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Is India losing its shine?
Jayshree Sengupta
17 April 2012

The Western media now perceives that India is losing its shine. This belief is based on the fact that India's GDP growth rate is slowing down ( from 9 per cent to less than 7 per cent). It is also being mentioned that because of the many political problems that the UPA government is facing, it is unable to act fast on economic reforms. The big multinational business abroad has often been criticising India for not opening up the economy faster. According to them, many obstacles to a free flow of foreign investment and trade remain unresolved. After all, India is a huge market and a slowdown in growth and policy-making does not look encouraging.

Emerging market economies are important for the industrialised countries for selling their products because of their large population and the rapid rise of the middle class with purchasing power. India has always had a creamy layer of people who enjoyed luxury goods from the industrialised West. The Maharajas of the past ordered jewelry, cars, guns, furniture and decorative items from famous brand names of Europe and America. In the last 20 years, however, the unprecedented influx of Western branded consumer goods in the Indian markets has made them accessible to a much larger cross-section of people with high salaries and incomes.

Now with the slowdown of the economy, the same makers of branded goods are afraid of losing their lucrative market and are calling for more 'economic reforms' which would allow them to have a higher equity stake or complete ownership in the companies producing various consumer items for the Indian market. They want further opening up of retail, insurance, automobile, wines and spirits, legal and accounting services, defence, banking and aviation sectors. This would ensure them a more secure and a larger share of the Indian market.

India will no doubt gain from more foreign direct investment, especially if it comes to important sectors like infrastructure and capital goods industries. It will bring more expertise and foreign exchange also. But India will have to watch out whether our own industrial interests and the national agenda for development is not disturbed or jeopardised. For example, foreign banks will have to have branches in villages if they want to come to India with higher equity stake. Perhaps, introspection regarding which reforms to undertake is a good thing, and not mindlessly opening up.

For many people across the world, however, India will never lose its shine because it does not depend too much on foreign investment. Nor will a slightly lower GDP growth be an indicator of India losing its shine. Many have been inspired by India's repository of knowledge, tradition in music, art, indigenous medicines, yoga, decorative arts and textiles, and they are always going to come to India because India remains unique with centuries of knowledge, ingenuity, originality and craftsmanship. Even the Chinese are enamoured of the 'Indian Model' of development which has democracy at its core.

India can lose its shine only when the ordinary common man or woman is no longer happy or secure and is worried about children's future. It is children's education, housing, job, health, environment and peace which are the true indicators of a country's attraction as a place of residence.

After Independence, India has been struggling with millions of problems but in the last 20 years, the problems have been compounded due to the rise in population, rural migration, urban congestion, inadequate infrastructure and rising inequalities of income and wealth. The inequalities in consumption patterns and lifestyles have also become more glaring, and better communications have led to higher aspirations. We also have around 300 million people who have remained poor and whose children have not been properly educated and who cannot find jobs. There are thousands of youth out of work and who lack marketable skills and training. There are around 80 million people living under inhuman conditions in slums.

Health care is one area in which we have progressed in a bizarre way, and the rich have been the beneficiaries of the latest medical practices and procedures in well equipped super-specialty, spotlessly clean hospitals. The poor, by contrast, have to stand in queues for hours to seek medical advice or get tests done.

Also, to become a world power, we have to look for ways to make the ordinary person's life more fulfilling and secure with justice and equity for all. There has to be proper sanitation and hygiene in cities and villages, and people should have access to universal healthcare and universal food security. Everyone points out the need for good governance which, of course, is badly needed with less corruption and more accountability. There will have to be more involvement of the common man or ordinary people in the decision-making process, and the top-down approach has to be abandoned in favour of a more people-centric approach in which civil society participates. Decentralisation and giving more autonomy to the states is important for them to carry out their business according to their needs, and there has to be flexibility in the way they manage their finances.

Gender equality is also important. No emerging world power can afford to have frequent reports in the Press of female babies being killed. The sex ratio has to improve and female foeticide has to be stopped, and those indulging in violence against women punished.

Many would look at the inflation rate also to ascertain whether India is 'shining' or not. Low inflation, a good banking system, and low interest rates facilitate business and lead to prosperity. The inflation rate was at 6.9 per cent in February but for the last two years, people have suffered high inflation. To control it, high interest rates had to be imposed which has adversely impacted on investment decisions, and the industrial growth rate has faltered to 4.1 per cent in February 2012. Obviously, with slowdown in industrial growth, there will be less jobs created and lower profits for business. Indeed with a high rate of unemployment, no country can shine. Already, the unemployment rate is quite high at 6.6 per cent with around 28 million people out of work and many more disguisedly unemployed.

Thus, India will never lose its allure in some ways because of its unique culture and warmth. But on other fronts India is slipping especially if it does not care about giving an equal opportunity to all its citizens for a better life. If there is inefficient delivery of the most important public goods like good roads-especially village roads - good affordable housing, clean drinking water, food, sanitation, education and health services, India will not be shining for long.

(The writer is a Senior Fellow at Observer Research foundation)

Courtesy: The Tribune