By: Aruni Mukherjee
February 11, 2005

India is the cradle of the human race, the birthplace of human speech, the mother of history, the grandmother of legend, and the great grand mother of tradition. Our most valuable and most astrictive materials in the history of man are treasured up in India only! - Mark Twain

Disbelief spread across many quarters in June 2003, when Prime Minister Vajpayee was invited to attend the G8 summit being held in the seaside resort of Evian in France. India, a country supposedly exemplifying poverty, backwardness, misery and stagnation being invited to attend the club of the world’s most elite nations! In January 2005, when P Chidambaram is invited to represent India on the G8 summit of finance ministers in London, hardly anyone raises an eyebrow. How quickly the world has, or has been compelled to, recognise the arrival of a new player in the corridors of power.

Thanks to India’s democratic credentials, the most vehement critics of India can be found inside the country itself. They mention with nauseous glee that 26% of Indians still live below the poverty line or that around 30% of Indians are still illiterate. It shows a callous lack of appreciation for what India has accomplished. To me the most important achievement of India is the fact that these drawbacks are known, unlike in more seemingly glittering parts of the developing world, where serious problems are suppressed by censorship, propaganda or simple denial.

India’s overseas diaspora has long outdone the mainland in excellence. For instance, today, Indians are the richest ethnic group in the United States. The American Silicon Valley is held together by thousands of Indian software engineers who migrated to the country. The world’s largest steel company is owned by Laxmi Mittal, a British Indian. The CEO of Vodafone is an Indian, so is the designer of MSN Hotmail. But what about India itself? Decades of left leaning economic policy had strangled entrepreneurship in India and stifled growth to the brink of bringing the country to near bankruptcy in the late 1980s, when the government decided to carry out economic reforms. Sizzling growth came as a result- hovering around 7% for the last decade. As a result, 130 million Indians were uplifted out of poverty.

India’s long term prospects can be studied by a simple piece of statistic- during 2003, China’s stock market fell by 15% making it one of the worst performers in the world. This is not a one off- same happened in 2002. Why so, when the country gets over $50 billion in foreign direct investment (FDI)? It is the lack of trust among investors for China’s nascent private sector, which is still haunted by the cadres in Beijing. On the other hand, India receives a tiny $4 billion in FDI due to the hangover of leftist politics on the Indian economy, but its stock market grew by 20% last year, despite a crash due to the communist supported government coming to power in Delhi. China’s mammoth companies are usually state owned monopolies or near monopolies, whose bad loans from state owned banks magically vanish overnight, showing a rosy picture in their accounts. India operates on a free market basis, and Indian companies in a number of sectors are excelling rapidly. In the latest Forbes list for small and medium enterprises, India had 17 companies while China had 3.

India falls behind China or the ASEAN countries in one important aspect- speed of the implementation of projects. It is this fundamental thorn that has made a richer India in 1960 today twice as poor as China. India lacks an authoritative government, due to its democratic ideals. Whether trusting the Indian people with shaping their own destiny will pay off in the longer run, only time will tell.

Aruni Mukherjee