by Kanti Bajpai

Clip_59What is the state of the Indian nation, and what are the key challenges ahead? The sad and terrible fact is that India is one of the poorest, most wretched places on earth, especially northern India, and the task for the BJP government is massive. At the same time, the capacity of India’s institutions to do anything rational and substantial to improve the lot of Indians, middle class or poor, is limited.

The largest number of poor people in any single country is to be found in India.  You are poor in India if you consume at approximately the rate of Rs 25 per day, Rs 750 per month, and Rs 9,000 per year—roughly $150 per year, or less than 50 cents per day. Using that abysmally low figure for the poverty level, about 22 per cent of Indians are poor—nearly 300 million people. If we raised the figure used to compute poverty, a much larger number of people would be counted as poor. To give you a sense of what it means to say that 300 million people are poor, we should note that the total population of South America in 2013 was 386 million.

India’s economic growth has been falling over the past three years, but its human development index (HDI) has been rising steadily. Before we get excited about this rise, it is worth pausing over where India stands in the world. According to the 2013 Human Development Report, India was 136th in the world out of 186 countries. The report places India at the bottom of the middle developed countries—probably a kindness on the UNDP’s part, which can draw the line anywhere it pleases. Only seven Asian countries rank lower—Cambodia, Laos, Bhutan, Bangladesh, Pakistan, Myanmar and Nepal.

Clip_74Even this is misleading. Amongst six SAARC neighbours, India shares bottom place on life expectancy at birth (along with Pakistan), fifth place on infant and under-5 mortality, fifth place on maternal mortality, fourth place on fertility, fifth place on access to improved sanitation, sixth place on dpt immunisation, sixth place on measles immunisation, fourth place on mean years of schooling (among 25-year-olds and above), fourth place on female literary (15-24-year-olds) and sixth on proportion of underweight children.

In 1990, on the same set of measures, in most cases India placed between second and fourth position. The years of India’s highest economic growth coincided with India’s decline on key human development rankings. It’s worth remembering that these are national figures. The numbers for the northern states of India are worse than the national figures, making these states amongst the most shameful places on earth in terms of the quality of life the state offers. Basic health services, sanitation, school education, and food and nutrition must be on top of any government’s list of priorities.

A key governance challenge is the provision of energy and water (especially clean water). India’s energy use per capita, according to the World Bank, is the highest in South Asia but only 30 per cent that of China. India must provide more energy to its citizens if they are to live a decent existence, and yet it must not foul the air, water and soil. Most of its energy today is dirty energy—oil, natural gas and coal.  This contributes to global warming and ruins the health of ordinary Indians. The new government must confront the challenge of more energy, cleaner energy, energy efficiency and renewable energy. Dependable imports, better delivery, regular supply, greater exploration, rational pricing, investment incentives and technological innovation are vital.

India’s per capita water availability is scary—and getting worse by the day. India only has 1,719 cubic metres per person—roughly the minimum recommended by experts. By 2050, India’s population will be 1.65 billion and its water availability will have sunk to 1,140 cubic metres. Between 1950 and 2050, India’s water availability will have reduced from 5,177 cubic metres per person to 1,140 cubic metres. Add to this reductions in supply from global warming, changing rainfall patterns and the pollution of sources. Already 60 per cent of India is “water-scarce” or “water-stressed” and water conflicts within the country will proliferate if supplies don’t increase.  Poor distribution and management as well as water subsidies have contributed to water wastage, but perhaps the most serious deficiency has been the lack of investment in conservation.

India needs infrastructure—desperately. The state of India’s roads, railways and ports is amongst the worst in the world.  To see this, one only has to go to any country in East Asia or Southeast Asia and even large parts of Africa. There has of course been some improvement over the past two decades, but our structures still look creaky and stuck in the 1960s (barring a few new airports). The government has estimated that India needs to spend $1 trillion on infrastructure. Where China spends 8.5 per cent of its GDP on infrastructure, India spends about half that proportion. The new government has to mobilise foreign and domestic funding, including from Japan and China (Beijing has offered $300 billion in funding), speed up procedures and cut down on corruption.

