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Submitted by shashi on Sun, 01/02/2000 - 12:39
Jan 2nd 2000

Today is the first day of the twenty-first century and a good time to take stock.   The ascent of a country from poverty to prosperity, from tradition to modernity is a great and fascinating enterprise. India has recently emerged as a vibrant, free market democracy after the economic reforms and it has begun to flex its muscles in the global information economy. The old centralised, bureaucratic state, which killed our industrial revolution over the past fifty years, has begun a subtle but definite decline. The lower castes have gradually risen through the ballot box.

 Most Indians instinctively grasp the spirituality and poverty of India. But the significance of this quiet social and economic revolution eludes us. The change is partially based on the rise of social democracy, but more importantly on a sustained 5-7 percent annual economic growth that India has experienced for the past two decades. It has tripled the size of the middle class, which is expected to become half the Indian population within a generation. In the end, this "silent revolution" is more significant than the constantly changing fortunes of political leaders that so absorb us.

In the fifties we passionately believed in Nehru's dream of a modern and just India.   But as the years went by, we discovered that Nehru's economic path was taking us to a dead-end, and the dream soured. Having set out to create socialism, we found that we had instead created statism. We were caught in a thick jungle of Kafkaesque bureaucratic controls. Our sense of disillusionment reached its peak during Mrs. Gandhi's autocratic rule in the seventies. There was a glimmer of hope when Rajiv Gandhi became the Prime Minister in the eighties, but it quickly died when we discovered that he did not have what it takes. It was not until July 1991 that our mood of despair finally lifted with the announcement of sweeping liberalisation by the minority government of Narasimha Rao. It was as though our second independence had arrived: we were going to be free from a rapacious and domineering state. Although the reforms have been slow, hesitant and incomplete, they have set in motion a process of profound change in Indian society. It is as important a turning point as Deng's revolution in China in December 1978.
¼br /> In part, the past 50 years is a story of the betrayal of the last two generations by India's rulers. In stubbornly persisting with the wrong model of development (especially after 1970, when there was clear evidence that this path was doomed) they suppressed growth and jobs and denied their people an opportunity to rise above poverty. It is ironic that men and women of goodwill created this order and they were widely admired. After all, they had succeeded in institutionalising democracy. The tragedy is that they pig-headedly refused to change course in the seventies in the name of the poor. The worst indictment of Indian socialism is that in the end it did very little for the poor.   All the countries of East Asia did far better. Our failure in the end was less from ideology and more from poor management.

To top this tale of India's lost decades members of the Indian ruling elite are not contrite.   They complacently proclaim, "after all, we have done rather well compared to the 3.5 percent Hindu rate of growth."   There is no more defeatist expression in the dictionary than this fatalistic phrase.   They feel no humiliation that India has lagged behind in a Third Worldish twilight while its neighbours in East and South East Asia have gone ahead.   There is no feeling of shame that countries with a fraction of India's natural and human resource potential have created some of the most prosperous societies in the world. They have used the recent troubles of East Asia to justify our incomplete and frustratingly slow reforms. When individuals blunder, it is unfortunate and their families go down.   When rulers fail, it is a national tragedy.

Indians have not traditionally accorded a high place to making money. Hence, the merchant or bania is placed third in the four-caste hierarchy, behind the brahmin and the kshatriya, and only a step ahead of the labouring shudra. Since the economic reforms making money has become increasingly respectable and the sons of brahmins and kshatriyas are getting MBAs and want to become entrepreneurs. India is in the midst of a social revolution rivalled, perhaps, only by the ascent of Japan's merchant class during the 1968 Meiji Restoration, which helped transform Japan from an underdeveloped group of island into a thriving, modern society and economy.

The beginning of the 21st century is a time of ferment. Two global trends have converged-both of which work to India's advantage, and raise the hope that it may finally take-off. One, is a liberal revolution that has swept the globe in the past decade, opened economies that were isolated for fifty years and integrated them spectacularly into one global economy. India's economic reforms are part of this trend. They are dismantling controls and releasing the long suppressed energies of Indian entrepreneurs. They are changing the national mindset, especially among the young. Because we are endowed with commercial castes, we may be in a better position to take advantage of this global tendency. Banias understand from birth the power of compound interest; hence, they know how to accumulate capital.

Meanwhile, the information economy is transforming the world-this is the second global trend. We may not be tinkerers, but we are a conceptual people. Thus, the knowledge age potentially plays to our advantage and our success in software and the Internet is the first emerging evidence. We have wrestled with the abstract concepts of the Upanishads for three thousand years. We invented the zero. Just as spiritual space is invisible, so is cyberspace. Hence, our core competence is invisible. In information technology, we may have finally found the engine that could drive India's take-off, and eventually transform our country. The Internet has also levelled the playing field so that any mad, passionate Indian entrepreneur can write our country's future.

India embraced democracy first and capitalism afterwards and this has made all the difference. India became a full fledged democracy in 1950, with universal suffrage and extensive human rights, but it was not until 1991 that it opened up to the free play of market forces. This curious historic inversion means that India's future will not be a creation of unbridled capitalism, but it will evolve through a daily dialogue between the conservative forces of caste, religion and the village, the leftist and Nehruvian socialist forces which dominated the intellectual life of the country for 40 years, and the new forces of global capitalism. These "million negotiations of democracy," the plurality of interests, the contentious nature of our people, and the lack of discipline and teamwork imply that the pace of economic reforms will be slow and incremental.   It means that India will not grow as rapidly as the Asian tigers, nor wipe out poverty and ignorance as quickly.

The Economist has been trying, with some frustration, to paint stripes on India since 1991. It doesn't realise that India will never be a tiger. It is an elephant that has begun to lumber and move ahead. It will never have speed, but it will always have distance. A Buddhist text says, "The elephant is the wisest of all animals/the only one who remembers his former lives/and he remains motionless for long periods of time/ meditating thereon." The inversion between capitalism and democracy suggests that India might have a more stable, peaceful, and negotiated transition into the future than say China. It will also avoid some of the deleterious side effects of an unprepared capitalist society, such as Russia.

Although slower, India is more likely to preserve its way of life and it's civilisation of diversity, tolerance, and spirituality against the onslaught of the global culture. If it does, then perhaps it is a wise elephant. The struggle of one sixth of humanity for dignity and prosperity is a drama of the highest order and of great consequence to the future of the world. It has meaning for all of humanity and sheds new light on the future of liberalism in the world.