The importance of the coming years on India’s long-term viability as an international power is not lost on either local officials or international onlookers, and economic growth and internal development are crucial to the country’s future.. Economic growth rate is often used as a gauge for a countries’ commercial potential, drumming up interest in foreign companies for domestic investment. And for a developing country like India, the economic growth rests heavily on attracting this international trade. Continued signals of stagnation would prove catastrophic to India’s burgeoning economy.
Likewise, improving India’s internal infrastructure is imperative for ensuring lasting stability. The current state of national and state politics gnaws at the foundations of the Indian government. This places India on the brink of two distinct futures: permanence as an international economy with a prominent role in global affairs or as a nation plagued by inequality and mired in bureaucratic corruption and inefficiency.
Various observers emphasize the need for an increase in international investment combined with a decrease in government regulation of the economy, pointing to economic reforms implemented by Prime Minister Rao and Finance Minister Singh to deal with the 1991 financial crisis. Others, like Harvard faculty member Amartya Sen, believe that, to become a respected global presence, India must first ensure better health, education, and public services for its population.
While both of these ideas have basis and merit, they fail to properly address the ability of the Indian government to implement major institutional changes. Both the fragmentation of the current parliament and the impotency of the rule of law exhibit a distinctive lack of institutional strength. The efforts to improve India should thus include providing support to reputable non-governmental institutions, such as Sargam Sanstha and the Gates Foundation, working to promote entrepreneurship and improving the lives of Indian citizens. Such a policy would ensure the efficient application of reform while providing immediate and substantial internal development, including programs that would bring legitimacy back to local and state governments.
Woes of a Slowing Economy
In addition to extensive domestic complications, the once flourishing economy of India has entered a prolonged period of stagnation. The numbers coming out of the April to June quarter show a sluggish GDP growth of 4.4 percent, the lowest quarterly growth since the early days of 2009. The true impact of this number comes when juxtaposed with China’s 7.8 percent growth over the same time period and India’s own growth of 10 percent as recently as 2007. India also has one of the smallest monetary reserves in comparison to its peers, leaving it looking weak and less appealing to foreign investors. Combining this with the precipitous decline of the rupee, which lost 12 percent of its value over the last month, calls into question India’s future prospects.
The Indian parliament has decided to address its economic woes by seeking to stabilize India’s current account deficit. The CAD, the difference between the inflow and outflow of foreign exchange, had touched an all-time high of USD 88.2 billion, or 4.8 per cent of GDP, in the last fiscal quarter. Prime Minister Palaniappan Chidambaram stressed that the government is trying to rein in CAD by imposing higher duties on gold and cutting down on non-essential import items, adding that he has set a target of below $70 billion or 3.8 per cent of the GDP of CAD this fiscal. If these government measures succeed in outperforming the dire prognoses, confidence in the Indian market may still rise.
However, the Prime Minister admitted that challenges like high inflation levels and reviving the investment sentiment in a sluggish economy still remain. He said he looked forward to attracting more foreign investments in pharmaceutical, telecom, and single- and multi-brand retail sectors. Although the Indian parliament can achieve certain levels of progress, the problems facing India today go beyond what the current legislature can fix.
The Role of Inequality
The disparity between India’s haves and have-nots is striking; the GINI index, whichmeasures individual income inequality, has risen to 39.9 percent. Meanwhile, countries like Sudan and Niger hover around 35 percent. The United States is no longer measured. Educational inequities are also staggering, as Amartya Sen wrote in the New York Times, “among all Indians seven or older, nearly one in every five males and one in every three females are illiterate… and most schools are of low quality.” Health care for the poor is low quality and exploitative, most having to receive the most basic vaccines from international NGOs.
The fundamental step towards the next level of economic sustainability stems from a better-educated populace. Examples such as Japan, Korea, and Taiwan can be used as demonstrations of countries with similar economic backgrounds. Their high levels of growth in the 1960’s occurred concurrently with a rise in the national Human Development Index. The HDI is an important composite statistic of life expectancy, education, and income indices used to rank countries into four tiers of human development. As of 2013, all of these countries have HDI ratings of “Very High.” India’s classification is “Low.”
From a purely economic outlook, expansion into new and developing markets would provide a possible fix for a stagnant economy. However, these markets will remain closed to India if it does nothing to change an education system ranked second to last among the 73 countries that participated in the Programme for International Student Assessment. The Indian government, which only spends 3.3 percent of its GDP on education, does not seem to hold the answer for improving accessibility towards a basic schooling.
Progress thus lays in organizations like Pratham, which has reached 2.4 million children through its Read India program, and Nanhi Kali, a NGO the aim of providing primary education to underprivileged girls in India. In terms of health care, the Gates Foundation does an unparalleled job in providing polio and malaria vaccines to the disadvantaged population of India’s most rural districts. These organizations and many others like them provide tangible results in the daily lives of Indians while relying on mostly private funds thanks to the benefit of having a dedicated and focused workforce.
Resorting to these NGOs as a primary stimulator of internal development has the dual benefit of optimizing spending on key issues while improving the infrastructure of the Indian state. The NGOs mentioned above have initiated various successful programs that have been publically co-sponsored by the state. At first glance, the vocal inclusion of the state in these programs would seem to be for wider publicity. Rather, the co-sponsorship is a channel through which to return power to state programs and capabilities. NGOs such as the Gates Foundation are innately driven to improve the internal infrastructure of the Indian state. This belief is echoed in their mission to India, a commitment focused on “accelerating the sustainability of health interventions” and “strengthening the program within the state.”
The Indian people have been very supportive to the idea of reform and improvement. The recent push by President Mukherjee for educational reform was met with approval by the citizenry. In India, as well as in many developing countries, there is wide acceptance that the present health care system needs serious reforms. The roles of the NGOs would not be to implement a change that is unnecessary or unpopular; rather it will be to facilitate the development of policies that the country advocates.
Prospects of Indian Democracy
The idea that India is not a functioning democracy is both widespread and incorrect. Professor Sen puts it best when he points out that the Indian “media is vibrant and free; Indians buy more newspapers every day than any other nation.” The real question comes when measuring the strength of the Indian state in comparison to its peers and those it wants to emulate. Will India ever be considered a fully developed democratic country?
India has the opportunity to become a consistent economic and political player on the global stage. While issues of internal politics and economic strife face the country today, India is able to address and correct these obstacles. To do so, India must reinforce its institutional base and political infrastructure before looking to expand on its international role. This sustained push to build up its foundation would be best led by non-governmental organizations focused on these fundamental human affairs. This transitory collaboration will ensure an improved development for the Indian people and, subsequently, the Indian state.
Image Credit: Associated Press/Aijaz Rahi