Back to the future

The nation will face new tests in the years ahead

As India completes 76 years of independence, there is much to celebrate for a country that inherited a grim colonial legacy of poverty and starvation in 1947. Judged in terms of life expectancy, adult literacy, and access to food and basic necessities, Indians today are better off than their compatriots at independence. The country is now the world’s fifth-largest economy, overtaking France and Italy, and could become the third-largest by 2027. It is among the world’s largest and fastest-growing markets for consumer goods, a global information technology (IT) services major, a space player of note, and wields considerable soft power. Contrary to the predictions of its imminent demise as late as the 1950s, the Indian republic has survived as, by and large, a united, vibrant, multicultural democracy. When set against the Himalayan complexities and handicaps with which the Indian nation-state started out, these are significant strides. They are a tribute to the steadying hand of the Indian Constitution and of judicious state policymaking, despite inevitable missteps — making India a consequential player on the world stage.

Justified pride in these achievements should not become a source of complacent self-congratulation. Last month, policymakers celebrated the fact that some 415 million Indians exited poverty between 2005-06 and 2019-21. This is a praiseworthy achievement in and of itself, but a comparison between India and some Asian peers shows the distance the country needs to cover to deliver deeper prosperity to its people. India’s China lag is well documented but the Middle Kingdom’s destiny was not determined by colonisation. The fact is that India trails former European colonies in Asia too. Malaysia, for example, which achieved independence in 1957, has fared consistently better than India in the United Nations’ human development indicator (HDI) and has a per capita gross domestic product that is six times India’s. Indonesia, which won its independence in 1945, also outperformed India in HDI rankings and its per capita income is double. These countries faced similar problems of poverty and integration at independence. As for South Korea, which won independence from Japan in 1945, it now ranks among the world’s most developed nations, with a massive competitive advantage in electronics and advanced chip design and manufacture.

All these countries shrugged off their colonial handicaps by directing public expenditure to education and health. Country comparisons show consistently higher expenditure as a percentage of national Budgets than is the case for India even today, highlighting one of the country’s fatal flaws since independence. More to the point, these investments in Southeast Asia were complemented by establishing strong linkages with global supply chains by lowering tariffs and opening their economies to foreign direct investment. Today smaller countries like Vietnam and Bangladesh are reaping gains by adopting similar policies. The rise of China as an economic power from the eighties onwards has shown the extraordinary transformational power of this basic economic template even in a populous nation. India’s economic and social transformation since 1991, reversing the slow growth of the notorious licence-raj years, was also testimony to the benefits of economic liberalisation. Now, protectionism and import substitution are back in vogue as economic policies. Combined with the impulses of political and social majoritarianism, the nation’s socioeconomic resilience will undoubtedly face new tests in the years ahead.