The tangibles are all there: the BSE-500 has risen over 100 percent in the last eight months, making it a world-beater. Business confidently predicts a growth at greater than 7 per cent of GDP (the last time this happened was in 1996, and even then, it was 6.8 percent); the monsoon was good, so much so that dry Rajasthan saw excessive water!
Then, for the chattering classes, who are obsessed with beating Pakistan in war and China in economic growth, the good news was a flurry of articles questioning China's high growth and praising India's solid performance. Economists of varied hues and financial giants like Goldman Sachs and others said India was the country to invest in.
A few years ago, Indian industrialists were crying hoarse about foreign competition eating them alive. The so-called Bombay Club kept talking about how foreigners have it easy (cheaper finance from abroad, huge economies of scale) while poor they had to pay excise and more interest. There was a phrase used then: 'level-playing field'. Guess what? That phrase has disappeared. When was the last time you heard it?
Here credit is due to all our finance ministers -- starting from the redoubtable Manmohan Singh to P C Chidambaram to Yashwant Sinha, and finally Jaswant Singh, and to their prime ministers who stayed the course -- that economic reforms never buckled to the industry lobby. Instead, forced to restructure and undergo painful changes, industry emerged whoppingly strong. It is no longer IT but the 'old economy' of bricks and mortar that is fuelling India's growth.
Earlier, some warned that Chinese goods would flood India. They came, they stayed, and most of them disappeared. Chinese bikes and televisions made little headway. Only Chinese toys sell in India (they sell all over the world!). And in return, China has been importing huge amounts of Indian steel and fears dumping by Indians. The two Asian giants have agreed to border trade and started direct international flights. Even politically, the two are closer than ever before since 1962: the Chinese and Indian navies held a joint exercise off the Shanghai coast
To talk about IT and pharma would be to go over well-covered ground, but to summarise, India appears to have a head start in the 21st century's sunshine industry. Studies now predict, in fact, simply state: by 2050, India's economy, currently less than half a trillion will the third largest, just behind China and the US.
For the middle class, inflation has remained under control even as the economic growth presents ever-increasing opportunities.
The never-ending dispute with Pakistan took an apparently decisive turn towards peace when Prime Minister Atal Bihari Vajpayee decided to go where no one else has before: he made offers that left everyone gasping. The first was when road links were resumed. And off the very first bus from Lahore got off a little girl, all of two, with an ailing heart. She came for surgery to Bangalore and India prayed along with her parents for her speedy recovery. The outpouring of emotion did not go unnoticed in Pakistan. And not much later, Pakistan Prime Minister Mir Zafarullah Jamali offered the olive branch.
Vajpayee went further: he offered not just rail links in Punjab, he suggested
rail links between Rajasthan and Sind, and sea links between Karachi and Mumbai. And then he spoke of a free trade zone and common currency.
The feel-good factor is not limited merely to the cities, though it is most obvious there. First, thanks to the presence of television across India, news and views are now disseminated across the length and breadth of India. But progress can be measured. For instance, the building of the massive Golden Quadrilateral road project, a six-lane highway linking the four largest metros. Along with the GQ project is the East-West and North-South road corridors, linking India's extremities to each other.
These projects will take a few years to complete but work on them is underway. And the villager who sees the project take shape before his eyes knows that in the days to come, this new highway will benefit him. It will bring more people to his village or give him the chance to travel easier and quicker elsewhere to work. No wonder, one of the most consistent demands in the recent election was for roads and more roads. The plan to provide midday meals in all schools has ensured that poor students attend to their classes and learn the three Rs. In Parliament, there is a bill due to be passed making education compulsory and mandatory for all students. When even politicians do such good work, surely something must be right with India!
Yet, in the midst of this optimism, a note of caution is needed. First, the monsoon factor: India has had good monsoons for the past 14 years, but the fact that we still depend on the monsoon so much is a concern.
Then, one might like to consider the horrendous riots in Gujarat as an aberration. But the tragic fact is that it took so little for that to happen: some inhuman beings torched a train coach and the state, instead of punishing the culprits, sponsored an anti-Muslim pogrom. For those against India's progress, such horrendous communal riots will always remain India's Achilles heel, a way to undo all the progress and good work.
India's improving ties with Pakistan cannot disguise the fact that the issue of Kashmir remains unresolved. Right now there is a stalemate of silence, but such a stalemate cannot substitute for a solution. It is not just Pakistan: India's standing as a nation worthy of a seat in the Security Council will depend on how it resolves Kashmir. And as we have seen, any outbreak of violence can easily drag India into a quagmire of feuding that affects the economy, and induces a feel-not-so-good element among the populace.
Finally, there is no substitute to further reforms. As an article by Mohan Guruswamy, former advisor to the finance minister, pointed out, the reason India is poised for high growth is the demographic shift: far, far more earners than pensioners. But with a declining birth rate and increasing number of pensioners, this advantage will decrease, just as it is happening in China at present and which is seeing China's growth come down from the burning 12 per cent of yesteryears. Guruswamy warned that if India fails to take advantage of this demography, it might never make the grade.
In the 1980s, Japan was growing so rapidly it was poised to overtake the US as the world's largest economy. Instead, a series of scandals and institutional weaknesses saw the world's second largest economy flounder. Now not only is it unlikely that Japan will overtake the US but it risks being overtaken by China. There is many a slip between the cup and the lip, and India at present and becoming the third largest economy are much further apart that a cup and the lip.