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Home > News > Report

The dark side of India's growth story

Suman Guha Mozumder in New York | May 23, 2007 16:36 IST

Fareed Zakaria, editor of Newsweek International, believes that while India has several Silicon Valleys within it, the country also has three Nigerias within.

"The Indian private sector is doing extraordinary things and the country is bursting with energy, yet behind all these is the reality," Zakaria said alluding to the rampant poverty that coexists with affluence. That reality, he said, is that there are still close to 800 million people in India who live on less than $2 a day despite India being a democracy, which is its greatest pride.

His remarks came during a keynote address at the Child Relief and You-United States fundraiser May 5 in the presence of 200-odd guests.

Zakaria said in India, democracy has not allowed the rule of the majority.

"What you see issue after issue, state after state is that powerful minorities, farmers, minority interests and landed interests have been able to capture the political system and extract government benefits for themselves [by way of] subsidies, etc," he said.

Noting that Indian democracy is wedded to these powerful minorities, he said this is not an unfamiliar concept in democracy -- in the US they are called special interests. But he said in India it has proved deadly because people who do not get represented are the ones who are powerless. Little wonder, he said, that at the annual United Nations Human Development Index, India fares very badly.

"It is a great shame for Indian democracy. The large majority of people have somehow slipped though the cracks. So you see that India does worse than Bangladesh, worse than Cuba, worse than Syria, on all these measures. It does worse than many other countries that have lower per capita GDP [gross domestic product] than India has," Zakaria said.

"It is one of the important things that will make it impossible for India to continue this extraordinary growth and for this growth to trickle down to the masses," he said. Zakaria said there are all kinds of models of economic policy -- from Hong Kong which was totally laissez faire to South Korea which had lots of tariffs and regulations, to Taiwan which was somewhere in the middle, to Singapore which was pro-market but had a huge government presence.

"But there were three factors that were in common in all these East Asian models. First was broad hospitality to markets and trade, investment in education, particularly for the poorer half of the population, and third was the investment in health," Zakaria said. "Those are, so far, lacking in the Indian case," he added.

Zakaria said when one looks at India's great growth story, one has to ask oneself that if the country does not make significant investments in education and healthcare -- which is essentially the investment in children that CRY is talking about -- will India be able to sustain the growth rate and sustain it in a way that it spreads to the entire country?

"I have talked about India's systematic and political failings. What we have to do in a sense is to take advantage of the great political strengths that India has -- its openness, its democracy, its freedom and its participation at the civic society sector," he said. "In other words, if India's strength is the society, not the State, if India's strength is the micro growth, not the macro growth, if India's strength is the small entrepreneur and not the technocrat, then we have to leverage that and use that as best as we can," Zakaria said.

"That is where you come in because it means that the only way this problem is going to be solved is if Indian society and the friends of Indian society mobilize and petition the government and get civic society involved, get nonprofits involved... That is the only way to get it solved -- a broad, multi-pronged, multi-tier strategy that tries to attack the problem," Zakaria said amid applause.

He said India is not going to get some "great minister of health or minister of education or minister for children's affair" who is going to suddenly make all these things happen and therefore there is no point sitting around for a good government. He said the only way it could happen is by pressing the government as well as through a charitable solution. "It has to be bottom up approach and not a top-down approach which means that you can't wait around and hope and wish. We have to reverse them," he said.

"All this sounds very gloomy, but I think it is less gloomy and India growth story is not as fragile as it sounds because of the event this evening and because of organizations like CRY. There are all these problems but there are all these solutions and people, who are interested, who are motivated and who want to do something and who are beginning to change the dynamic," Zakaria said, ending his keynote on an optimistic note.