By Frank-Jürgen Richter
Unless India can get a grip on infrastructure and network building and carry out the much needed reforms in a timely manner, it will loose out on its demographic dividends.
We get so used to reading comparisons of India against China that we take it for granted that these populous nations are really alike; yet on the dominant dimension – India is a democracy. Some in government might wish otherwise at times as parliament, regional governments and everyone else talks and talks, discusses, and gets nowhere even on important matters. The nation is facing, just like the rest of the world, an economic downturn – in its case it looks to a possible drop in growth to seven per cent from the expected nine per cent – which is seen by its bourgeoisie as a disaster.
Once I used to be provocative stating that India was not a large country; look it fits on an A4 page in an atlas! But now, having travelled extensively across its land I know otherwise. Yet travel itself could be made easier. Once again the democratic process hinders. The mass of poor people, ill-educated and mostly illiterate, do not possess their land-rights documents. These are needed to allow sales of land to the developers and to prevent the massive fraud that does take place when industry, or roads, railways or airports need to be built. Every development thus slows down hindering the broader economy. And even when good new roads are built, their dual carriageways are abused by allowing cattle and oversized and under-lit vehicles to dangerously occupy space, often on the wrong side of the barrier, causing havoc and far too many needless deaths. It is imperative that the basic Indian infrastructure is not just mended, but is also properly planned, initialised and joined-up. After that the secondary infrastructures can grow more easily – the important water delivery and sanitation infrastructures, the electricity distribution, new townships (not slums); and above all, coherent schooling for all children so they can escape the illiteracy trap and learn to be critical thinkers.
It is in fact almost too late to aid what will be a quarter of the world´s teenage population who, without growth in Indian manufacturing, will be out of work and thus grumbling if not demonstrating against their government. This is an international problem, not only Indian, and its cause goes back several generations of children… they were educated by rote although the brightest grew to learn of other things, the middle group learned to obey, and the dull were forgotten. The next generation of teachers were told by the old group of school governors to continue the rote learning so a new cohort of children did not benefit from any schooling aligned towards creativity. Meanwhile manufacturing was changing from mass employment to demand a higher educated group able to think and control the operations of more complex machinery and soon these machines became automated requiring well-trained programmers to creatively control them; business bosses complained that the school-leavers, even university graduates, were under-trained and not fit for purpose in this modern world. We must not blame the school governors of yesteryear as the mechanisation and digitilisation of everything could not have been forecasted – but they could have insisted on teaching creativity and critical thinking rather than rote-learning. India and the world face a grave issue on this front.
Interdependence upon both hard and soft infrastructures has been affected by a rapid fall in inward investment – it is at a five-year low reflecting the continued global volatility since the US financial difficulties of 2006 onwards which affected all of us. But it also reflects on critical business issues in India – its inflation and its inability to pass anti-corruption laws. The Lokpal bill against corruption, pressed by the 12-day hunger strike last August by Anna Hazare, looked set to be passed, but finally did not become law. Investors still cannot judge how effective their plans will be given the inflation (at 7 – 9 percent which is the higher than most other developing nations) and the rampant corruption which together erode planned returns on investment. Unfortunately some of their new investment might have been aimed at production for the European market place which is itself undergoing a radical depression – thus like the proverb ‘… a butterflies´ wings flapping in…’ So, problems outside India´s control affect issues inside; especially relating to industrial growth and longterm jobs. Happily the rupee seems to have recovered somewhat following sharp falls in 2011.
I think I am inclined to agree with many Indiawatchers; the nation needs to press ahead with reforms, despite the acrimonious discussions by opposition parties against any and all such actions. Perhaps when the Assembly elections due through 2012 would end, especially in the populous Uttar Pradesh region, the government can take firm action. Unless India can get a grip on its needed infrastructure building and connecting, and the many reforms affecting its economy it will lose out on its demographic dividends. Over the next few years it will have more young people entering work, and despite my reflections above on the poor education systems globally, India has a relatively good basic system with most children able to communicate in English and Hindi. They can offer a great opportunity to transform India into a cheap-labour producer for world capitalism through tax cuts, deregulation, privatisation and other pro-investor policies. But only if parliamentarians agree that India Inc. is more important than fisticuffs and bickering; such images on the world´s TV channels do not inspire investor confidence.
Frank-Jürgen Richter is the Founder and Chairman of Horasis – a global business community. The views expressed in the article are personal and do not reflect the official policy or position of the organisation.