

There is, however, no denying many Indians their conviction that the 
21st century will be the Indian Century just as the 20th was American. 
The exuberant self-confidence of a tiny Indian elite now increasingly 
infects the news media and foreign policy establishment in the United 
States.

Encouraged by a powerful lobby of rich Indian-Americans who seek to 
expand their political influence within both their home and adopted 
countries, President George W. Bush recently agreed to assist India's 
nuclear program, even at the risk of undermining his efforts to check 
the nuclear ambitions of Iran. As if on cue, special reports and covers 
hailing the rise of India in Time, Foreign Affairs and The Economist 
have appeared in the last month.

It was not so long ago that India appeared in the American press as a 
poor, backward and often violent nation, saddled with an inefficient 
bureaucracy and, though officially nonaligned, friendly to the Soviet 
Union. Suddenly the country seems to be not only a "roaring capitalist 
success story" but also, according to Foreign Affairs, an "emerging 
strategic partner of the United States." To what extent is this wishful 
thinking rather than an accurate estimate of India's strengths?

Looking for new friends and partners in a rapidly changing world, the 
Bush administration clearly hopes that India, a fellow democracy, will 
be a reliable counterweight against China as well as Iran. But trade and 
cooperation between India and China is growing; and, though grateful for 
American generosity on the nuclear issue, India is too dependent on Iran 
for oil (it is also exploring developing a gas pipeline to Iran) to 
wholeheartedly support the United States in its efforts to prevent the 
Islamic Republic from acquiring a nuclear weapon. The world, more 
interdependent now than during the Cold War, may no longer be divided up 
into strategic blocs and alliances.

Nevertheless, there are much better reasons to expect that India will in 
fact vindicate the twin American ideals of free markets and democracy 
that neither Latin America nor post-Communist countries - nor, indeed, 
Iraq - have fulfilled.

Since the early 1990s, when the Indian economy was liberalized, India 
has emerged as the world leader in information technology and business 
outsourcing, with an average growth of about 6 percent a year. Growing 
foreign investment and easy credit have fueled a consumer revolution in 
urban areas. With their Starbucks-style coffee bars, Blackberry- 
wielding young professionals, and shopping malls selling luxury brand 
names, large parts of Indian cities strive to resemble Manhattan.

Indian tycoons are increasingly trying to control marquee names like 
Taittinger Champagne and the Carlyle Hotel in New York. "India 
Everywhere" was the slogan of the Indian business leaders at the World 
Economic Forum in Davos, Switzerland, this year.

But the increasingly common, business-centric view of India suppresses 
more facts than it reveals. Recent accounts of the alleged rise of India 
barely mention the fact that its per capita gross domestic product of 
$728 is just slightly higher than that of sub- Saharan Africa and that, 
as the 2005 United Nations Human Development Report puts it, even if it 
sustains its current high growth rates, India will not catch up with 
high-income countries until 2106.

Nor is India rising very fast on the report's Human Development index, 
where it ranks 127, just two rungs above Myanmar and more than 70 below 
Cuba and Mexico. Despite a recent reduction in poverty levels, nearly 
380 million Indians still live on less than a dollar a day.

Malnutrition affects half of all children in India, and there is little 
sign that they are being helped by market reforms, which have focused on 
creating private wealth rather than expanding access to health care and 
education. Despite the growing economy, 2.5 million Indian children die 
annually, accounting for one out of every five child deaths worldwide; 
and facilities for primary education have collapsed in large parts of 
India (the official literacy rate of 61 percent includes many who can 
barely write their names). In the countryside, where 70 percent of 
India's population lives, the government has reported that about 100,000 
farmers committed suicide between 1993 and 2003.

Feeding on the resentment of those left behind by the urban-oriented 
economic growth, Communist insurgencies (unrelated to India's 
parliamentary Communist parties) have erupted in some of the most 
populous and poorest parts of north and central India. The Indian 
government no longer effectively controls many of the districts where 
Communists battle landlords and police, imposing a harsh form of justice 
on a largely hapless rural population. The potential for conflict - 
among castes as well as classes - also grows in urban areas, where 
India's cruel social and economic disparities are as evident as its new 
prosperity. The main reason for this is that India's economic growth has 
been largely jobless. Only 1.3 million out of a working population of 
400 million are employed in the information technology and business 
processing industries that make up the so-called new economy.

No labor-intensive manufacturing boom of the kind that powered the 
economic growth of almost every developed and developing country in the 
world has yet occurred in India. Unlike China, India still imports more 
than it exports. This means that as 70 million more people enter the 
work force in the next five years, most of them without the skills 
required for the new economy, unemployment and inequality could provoke 
even more social instability than they have already.

For decades, India's underprivileged have used elections to register 
their protests against joblessness, inequality and corruption. In the 
2004 general elections, they voted out a central government that claimed 
that India was "shining," bewildering those who had predicted an easy 
victory for the ruling coalition.

Among the politicians whom voters rejected was Chandrababu Naidu, the 
technocratic chief minister of one of India's poorest states, whose 
forward- sounding policies, like providing Internet access to villages, 
prompted Time magazine to declare him "South Asian of The Year" and a 
"beacon of hope."

But the anti-India insurgency in Kashmir, which has claimed 80,000 lives 
in the last decade and a half, and the strength of violent Communist 
militants across India, hint that regular elections may not be enough to 
contain the frustration and rage of millions of have-nots, or to shield 
them from the temptations of religious and ideological extremism.

Many serious problems confront India. They are unlikely to be solved as 
long as the wealthy, both inside and outside the country, choose to 
believe their own complacent myths.

Pankaj Mishra is the author of "Temptations of the West: How to Be 
Modern in India, Pakistan, Tibet and Beyond."