The only important question in the West right now is how to restart stalled economic growth.
So it is easy to be dazzled by India, where a 7% rise in gross domestic product is the nightmare scenario, and optimists are shooting for 9%. But Indians themselves are starting to worry about how that growth is being achieved – and who is benefiting.
The headline complaint is corruption. That is nothing new here, of course. But the country now has a middle class self-confident enough to feel humiliated by paying quotidian bribes and resentful of the rise of baksheesh billionaires. Anna Hazare’s hunger strike became a national political event because it tapped into this anger of the urban bourgeoisie.
“India has been overwhelmed by corruption scams,” Kiran Bedi, the first Indian woman officer and one of Hazare’s chief lieutenants, told me in one of a series of interviews in Mumbai. “While it has been apparent that India is shining, India has also been declining in many ways as there has been rampant exposure of corruption.”
“Corruption is endemic,” said Rajiv Lall, chief executive of Infrastructure Development Finance Co, a partly state-owned financial institution. “I don’t think anybody here is pretending that there’s no corruption in India.
And corruption can take on a new dimension, especially in time of great transformation.”
Graft is just part of the story. One of the reasons to celebrate India’s astonishing economic rise is that the subcontinent desperately needed to get richer. In 1991, when Manmohan Singh, then the finance minister and now the prime minister, began the liberalization program that underpins the country’s transformation, India’s 854 mn citizens had an average annual per capita income of only $1,300. The problem, said Arun Maira, a former industrialist – member of the country’s influential planning commission, is that India’s economic rise has had the least impact on people who need it most.
“My thesis is that most people are not feeling included in the growth,” Maira said.
“This has become a very loud voice which is saying ‘Come on guys, the economy is growing very fast now. You’re celebrating this 8, 9, 10% growth, but what about us?”
As Maira points out, one of the most powerful advantages of the wealthiest 1% is “access to people in power.” But there is a more subtle reason the game is most effectively played by those who are already winning it. S. Gopalakrishnan of Infosys, said that “The tendency is that people who have access to power and access to governments, etc., tend to get a better deal. “The policies, the roots, are framed because they are people who give inputs to those policies,” he said.
This is the Indian version of what Willem Buiter, the former London School of Economics professor who is now chief economist at Citigroup, calls “cognitive capture,” and which he blames in part for the regulatory and legislative lapses that created the 2008 crisis.
Ashutosh Varshney, a professor of international studies at Brown University, likens India’s thriving and dirty capitalism to the United States’ Gilded Age. That apt comparison suggests that India watchers should be on the lookout for a Hindu version of the Roosevelts – a Teddy to break the grip of the robber barons and an FDR to offer the 99% a New Deal.
There is, however, one important difference. India’s robber barons have emerged in the age of globalisation and at a time when the US, still the world’s dominant economy, is experiencing its own second Gilded Age. The wealthiest 1% is a global class, and cognitive capture is an international phenomenon. The world may need its own global Roosevelts, too.
Courtesy: SmartInvestor.in 18-11-2011