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Inside Out

India is a nation of unfulfilled greatness

Lee Kuan Yew, founding father of modern Singapore, is currently one of the world’s most sought-after elder statesmen. Widely praised for helping make Singapore the economic powerhouse it is today, Lee, who was the citystate’s PM from 1959 to 1990, has also been criticised for leaving a distinctly authoritarian stamp on its polity. Now, a new book, 'Lee Kuan Yew: The Grand Master's Insights on China, the United States, and the World’ , by Graham Allison, Robert D Blackwill and Ali Wyne, features the statesman's views on a range of global issues. Excerpts from the chapter on India: 

What constraints does India's system of democratic governance impose on its long-term prospects?

India has wasted decades in state planning and controls that have bogged it down in bureaucracy and corruption. A decentralised system would have allowed more centres like Bangalore and Bombay to grow and prosper. . . The caste system has been the enemy of meritocracy. . . India is a nation of unfulfilled greatness. Its potential has lain fallow, underused. There are limitations in the Indian constitutional system and the Indian political system that prevent it from going at high speed. . . Whatever the political leadership may want to do, it must go through a very complex system at the centre, and then even a more complex system in the various states. . . . Indians will go at a tempo which is decided by their constitution, by their ethnic mix, by their voting patterns, and the resulting coalition governments, which makes for very difficult decision-making. India's political leaders are determined to reform, but the Indian bureaucracy has been slower and resistant to change. Regional jostling and corruption do not help. Furthermore, populist democracy makes Indian policies less consistent, with regular changes in ruling parties. . . . India has poor infrastructure, high administrative and regulatory barriers to business, and large fiscal deficits, especially at the state level, that are a drag on investment and job creation.

What constraints does India's culture impose on its long term prospects?

India is not a real country. Instead, it is 32 separate nations that happen to be arrayed along the British rail line. The British came, conquered, established the Raj, incorporated under their rule an amalgam of 175 princely states, and ruled them with 1, 000 Englishmen and several tens of thousands of Indians brought up to behave like English.

I am against a society which has no sense of nurturing its best to rise to the top. I am against a feudal society where your birth decides where you stay in the pecking order. The example of that, par excellence, is India's caste system.
India is an established civilisation. Nehru and Gandhi had a chance to do for India what I did for Singapore because of their enormous prestige, but they could not break the caste system. They could not break the habits.

Look at the construction industries in India and China, and you will know the difference between one that gets things done and another that does not get things done, but talks about things. . . . It is partly because India is such a diverse country - it is not one nation, but 32 different nations speaking 330 different dialects. . . . In China, it is 90 per cent Han Chinese all speaking the same language, with different accents, but reading the same script. If you stand up in Delhi and speak in English, out of 1. 2 billion people, maybe 200 million will understand you. If you speak in Hindi, maybe 250 million will understand you. If you speak in Tamil, 80 million people will understand you. So there is an enormous difference between the two countries . . . . We are comparing oranges and apples. . . . Let me not be misunderstood. The upper class in India is equal to any in the world but they face the same hurdles.

The average Indian civil servant still sees himself primarily as a regulator and not as a facilitator. The average Indian bureaucrat has not yet accepted that it is not a sin to make profits and become rich. The average Indian bureaucrat has little trust in India's business community. They view Indian businesspeople as money-grabbing opportunists who do not have the welfare of the country at heart, and all the more so if they are foreign.

What are India's current economic strengths?

India's private sector is superior to China's . . . . Indian companies follow international rules of corporate governance and offer a higher return on equity as against Chinese companies. And India has transparent and functioning capital markets.
India has a stronger banking system and capital markets than China. India has stronger institutions -in particular, a well developed legal system which should provide a better environment for the creation and protection of intellectual property.
India - with an average age of 26, compared to China's 33, and with much faster population growth - will enjoy a bigger demographic dividend, but it will have to educate its people better, or else, the opportunity will turn into a burden.

What are India's economic prospects relative to China's in the next decade?

Do not talk about India and China in the same breath. They are two different countries. But does that make India a non-player ? No. It is a bigger player than the whole of ASEAN put together. The systems are not comparable. . . . China's GDP (gross domestic product) is three and a half times that of India. India is growing at about two-thirds the rate of China. But India is a big country and a counterweight in the Indian Ocean. India's economy can grow to about 60-70 per cent that of China. . . It is not going to be bigger- on present projections. But 60 - 70 per cent of China with a population which will be bigger than China's by 2050 is something considerable, and India has some very able people at the top.

Why has China's peaceful rise, however, raised apprehensions? Is it because India is a democracy in which numerous political forces are constantly at work, making for an internal system of checks and balances ? Most probably, yes - especially as India's governments have tended to be made up of large coalitions of 10 to 20 parties. . . . India can project power across its borders farther and better than China can, yet there is no fear that India has aggressive intentions . . . . India does not pose such a challenge to international order as China - and will not until it gets its social infrastructure up to First World standards and further liberalises its economy. Indeed, the US, the European Union, and Japan root for India because they want a better-balanced world, in which India approximates China's weight. . . . What if India were well ahead of China? Would Americans and Europeans be rooting for China? I doubt it. They still have a phobia of the "yellow peril, " one reinforced by memories of the outrages of the Cultural Revolution and the massacres in Tiananmen Square, not to mention their strong feelings against Chinese government censorship.

China is focused on the US and just wants to keep the Indians at arm's length. I am not sure that India wants a piece of the consumer demand from China's growing middle class, because India is scared of the competition. The Chinese have offered the Indians a free trade agreement, but the Indians have not snapped at it because Chinese goods will go into India and compete. As long as there is freemarket bargaining, India will just have to learn to outbid China.

China will not go to war with India. It is prepared to take risks;for example, it is in the Niger Delta, risking Chinese lives with Chinese money, but it has decided that it is worth it. It is in Angola and Sudan. It wants something out of Iran. It is making friends with the Central Asian republics. It wants a pipeline from Kazakhstan into China over thousands of kilometres, and it is prepared to build it. This is free-market competition. I do not see it as being, "If you agree to sell to India, I will beat you up, " but rather as, "Whatever India offers you, I will offer you more. " It (China) is going to play by the rules of the game and is quite convinced that it can win that way.

Published by The MIT Press, 2013.
Copyright 2013 Belfer Centre for Science and International Affairs. All rights reserved.

Reader's opinion (1)

Chandu LakhaniApr 9th, 2013 at 17:53 PM

Problem of India is both regionalism and casteism ! From historic times, though a single nation, it never thought as a single nation. For there were/are more divisive forces than uniting ones ! Leave alone at national level or regional level, in reality, we are even divided by local areas.

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