The other day I came across an excellent thoughtful piece by Mr. Arvind Singhal at The Economic Times (October 9, 2012) extolling the virtue of making decisions based on quality data; not on kneejerk, emotion-induced actions. He notes and I agree that “The India of today would, perhaps, be among the most emotion-driven societies in the world.” In fact it has been this way since time immemorial. And decisions, choices we make have consequences.
As to post-independence political leadership decisions, let’s briefly look into two. The first deals with leadership transition. The leaders who successfully headed the independence movement were time-tested, gifted, brilliant, energetic, and possessed incredible skills to connect with the whole Indian society (the Aam Aadmi). But every student of leadership knows that leadership is contextual. Leadership style for the independence movement has to be strikingly different than the leadership skills and style needed for the post-independence economic transformation of the country. India finally around mid-eighties seems to have learned it, but only after losing precious four decades of growth opportunities. Unforgivable lost four decades!
The second deals with the emotion-driven choices India made for its economic model and in selection of the team of economic advisors. India opted for grandiose, egalitarian, socialist, self-reliant (swadeshi) economic model that propped up and protected inefficient enterprises and squandered four decades in the calamitous experimenting, all done, however, with good intensions as one attempts to change weather, change nature out of a genuine concern for the habitants. While at the misfortune of its people, Indian leadership was irremediably impressed by the Soviet experiment and earnestly listened to the economic advice of glamorous, charming, well-articulate late John Kenneth Galbraith and in the process assembled an unprecedented level of burgeoning, mammoth bureaucracy and bureaucratic control of every aspect of life, the Asian Tigers (Singapore, Honk Kong, Korea, and Taiwan) were quietly and unceremoniously pursuing steady, well-disciplined economic growth embedded in the belief of long-term virtues of capitalism and free enterprise with minimal but skillful oversight of the state.
India did some catching up since mid-eighties, but could not erase the consequences of the ill choices it made during the preceding four decades. China, on the other hand eventually got it, and its smart, seasoned, resolute, unwavering leaders have aggressively pursued, through gradualist experiments, disciplined growth with impressive results. China started much too late but has almost caught up with the average growth rate of Asian Tigers taken 50 years together (1960 – 2010). Unfortunately, India, despite its enormously talented entrepreneurs, scientists, industrialists, ingenuity and genuine goodness of its people, doesn’t fully get it; it occasionally continues to take backward steps, mired in internal divisiveness and corruption deeply rooted in its culture.
To be among the top economic leaders of the world, a nation today has to excel in innovation and technology. To spur innovation, government policies must support the process of creative destruction and disruptive innovations. India’s answer to economic stardom perhaps lies in the ideas of profound thought leaders, such as, Joseph Schumpeter, Clayton Christensen, Milton Friedman; yet, India, with noble intensions, of course, chose brilliant, glamorous, witty, charming John Kenneth Galbraith. To paraphrase, road to calamitous outcomes is often paved with good intensions. And choices have consequences. Such is the open secret of life’s many ironies.
Now coming back to Mr. Singhal’s point of data-driven decision making, the accompanying Graphs 1 and 2 show selected, relevant data and in particular Graph 2 shows that had India achieved the average growth rate of the Asian Tigers over the 50-year period (as China did), its current GDP would have been almost equal to that of China’s with a distinct advantage of democracy and democratic institutions in place.
India, with PPP adjusted per capita GDP of $3,996 in 2010, has a long, arduous journey ahead to catch up with Singapore’s per capita GDP of $59,615 or China’s $8,795. And it has to achieve it notwithstanding widespread corruption, so firmly rooted in its culture. Astute students of cultures and civilizations know that cultures and civilizations change, if at all, at painstakingly slow pace, and their remnants and residues linger on and on for centuries and centuries. There is no magic wand to completely eradicate India’s corruption and thus it would be cruel to raise expectations of its youth about a corruption-free Indian society just around the corner. It is not in cards, not at least in the near future; the stakeholders just have to learn to manage it and succeed in spite of it. What one can most ideally hope for is to wrest the rate of growth of corruption. All concerned, thoughtful stakeholders, however, have to be extremely vigilant and engaged about economic policy choices India makes that would affect its destiny for the next fifty years. We wish its leadership has more wisdom and luck in selecting teams of its economic advisors who not only have time-tested, impressive credentials, but possess abundant of commonsense; those not only know it, but have done it; those with a flair for execution. A lot to learn from China!