The tragic disconnect between the wealthy and the poor in India is probably best exemplified by the creation of an artificial Indian village, where the rich pay $150 a day(or the equivalent of six months income of real inhabitants of real Indian villages) to play at being peasants. The Gini index for India is greatly skewed by the lack of proper data- or intentionally distorted data- and the unwillingness of government to acknowledge the ongoing failure of projects ostensibly designed to lift people out of poverty. Those Indians who escape the clutches of poverty do so serendipitously, in spite of rather than because of government actions. It's not that government initiatives and policies cannot help. They can, indeed, as China has shown. The failure in India is the failure of intent or, if you prefer, of the "local" mindset. Recently, the Chief Minister of Karnataka, Sadananda Gowda, was compelled to resign, and was replaced by Jagadish Shettar. Mr Shettar's selection of his cabinet, as indeed his own appointment, was embroiled in caste-based controversy. This should have been at least mildly surprising to supporters of the Bharatiya Janata Party, which currently rules the state, because the BJP has always- officially, at least- railed against caste politics and communalism, and portrayed itself as a "clean" party. Some of the ministerial appointees were upset that they weren't given the most "lucrative" portfolios(that is, posts which have higher corruption potential), as reported by The Deccan Herald. The national BJP leadership takes a predictable stand: "It's local." That a party which runs on a national platform of honesty, integrity and patriotism so openly and irresponsibly bases the composition of a State cabinet on caste and lucre spotlights the fundamental apathy of Indians to one another. It's a chase after personal wealth accumulation, principles and the nation be damned. It's as "local" as one can get.
No doubt some who read Part One are wondering what my objections were to the "liberalization" initiated by then-Prime Minister Narasimha Rao and his Finance Minister(and current PM) Manmohan Singh. I should bring some clarity to my remark. Unlike China- and before that, Japan, Taiwan and South Korea- India's liberalization failed to provide needed protections to its citizens during the process, particularly for the poor; for food and income security, and to a lesser extent, to protect existing and nascent industries against undue economic pressures while they adapt to competition and develop survival skills. To be sure, some industries are still protected, but a large part of the new industrial infrastructure is owned or controlled by MNCs, who are free to(and do) take their profits wherever they please. Take a look at the automotive sector: barring Tata and Mahindra, the rest of the four-wheeler sector is controlled by entities with no commitment to national objectives. Contrast that with China, where foreign participation is limited to a minority stake, with mandatory technology transfer. That policy, combined with China's active industrial espionage and nurturing of its domestic high-tech industry, has enabled the Chinese to go from making poor copies of Soviet-era fighter jets to putting together its own manned space program and GPS system in less than two decades.
By contrast, India is still unable, despite having some expertise in launching satellites, to build its own turboprop trainer airplanes, and is buying them from a country not particularly known for aeronautical prowess. India buys its short-haul jets from Brazil, which is still considered a developing economy, and doesn't impinge on the Indian consciousness as a technically advanced country. While India has apparently developed long-range nuclear capable ballistic missiles, it is still unable to produce one of the staples of modern warfare: tank shells. Having previously made arrangements with a supplier from tiny Israel, India is now looking once more to Russia for this critical armament. India has also failed to develop a reliable automatic weapon for the infantry- again, a staple of the modern military. Not exactly what one would expect from a country which brags of having "arrived on the world stage" and aspires to be acknowledged as a "global military power".
In the meanwhile, food insecurity is growing, with farm laborers helping cultivate grain crops whose prices are influenced by commodities sharks on the other side of the world, at the Chicago Mercantile Exchange, compelling them to compete for these staples of life with people earning hundreds of times more than they do. I recall a few years ago when grain prices suddenly skyrocketed. It was attributed to President Bush's ethanol initiative, which allegedly put extraordinary demands on the global grain market. That has turned out to be just so much equine excreta(because Brazil has greatly expanded their own ethanol program for many years without significant impact on global grain prices), but what was accomplished- and what was the intent all along- was to open the door to the acceptance of global grain price volatility manipulated by those without(i.e., outside of) the actual production and distribution system. Money for nothing, like taking candy from a baby.
Legitimate hedging of crop production has given way to unrestrained speculation which literally takes the food out of the mouths of the world's poor. Commodities trading used to be a low-key, lusterless, bordering-on-boring but necessary component of price stability for industrial inputs and farm incomes. Now it's become a high-stakes gambling activity, with superstar billionaire traders and princely returns to the select few at the cost of food security for hundreds upon hundreds of millions of the world's poorest. Countries like India should de-link their domestic commodities from the global market until such time as the people are able to accommodate world prices. Persistent double-digit inflation is destroying the lives of people on fixed incomes, as they constantly adjust to making do with less. Savings are losing real value even at the highest rates of interest currently available, with inflation running higher than the best rates, making it a double-whammy for people living on interest income: higher prices year-over-year and erosion of their capital base. No doubt some part of the population is seeing their incomes and assets grow quite satisfactorily(and some even spectacularly), but the overwhelming majority are suffering declines in real per-capita incomes, assets, food and water availability, and of course access to education and health care. No number of shopping malls, luxury apartments and other indicators of the high life for a tiny minority can nullify that fact, even if they do provide a convenient veil for those of the "local" mindset.
In liberalizing India's economy, there should have been some sacred cows protected until such time as the people were able to deal with them without undue suffering. One, and the most important, is the food chain. "Globalizing" grain prices is nothing but disaster for people surviving on less than 50 US cents a day. Another is the financial system, including banking and insurance. While certainly the system needed to be modernized, there was no reason to open up the sector to foreign players at this time, particularly the insurance sector which is almost money for nothing in the virtually unregulated Indian market, and when there is no technology or value-addition being brought to the table. I have argued other points as well with people, such as the unaffordably liberal dispensation of hard-won foreign exchange, which has never been the hallmark of a country seriously building up export earnings as the catalyst for internal growth. For all the talk about the Indian economy being internally driven and not dependant on exports, the reality is quite the opposite. Exports(over $300 billion in 2011), and the multiplier effect from them, probably account for half of the real GDP of the country. Add in the effect of NRI remittances, and it's easy to see how precariously dependent India is on foreign sources of income.
This is the outside of a new restaurant in Bangalore. A perfectly walkable sidewalk has been rendered unusable for pedestrians, who will henceforth have to take to the street. Sure it looks nice, but is it worth having people run the risk of being mowed down by traffic? Why you bother, yaar? Its "local" problem, no?
But it isn't all government alone to blame. I think there is a cultural indifference to what is perceived as "not mine", and to the effects of one's actions on society. Walk around any "upscale" neighborhood in any city in India. Odds are, you will find beautifully designed and executed homes, some with features like fountains and gazebos until recently only seen in estate homes. The patches of lawn will be immaculate emerald green. There is likely expensive paving, cladding and panelling, pride in displaying a meticulous sense of style and wealth. But that ends immediately beyond the property wall, where you will find sidewalks that are either rendered unusable by the homeowner making them an extension of his garden or using it as a parking space. If neither is the case, you will probably find them in a state of perpetual neglect, unpaved or broken, with trash strewn on them and in the gutters alongside. Money, obviously, is not a constraining factor in keeping these small public spaces in front of these expensive homes tidy and usable, and it is not a constraining factor in many less expensive neighborhoods either. What is a constraint is the mindset that nothing outside the walls deserves any consideration or upkeep. That is someone else's problem, easily dismissed as something "local".
If you aren't bored to death already, go on to Part Three!
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