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Business News/ Opinion / Why everything is not the government’s fault

What’s the problem with India’s economy? Why has growth collapsed? To read the material on this subject, you would conclude it has to do with one or more of the following: Inability of Parliament to legislate reform, inability of Prime Minister Manmohan Singh to govern, reluctance of the higher bureaucracy to move files, corruption, a deficit in the current account (more imports than exports) which is the third highest in the world, a fiscal deficit (government spending more than it should) that will grow with the food bill, the global economy’s slowing, another war in West Asia and so on.

All of our problems, it would seem, originate in government and in the external environment. It is there that the solutions must be found, and the most important one is a change in the government in New Delhi.

To my mind this focus on the immediate GDP growth is the same as examining a company and its health by focusing on results quarter-on-quarter. Growth in the immediate period is the objective and the chief executive is judged on his delivery of this. It is the wrong way of looking at it.

In my Lounge column of 29 October 2009, I wrote: “Can India’s high growth continue? No."

Why was I confident in saying this? Because the problem actually resides in deeper things than that list above. Slowing in an economy that produces only 8,000 per person per month, meaning one-seventh the global average, comes because of things other than an incompetent government.

The basis for high growth is missing in the place most important—the population.

Here are my five reasons for believing that the high growth phase was temporary and would end. It is also why we will remain a poor and developing nation for a long time:

1. A small caste-bound entrepreneurial base. I have written about this often enough before. Is this changing? Sure. But not fast enough to make a significant difference. The Indian cleaves to his caste. He could escape this through good education. But this is not available in India.

2. Poor quality of education. If you are one of those who has hired people, you will know the magnitude of the problem this has created. We are short of skilled labour and middle-management. This condition is not about to change, and in my opinion will get worse.

3. An absence of philanthropy means that there is little expansion of the educational system outside the state. We have enough evidence to show that the state is incapable in such matters.

4. A parasitic dependence on the outside for technology. This is a product. The cause is a cultural lack of scientific curiosity and a disinterest in invention, and in basic science and applied science. India’s creative contribution to the world is insignificant and can be dismissed. We are a net importer of ideas and of quality.

5. An emphasis on change coming from the state. This is attitude more than cause, but it is so pronounced in our parts that it has become relevant. What we have is a rejection, particularly in the angry middle class, of the notion that it is in any way responsible for its condition.

What improvement can we expect from this pass? Little. None of these five things has to do with the state, and the government in this view is incidental if not irrelevant. What this means also is that a change in New Delhi and the introduction of a figure like Gujarat’s chief minister Narendra Modi does not change the underlying internal conditions.

There is actually evidence on the ground to show that where there is outstanding infrastructure, there is still a problem with investment and growth.

Driving on the beautiful multi-lane national highway from Kolkata to Santiniketan, the only signs of industry are buildings that one realizes are for potato cold storage. The one real factory never opened: the ghost town at Singur.

Who should we say is responsible for this? New Delhi? That is quite unfair.

In 2011, for example, the state of West Bengal received industrial investment of just 325 crore. Is the problem here on the outside? I can name at least 20 Gujaratis who will not notice 325 crore missing from their business. I know it’s a cruel thing to say, but it’s true.

However, to see the number of Bengalis in the media flocking to Modi’s messianic tent is to think that he will transform their state.

What 91 million Bengalis cannot do, one poor Gujarati is expected to deliver.

Also Read | Aakar’s previous Lounge columns

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Updated: 21 Sep 2013, 12:26 AM IST
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