Most importantly, a way has to be found to make land available without cheating and alienating the owners. The new land acquisition bill may be so complex and conservative—in terms of arriving at fair compensation (and meeting environmental standards)—that procuring the necessary space may be virtually impossible. The new government is in the process of revisiting the acquisition bill, but at the very least, it must find a way to coordinate far better between citizens, government agencies, construction companies and investors.

Speaking of infrastructure, one area that the Modi government must pay special attention to is tourist infrastructure. China gets 26 million tourists per year, India gets 5 million—this when even Chinese friends remark on the richness of historical artefacts in India compared to China.

Astoundingly, Beijing has more hotel rooms than all of India combined. Not so astoundingly, China’s transport and sanitation is far superior. The neglect of tourism is bemusing given that it contributes about six per cent of India’s GDP.

The future of any modern society is urban: China is already more than 50 per cent urban, Pakistan over 40 per cent, while India is at 35 per cent. India can remain largely rural (as some agrarian romantics would like), but it cannot then be modern. Much of Indian rural life continues to be feudal, suffused with religion and tradition, and violent in varying degrees towards women, children, lower castes and minority communities. Indian cities are fairly horrible too, both physically and socially, but they are more liberal environments than our villages and small towns.

Fortunately, India probably cannot escape urbanisation. The new government must find a way to improve urban life and bring more Indians into an attractive city life. Both the BJP and Congress election manifestos talked about 100 refurbished or new urban spaces. Now the budget reiterates it. It is time to think big, even of megacities; anything less means catastrophe. Once again, the vital question will be how to acquire land for these projects.

Obviously, managing India’s macroeconomy is crucial. India simply cannot raise itself out of a low-level equilibrium trap without growing at 7-8 per cent per annum for the next 30 years. While it is true that the global economic crisis affected the Indian economy, the constraints on growth were not primarily external; they were internal. The UPA government stopped short of the next round of reforms, choked off investment (for instance, with foolish retroactive tax laws), failed to build infrastructure fast enough, focused on an entitlement approach to development, was unable to ignite manufacturing and ran up a massive deficit. The result was an economic slowdown, inflation, capital flight, and, with rumours of a US tapering-off of its quantitative easing programme, a collapse of the rupee.

Can the Modi government possibly do worse? Yes, but it will have to work hard at making things worse, especially when the last-minute course-corrections by the UPA government are beginning to take effect.

The biggest challenge on the horizon is reducing the fiscal deficit. Either the government must curtail spending, particularly on subsidies, or it must raise revenues. Both will be difficult, though the UPA government has made a start on reducing subsidies. Curtailing India’s defence expenditures might be another area to consider. Raising revenues may be easier that controlling expenditures. The number of Indians paying taxes is ridiculously low—barely three per cent. Farmers are exempted from taxes—not because it is impossible to assess their incomes but rather because our politicians fear losing the rural vote. Plus, many of the rich and super-rich are evading tax. Revenues would increase if Indian tax laws were not so convoluted and complicated. The BJP is therefore right to contemplate tax reforms.

Finally, there is foreign policy and national security. One of the relative successes of the UPA was foreign policy as well as security, internal and external. Relations with Pakistan, China and the US were more stable than they were during the Vajpayee government and there were some successes—fewer terrorist attacks in Kashmir, the 2005 agreement on a possible border settlement with China, and the nuclear deal with the US.

Internally, the Maoists have been contained as have various separatist groups. On the other hand, there have been no fundamental breakthroughs with Pakistan or China, and a promising start with the US has faltered to the point that Washington, having denied Modi a visa all these years, is secretly pleased to see him take charge in Delhi. As for Maoism, it is in retreat but could resurge.

The Modi government must build on the UPA’s successes and be more ambitious. BRICS has been good. On Pakistan, agreements on Siachen and Sir Creek are waiting to be inked. The prime minister must dust off the near-agreements of 1993, overrule the Indian army on Siachen and come to a reasonable agreement on Sir Creek. With that done, more ambitious things might be attempted, particularly on Kashmir. With the US poised to retrench or retreat in Afghanistan, India has to find a way to work with the new Afghan government, and with Pakistan, China, Iran, Russia and the Western powers in order to stabilise the country.

