India could witness a dramatic decline in Asian leadership
The crisis in India is bigger than people imagine. One reason is India’s middle class is shrinking sharply (see chart).
True, China saw more high income and upper middle class income groups decline than India did. But then China always had several times wealthier people than India.
Yet, China continued creating wealth generators. It also prevented people from slipping into poverty. Good education and medicare helped. So did a focused approach towards economic growth. Today, Beijing has more billionaires than even New York. India shaved off the wealthy, and massively increased the numbers of the poor.
It is then that you realise that slogans like sabka saath, sabka-vikas (loosely translated as together, we march towards prosperity) are only a chimera.
In India, many of the billionaires were scamsters - compare the soft touch towards the Sandesarias, with the treatment meted out to Vijay Mallya. The latter, unlike the former, was a wealth generator.
No wonder then, many of the good billionaires opted to take up citizenship outside of India. And there are others, who would like to be billionaires, but are cut to size by the crippling regulatory environment and all-pervasive corruption.
India marginalised
But the biggest danger for India is that it is being marginalised.
Saudi Arabia has ignored its call to reduce oil prices. India states that it will reduce its oil imports from that country.
The US has begun conducting policing manoeuvres in the Indian
Ocean without even consulting India.
Border discussions between India and China continue to stretch.
To understand what is happening, do listen to Padma Bhushan Shyam Saran’s recent talk on the Manthan platform. Saran, who was former foreign secretary to the Government of India explains how India’s leadership, even in the Asian region, is rapidly slipping.
In 2003, when the then Prime Minister Atal Bihari Vajpayee visited China, the world was aware of how India’s GDP growth rates had begun to march upward. By the time Chinese Premier Wen Jiabao and the then Prime Minister Manmohan Singh met in 2005, everyone was talking about an Asian century led by China and India. China exchanged maps with India for the first time (showing Sikkim as part of India).
Today,
China talks about the emergence of an Asian century led by China. India is missing. It has become a declining economic power.
Instead of economic growth, India focused on bans and proscriptions and targeted businessmen who sup with people critical of the government.
The harsh reality is that the world respects winners and wealth generators. Unfortunately, India’s GDP
Opportunities missed
There were two industries in which India was #1 – dairy farming and gems and jewellery. The latter was allowed to slip into scams through government and banking connivance. The former is now being threatened. Myopic government policies seek to reduce its clout. Consequently, two other industries where India could be a global leader – leather and beef exports – could also suffer, jobs will be lost.
For years, the government knew that the fastest route to job creation (over 80 million in a few years) was through rooftop solar. Germany discovered this in 2008. India has huge advantages over Germany - more sun, more people, hence more rooftops. But, the siren songs of powerful industrialists made India promote solar parks. It ignored the runaway success of rooftop solar in Tripura.
It refused to double the capacity of government-owned hospitals to create more medical education seats for doctors and nurses. India thus loses out on medicare, health tourism, and manpower exports. More doctors could have meant more rural clinics and nursing homes.
It could have made its domestic shipping fleet stronger. But once again, swayed by seductive calls from big industry, it gave away its coastal rights (cabotage) to foreign flag ships.
It could have encouraged gold mining. But instead of recognising the nature of gold deposits in India – suitable more for small mines developed by both prospectors and rural land-owners -- the government has now passed a bill meant only for large industrialists.
It also did a lot of damage through selective gold targeting. It spent a lot of time and effort in tarnishing Kerala for the 25 kg gold smuggling, even while it stayed quiet about the 104 kg stolen from the CBI gold vaults
Thus, one by one, the government has short-sold its people, its strategic advantages, and has shrunk its middle class. It also shrank its wealth generators. And it has betrayed future generations by not focusing on quality education and medicare.
Can the government roll back these myopic missteps? Can it recover? Yes, it can. It is obviously not a basket case. Not yet.
The author is consulting editor with FPJ
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