Arvind Singhal: A future-defining decade ahead

If the current decade gave India the confidence to dream big, the coming one may well decide if those dreams could ever become a reality and perhaps even define what India’s future may be.

On the surface, as we enter 2010, India has reasons to be cautiously optimistic on the economic front. Investment is up, industrial output continues to grow steadily, if not spectacularly, and domestic capital formation and international capital flows have picked up momentum again. While there is reason to be worried about the runaway food-inflation, perhaps it would be tamed by a more favourable rabi crop output. Indeed, the Indian economy could grow at a compound average rate of about 8 per cent in the next decade, making it a 2.5+ trillion dollar economy in current terms, comparable to a UK or France of today. By the end of 2019, India may well have a consuming class of over 800 million people and overall consumer spending topping $1.2 trillion, creating new multi-billion dollar industries and businesses. At that size of the economy, India will be among the top-five markets for most major global corporations and certainly still remain among the most promising ones for further growth.

However, it is not only the progress on the economic front that will shape India’s future. Indeed, the nation’s entry into the next New Year will be in the backdrop of some of the most daunting challenges it has faced since its Independence.

The challenge of the quality and ability of the political leadership is on the very top of the list of many challenges India will face with increasing criticality. In the previous seven decades, India had a pantheon of visionary, ideology-driven, strong leaders across the political spectrum. The current decade saw the very last of them fade away, and as we enter the next one, we have mere pretenders who occupy leadership positions across party lines. The ideology has been reduced to serving self-interest and the vision limited to clinging to power through whichever means that can somehow pander to real and imaginary vote-banks, at the risk of creating even more schisms in the already divided society and creating the ground for balkanisation of the nation. Indeed, if India does not throw up a new, nationalistic and pragmatic ideology-driven political class by the next general election in 2014, the next decade could see the current fires of internal strife go beyond control.

The next big challenge is the rapidly growing nexus between big (money) business, the political class and the media. While there was always a cozy relationship in the previous decades between select large business houses and the ruling political class, the impact was largely limited to preferential treatment in award of licences and permits and bank credit in exchange for some financial contributions to the “party” funds. Indian media, by and large, remained isolated from this nexus though they had their own leanings towards or against the establishment. This is changing now. With billion and multi-billion dollar sized fortunes to be made almost overnight, the stage has already been set for auctioning of national assets and resources meant for the general population to the highest and most audacious “bidder”. With the media itself becoming a beneficiary of some of this largesse, and a bureaucracy tamed through continuous application of carrot and stick, the omens are not too encouraging.

The third big challenge that can no longer be wished away in the coming decade is the increasing deficit in social and basic physical infrastructure, including accessible, affordable and accountable healthcare; accessible, affordable and appropriate education; and access to housing, sanitation and clean water. No nation can carry a burden of the over 400 million now officially below the poverty line, and another 300 million barely eking out a living just above it. Patchwork or populist solutions will just not work anymore with such large numbers to be taken care of, and instead, very innovative and radical options have to be found.

While the list of challenges is long, at least one more merits a serious look at. The nation will face more rapid degradation of environment as it grows, and more pressure on natural resources, including land and water, as the population grows by another 180-200 million. Finding an equitable balance will get tougher.

How India handles these challenges in the coming decade may well define its future.

arvind.singhal@technopak.com