Modi has travelled to China four times and welcomed Chinese delegations and businesses in Gujarat. After 33 years of  border negotiations, even Beijing seems keen on a final settlement—as the Xi Jinping-Modi meet in Brazil proved. India needs a debate on China. The release of part of the Hender­son-Brooks report was a chance for some new thinking, but the government has chosen conservatism.

The US is responsible for a good bit of the stasis, if not irritability, around India-US relations, but so is India. Modi can be more forthright about the importance of the US for India than the UPA government was able to be and dare to take more strategic decisions on both economic, defence, and diplomatic issues with Washington DC. As for Maoism, it will wither away as the tribals of central India find themselves assured of economic and physical security.

Can Modi do all these practical things for India’s good, or will he descend into the darker side of his agenda, both personal and political? Modi is a decisive person, he is politically shrewd, he can energise large numbers of people, and he is by now an experienced and effective administrator. On the other hand, it is clear that Modi is obsessed with himself—his speeches reveal a person who thinks he is central to India’s prospects and that no one else matters politically. He has shown a nasty, unforgiving side as well.  There are also his disquieting Hindutva beliefs.

Modi supporters extol his clarity of thought and decision-making. In fact, his pronouncements and actions are full of contradictions. He projects confidence, but his unparliamentary and snide remarks reveal insecurities. He favours decentralisation and delegation, yet his record suggests a leader who micromanages and depends on a small group of technocratic advisors. He takes credit for everything to do with Gujarat’s progress and then says he was helpless in the face of the Gujarat riots of 2002 and cannot be held responsible. He is seemingly meticulous about facts and figures and then exaggerates in public and gets trivial historical details wrong. He talks the language of social inclusion but shows little sympathy for the minorities, especially Muslims. He insists that his election victory was based on the promise of development and economic betterment, but his campaign in Uttar Pradesh and Bihar relied at crucial moments on the crude mobilisation of religious and caste appeal. And so on.

As long as things go well politically, Modi will probably be pragmatic and move ahead on fairly sound policies, though there is a big question mark about his commitment to human development. If things don’t go well for him in getting his policies through, there is a chance that he will turn to the Hindutva agenda.

In implementing his policies, Modi will have to deal with all the limits that every Indian prime minister must deal with. First of all, there are rivals and differences within his team, the Sangh parivar in his case. Seco­ndly, India is a federal country where chief ministers have got used to defying and resisting the central government and acting like petty dictators. Thirdly, there are so many constituencies in India, all wanting their own way, and pulling in different directions. It is one thing to run a state, quite another to run a country of 1.3 billion. Fourth, there is civil society, the private sector and the media, all of whom can turn against Modi.

Finally, and most importantly, India is a weak state, and the ability of the government to choose rationally between alternative policies, to implement, to monitor, to enforce, and to adjudicate, by world standards, is very limited—and Modi will have to find a way to strengthen the sinews of government. As things stand, India has one MP for every 2 million citizens—in Sri Lanka, it is one for every 89,000 people (so also in the UK). It has 6,000 frontline administrators (the IAS) which is one for every 2 lakh people. The Indian Foreign Service has 600 officers, about the size of Belgium’s diplomatic service. The Indian Police Service is understaffed to the tune of 1,200 officers. Out of 50 countries for which there are figures, India is 49th in terms of the police-to-population ratio (only Uganda is lower). India has only 14 judges per million people, the fourth lowest amongst 65 countries—only Guatemala, Nicaragua, and Kenya ranked lower than India. The Indian courts have a backlog of 31 million cases; the upper courts alone had four million and the Supreme Court has 59,000 in arrears.  First-year law associates get paid better than Supreme Court judges, and the Chief Justice of India has an average tenure of one year. Last but not least, many of India’s laws are antiquated and need to be overhauled and simplified.

Contrary to the drumbeats, India is not rising; it is struggling to stay where it is. Modi has a chance to make India better. He brings strengths but he also brings great weaknesses to the job of prime minister. He will have to set a pragmatic course, improve the lives of large sections of Indians, avoid divisive and authoritarian politics, strengthen the Indian state without turning government into a tool of oppression and modernise a largely feudal society. No easy task.