Speaking Of Asia

India's rise prompts fresh hope, new fears

When India got independence from British rule in 1947, few gave it a credible chance of surviving as a united nation. Incredibly, it survived and thrives. With its rise comes new challenges.

Launching my book India Rising: Fresh Hope, New Fears last week, Emeritus Senior Minister Goh Chok Tong drew a subtle distinction between a rising India and a shining one. For the latter to happen, he said, India must proceed steadily down the path of economic reform, development and modernisation. It must, in particular, pay greater attention to the development and skill training of its workforce in order to find jobs in the future economy.

Mr Goh's words merit special attention in New Delhi. In January 1994, as he prepared to visit India as prime minister, it was his remark that he intended to start a "mild India fever" that made the world first sit up and take notice of the seriousness of the Indian reforms kick-started two years earlier.

Whether India will shine eventually is a question that will hang in the air for a while longer. But, nearly a quarter century since Mr Goh's early endorsement, there is some cause to believe that the vast South Asian nation may be at a few key inflexion points - the "fresh hope" part in my book's title. The book, drawing from my long years of living in and reporting on India, is published by Straits Times Press and available at leading bookstores.

The first of these is in the matter of its nationhood. When India got independence from British rule in 1947, few gave it a credible chance of surviving as a united nation. There were too many disparities, too many languages and social divisions, not to speak of inflamed communal passions in the wake of the division of the subcontinent and the creation of the new state of Pakistan as a homeland for Muslims. Even in 1960, the Yugoslav thinker and writer Milovan Djilas had said he gave India 10 years to survive, no more.

Yet, incredibly, 70 years later, the nation has jelled in remarkable ways, sharing similar impulses. No state has seceded from the Union, and a few have actually joined. From 17 provinces at birth, India has 29 now, although some are on account of big states being broken up.

SECURITY SWEET SPOT

In fact, I argue, a sense of "Indian-ness" has emerged that cuts across geographies and boundaries. A syncretic Indian culture has emerged where cuisine is shared along with pastimes, which include a fascination for Bollywood and a fondness for cricket. Incredibly, India has pulled through.


ST ILLUSTRATION : MANNY FRANCISCO

A second inflexion point is that India is uniquely in a strategic sweet spot, courted by all, including China. It has no significant enemies save elements within its own fold. It has excellent ties to all the high-technology nations, including the United States, Japan, South Korea, Germany and Israel. There is strategic rivalry with Beijing, but China is not an enemy state. Indeed, Chinese Internet companies are teaming up with Indian firms to take on American companies like Amazon in India.

A third is that just as India was late into the telecom revolution but has now emerged as the hottest market for smartphones, it has the chance to leapfrog old development models to a new one based on clean tech. Sun-drenched India's phase of rapid industrialisation is kicking off just as solar power has become feasible enough to the extent of enjoying so-called "grid parity" with coal.

And then, of course, there is the economy. At first glance, the US$2.3 trillion (S$3 trillion) economy looks sluggish, even as it lays claim to be the world's fastest-growing major economy. The investment cycle, quite clearly, is yet to turn upwards. Banks have not fully passed on the benefits of multiple rate cuts to customers and central bank governor Raghuram Rajan himself has seemed a bit sceptical of the growth numbers.

That said, it has become a common market for practical purposes, including advertising campaigns. Once the Goods and Services Tax Bill is passed, a true common market of 1.2 billion people will emerge that should feed into growth. Two years into his five-year term, there are early signs that Prime Minister Narendra Modi's Make in India campaign is gaining traction.

Foreign direct investment (FDI) flows are swiftly rising and have placed India as the No. 1 draw for FDI. For the first time since 2004, FDI flows have more than financed the current account deficit, Moody's pointed out this week. FDI flows are poised to rise as the manufacturing thrust takes off with special economic zones, smart cities and industrial corridors.

The country is also fortunate to have a trinity of good regulators in place, starting with governor Rajan, one of the most respected economists in the world. Dr Rajan, who has cracked down on banks to clean up their debt-swollen balance sheets, and has issued a slate of new bank licences, is in good company. Both the stocks regulator, who is actively moving to broaden the mutual funds industry, and the telecom regulator - the latter recently ruled in favour of Net neutrality - are forward-looking people. Besides, a lot of the excitement is taking place out of sight. E-commerce, for instance, is exploding.

More importantly, perhaps, productivity is improving at close to 4 per cent a year. If that is indeed true, the Make In India project could be more than a dream. The country already seems to have fixed much of its power woes. Should lending take off again with the cleanup of banks' balance sheets - and with a good monsoon forecast after two poor ones - who knows, some spectacular things could be happening, come Deepavali. The issue then is to sustain that momentum.

And this is why New Delhi should listen carefully to Mr Goh. The output gap - the shortfall between potential and actual delivery - is still wide, as he pointed out. And once the low-hanging fruits such as infrastructure have been fixed, only steady economic reforms and modernisation can take India to the next level. Most important is skilling up the labour force to meet the needs of the future economy.

MINORITY UNREST

That's the fear part of the title. With 600 million under the age of 25, and 800 million if you start counting those below 35 years, India has a potential windfall in terms of the so-called demographic dividend. But finding gainful and quality employment for this cohort, I argue, will be the top national security challenge. With some 15 million added to the workforce every year, it is a daunting task at a time when automation and robotisation are proceeding apace.

Should it fail, India could be staring at disaster, including widespread social unrest. It is a job that requires deploying the best brains at the helm of the Human Resources Development Ministry. The current incumbent may be articulate, telegenic and a favourite of Mr Modi's but whether she has the depth of intellect for the job is coming under continual questioning.

The other big national security challenge for Mr Modi that could moderate the nation's growth thrust is minority unrest. There is a certain sullenness that has manifested among India's minorities since Mr Modi took charge. Some of it is because of the overwhelmingly Hindu nature of the ruling party's representation in Parliament - not one Muslim MP, for instance, save for the nominally Muslim Hema Malini, a former film actress who converted to wed a married man. But it also hasn't helped that months after Mr Modi took charge, Christmas was marked as "Good Governance Day" - an unnecessary poke in the eye of the approximately 30 million of that faith.

While Mr Modi himself has done little to aggravate those fears, he hasn't done quite enough to assuage them either. This week, the government took one useful step in that direction when it let free nine Muslim men falsely accused of involvement in the 2006 blasts in Malegaon, western India, which killed 37 people.

Eight years ago, as scandal after scandal rocked the Manmohan Singh government, a reader who followed my reporting of that era wrote in complaining that I was obsessively negative on India. He went on to suggest that this alleged negativity must stem from what must have been an unhappy childhood. He asked me to compare my work with that of my colleagues in China, who, he said, were always writing "positive" things about that country.

What beef (pardon the expression) could I have with India? Indeed, I do believe that it is on the cusp of some very interesting developments. Just that, as Mr Goh said last week, India has seen its fortunes come and go - there have been too many missed opportunities.

India also cannot shine unless every citizen, regardless of religion, language or gender, feels he participated in the process. Mahatma Gandhi said his mission was "to wipe every tear from everyeye".

At least for the sake of people like Mr Goh, who've steadfastly believed in its promise, I hope India does not fail its backers this time.

A version of this article appeared in the print edition of The Straits Times on April 29, 2016, with the headline 'India's rise prompts fresh hope, new fears'. Print Edition | Subscribe