'Behold the Leviathan' is a hopeful narrative of India's potential

Increasing women's workforce participation, the rise of a new class of elites without IIT-IIM education, and the JAM trinity are key socio-economic changes driving optimistic projections for India

Behold the Leviathan: The Unusual Rise of Modern India

Author: Saurabh Mukherjea & Nandita Rajhansa

Publisher: Penguin

Price: Rs 699
 

This is yet another book riding on the advances the Indian economy made after economic liberalisation and the accelerated growth of recent years. Most books like this extend the trend far into the future, based on the thin evidence of the past two or three years. This book, however, seeks to identify several socio-economic changes that provide the rationale for such optimistic projections.

The authors believe that India has changed the master narrative  — the shared stories of success that transform the belief and behaviours of people in the past two decades. From fear, failure and frustration of the first four or five decades after independence, India achieved a turnaround after 1991. While the performance of the Nifty 50, Chandrayaan’s success, achievements in chess, and the dramatic tunnel rescue in Uttarakhand are manifestations of this progress, the trinity of Jan Dhan accounts, Aadhaar, and mobile phones, collectively known as JAM, and Unified Payments Interface form the backbone, with greater financial inclusion, rising education, and accelerated infrastructure development leading to paradigm shifts.

Chapter 3 traces the transformation in four phases — until 1979, marked by stifling socialism; the acceleration from then till 1991; 1991-2014, when most controls of the first era were dismantled; and post-2014, when capitalism took firmer root and threw up more financially successful stories with government providing physical and digital infrastructure. There are, however, risks in this story, such as the growing concentration of wealth and rising inequality, the struggles of the informal sector, which bears the brunt of employment creation, and polarised growth in the southern states, which the country can scarcely ignore. Whether transfers and subsidies alone will be enough to tackle the inequalities is doubtful.

Section 2 covers women’s enhanced role in the economy and society, the China-plus-one strategy, outsourcing, and the rise of the educated elite in powering India ahead. The latent potential of women power is becoming increasingly evident. Surging women entrepreneurship, their rising share in self-employment, rising education, rising literacy (female literacy has risen three times as fast as males in the past 50 years) hold much-needed hope for their emancipation as well as contribution in the next phase of India’s economic journey. It is heartening to learn about their increased vote share, higher average bank balances than males in urban areas, and reduction of wage disparity (down from 48 per cent in the 1990s to 28 per cent now).

A new class of elites is emerging from India’s interiors, without degrees from IIMs, IITs, or prestigious overseas schools and colleges: Pedigree is losing its sheen. The share of IIT/IIM and foreign university graduates in the board room of Nifty 50 companies has fallen below 50 per cent for the first time. Networked India is bringing out more success stories from wider sections of society. The authors’ China-plus-one strategy revolves around: (i) manufacture of smartphones; (ii) increased share of active pharmaceutical ingredients; and (iii) medical devices manufacture, where the authors see better relative cost advantage. Risks such as the high cost of land and finance compared to competing countries and high labour cost when adjusted for productivity and quality of skills have been brought out well.  

The book will gladden the hearts of citizens of South India, where the faster pace of development comes in for some much deserved praise. The authors have examined why the South accounts for 30 per cent of the population but 45 per cent of gross domestic product, with an average per capita income 50 per cent higher than the rest of India. Longer years in school, lower infant mortality, better childcare, and vaccination all make for superior productivity. Declining disparity of wealth against the rest of India’s stagnant disparity also has its positive effect on growth. Telangana has the highest per capita income for larger states while Tamil Nadu’s lower dependence on the agricultural sector, both for jobs and output, augurs well for the South powering ahead even further. One punishment for the region’s success is the likely loss of Parliament seats due to the impending delimitation.

The authors feel that India has established itself firmly as a global capability centre and is set to expand its role further. They argue that Covid-induced absences from work and financial subsidies have discouraged more people from working in the West. Dwindling birth rates in the West has left it with a shortage of working hands, which is likely to help India in a big way. The most efficient smaller companies seem to be increasing their share in the profit pie too. The smaller companies provide more employment. Connectivity and inclusion of various kinds have helped such companies.

On balance, this is an average book. Many of the anecdotes are weak and the overall narrative does not add up. For instance, while the authors’ contention that there is great potential for the Indian economy is valid, it is also true that economies don’t live in a vacuum.  There are likely endogenous challenges, several fault lines within the country in terms of the socio-economic fabric and law and order, some of which may be the fallout of economic inequality, and winds from overseas. A proper assessment of such risks and likely impact would have lent the book a lot of balance. The book could have done with much better copy editing, and many tables and graphs are not readable.

The reviewer is the author of Making Growth Happen in India