Return of the Tiger ..., Part 2

(Please read part 1 before this blog)

India currently has a GDP (PPP) of ~$3trillion (2007) as against the world's GDP of $65 trillion, which is just about 4.6% (india is 5th after EU is about $14.7, US is $13.8, China $7, Japan $4.3).

So let's analyse what contributed to this rise?

There is one easy argument many would buy that the English left us a legacy of democracy, English and a constitution that helped us to jump back. There is a saying that "History is actually the biography of the winners". These our supporting factors but not the core factors. This argument is proposed and marketed by western intellectuals and lets see each one of them:

1. Democracy: According to Democracy Index 2006 refer the link below there are 28 full democracies, 54 flawed democracies (India, Brazil is among this list), 30 hybrid regimes (Russia), 55 authoritarian regimes (China is among this). Just the sheer list which indicates the most powerful nations like Russia, China were not even democracies does not bolster the argument that democracy has contributed to rapid growth of a nation. While i don't disagree that democracies sustain the growth better than anyone else since the risk of whims and fancies of authoritarian regimes are avoided. http://www.economist.com/media/pdf/DEMOCRACY_TABLE_2007_v3.pdf
2. English Language: An estimated 2.2 billion people fall under the English speaking countries contributing a GDP of $18 trillion. China and Japan which contribute to over 1.5billion people and among the top 5 in terms of GDP nations don't fall under this category. Among the 1.1 billion people in India less than 250million ( less 25%) are equipped with English knowledge and certainly their contribution to the GDP is significant. But it should also be remembered that India is a predominantly rural, domestic and agri based economy.
3. Constitution & Legal system: There is no need to talk about this in India as many of the laws are archaic and the law enforcement is actually the weakest link in this country. You cannot claim to be a rising nation due to this factor.
4. Population: This is a possible argument as the consumerism & consumption has increased significantly and hence a young population would certainly contribute to the nations growth. If this is case then how come EU which has less than half a billion population and US which has just about 300 million people contribute to ~$14 trillion each (22% of GDP each). Also to just remind you, do you believe that Population is the reason why India is made this progress in the last 50 years? I think as a nation and the world has recognized India's population as a strength only in this decade. We have been continuously taught that population is our biggest problem. Hence i cannot accept something which has been viewed as a problem for the last 50 years has been the single factor contributed to our rise. There is something more.
5. Education system: Partially yes. If you ask any academician / teacher / students he would respond that our students are forced to mug up and vomit instead of applying concepts in real life. There is a huge gap between the academic output and the employment readiness. Many industry leaders have complained that the English and academic skills are not at employable quality. Hence we may be better off than many countries but the amount of improvement which needs to be made is significant in this sector. Also our investment in education as a % of GDP is also negligible.

Then what can be the most important factor that has made this possible?

Is it the spirit of Indian people? May be yes, but you can attribute anything under this argument. There is something more fundamental, very integrated and yet not visible that contributes to a society which has come up in a big way which would not have been possible only with Government initiatives but also because of the direct result of the participation of the majority of the people.

What is this factor?

Lets see some of the byproducts of this factor before we discuss what this factor is...

1. Despite having the lowest per capita, how has the educated & literate population has grown year on year for the last 50 years? This is despite very poor and negligible government spending on education.
2. The police to people ratio is one of the lowest in the world and the police force is ill equipped to handle any major issues, despite that Indian society has been by far peaceful and calm.
3. While there is a concern on increasing divorce rates, till a decade back India still has the lowest divorce rates in the world. (One stat indicate that in the city of Bangalore alone the increase in divorce rates are contributed by IT sector significantly. 50% of the ~2500 cases filed in Bangalore are from IT sector only.)
4. Savings rate has been upwards of 35% over the last 50 years.

There are many such factors we can list but the basic binding force behind most of them in my opinion is the Indian Family values. India has been blessed with 2 generations (approx 60 years ) since independence to have great people who stuck to the Indian family values, took the responsibility of being a model citizen through self less love and dedication to their families.

These 2 generations educated themselves, worked hard, fiscally prudent, educated their families and children, saved a great deal for their family and children, did not get distracted by the governments inability to deliver good governance, social pressures, quota system, social unrest etc. Nothing distracted them from delivering a secured and quality life for their families.

The effect of good micro unit reflects in the macro set up and this has what has got us where we are now. India as a country and we as individuals should be indebted to these 2 generations which got us where we are now.

What could derail us is the damage to this institution and the indicators are:

• Divided families ... financial independence to women is certainly a good thing but that need not result in divided families. World over this trend has proved detrimental to the microcosm and hence to the nation.
• Falling education standards & overall educated people....... This is not measured by the number of school going children alone but measured as a continuum upto the number of doctorates we have. Our genes are programmed to hunt and acquire knowledge, we should not loose this thirst.
• Absence of fiscal prudence .... a fall in the savings rate below 30% is a lead indicator as to where we are going.

To summarize, its the selfless, hardworking, model citizens with family values of the last 2 generations which actually took india from being one of the poorest nation to one of the super powers of the world. If you want me to hypothesize a situation where in India was not a democracy and English was not left behind by British, i would still bet on the indomitable spirit of the indian middle class and their family values which would have still seen India progressing... probably with far lesser divorce rates :).

What India would be in the next 50 years is purely dependent on us and the next generation. My guess is as good as yours. I hope it would not be a "Return of the Tiger" to where it started :).

Yours salutingly

Happy reading!

PS: Most of the statistics i have provided are from the top of my mind recollection and would stand corrected if something is significantly different.