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http://money.cnn.com/2007/02/08/news/international/pluggedin_murphy_india.fortune/index.htm?cnn=yes


NEW YORK (Fortune) -- Plug in the words "India" and "superpower" into an Internet search engine and it's happy to oblige - with 1.3 million hits. I confess that I did not check each one, but I suspect that almost all of these entries date from the last couple of years.

This is understandable. For the first time ever, India has posted four straight years of 8 percent growth; since it cracked open its economy in 1991, it has averaged growth of 6 percent a year - not in the same league as China, but twice the derisory "Hindu rate of growth" that had marked the first 45 years of independence.

 
A homeless Indian mother feeds her child in Hyderabad.

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India has gone nuclear, and even gotten the United States to accept that status. Its movies are crossing over to become international hits. The recent $11.3 billion takeover of Corus by Mumbai-based Tata Steel was the biggest acquisition ever by an Indian firm.

No wonder the idea of India as the next superpower is fast becoming conventional wisdom. "Our Time is Now," asserts The Times of India. And in an October survey by the Chicago Council on World Affairs, Indians said they saw their country as the second most influential in the world.

Sorry: India is not a superpower, and in fact, that is probably the wrong ambition for it, anyway. Why? Let me answer in the form of some statistics.

47 percent of Indian children under the age of five are either malnourished or stunted.
The adult literacy rate is 61 percent (behind Rwanda and barely ahead of Sudan). Even this is probably overstated, as people are deemed literate who can do little more than sign their name.
Only 10 percent of the entire Indian labor force works in the formal economy; of these fewer than half are in the private sector.
The enrollment of six-to-15-year-olds in school has actually declined in the last year. About 40 million children who are supposed to be in school are not.
About a fifth of the population is chronically hungry; about half of the world's hungry live in India. 
More than a quarter of the India population lives on less than a dollar a day.
India has more people with HIV than any other country.

(Sources: UNDP, Unicef, World Food Program; Edward Luce)

You get the idea.

The 2006 UN Human Development Report, which ranks countries according to a variety of measures of human health and welfare, placed India 126th out of 177 countries. India was only a few places ahead of rival Pakistan (134th) and hapless Cambodia (129) and behind such not-about-to-be-superpowers as Equatorial Guinea (120), and Tajikistan (122).

As these and other numbers suggest, Indian triumphalism (a notable 126,000 hits on Google) is not only premature, it is misguided. Yes, growth has been brisk, and of course growth is necessary to make a dent in poverty. But as Edward Luce, author of the excellent, "In Spite of the Gods: The Strange Rise of Modern India," noted in a recent talk, poverty in India is not falling nearly as fast as its brisk rate of growth might anticipate.

The reason for this is that Indian growth has been capital-intensive, driven by the growth in high-value services such as IT. This is a good thing, but what it does not do is create stable and reasonably paid employment for not particularly skilled people - and this matters a lot, considering eight to 10 million Indians enter the labor force every year. Luce estimates that there are 7 million Indians working in the formal manufacturing sector in India - and 100 million in China.

India is awash in private equity
To look at it another way, the 1 million Indians working in IT account for less than one-half of one percent of the entire working population. This helps build reserves (and national confidence, and tax revenues) but is not the poverty buster that labor-intensive development is. As Prime Minister Singh told Luce, "Our biggest single problem is the lack of jobs for ordinary people."

The problem with India's self-proclaimed (and wildly premature) declaration of superpower status is that it reflects a complacency about both its present - which for many people is dire - and its future. Eight percent growth for four years is wonderful, but as the saying goes, past performance is no guarantee of future results. And India is not doing what it needs to in order to sustain this momentum.

Consider the postwar history of East and Southeast Asia. The comparison is appropriate because India started at about the same point, and has watched just about every country in the region get ahead of it on the economic curve. All these places developed by being relatively open to trade; by investing in primary and secondary education; and by building pretty decent infrastructure (not only roads and ports, but health clinics and water supplies). India has begun to embrace one leg of this triangle - freer trade.

Wireless Wonder: India's Sunil Mittal
Even here, though, many of the worst features of the swadeshi ("self-reliance") era remain intact, including an unreformed state banking sector; labor regulations that actively discourage hiring; abstruse land laws (and consequent lack of land titles); misshapen subsidies that hurt the poor; and corruption that is broad, deep and ubiquitous. Nothing useful is being done about any of this.

As for the other two legs of this development triangle - education and infrastructure - these are still badly broken. About a third of teachers fail to show up on any given day (and, of course, are unsackable); the supply of both water and power is expensive and unreliable.

These facts of life too often go unremarked in the current euphoria about the state of the nation. "We no longer discuss the future of India," Commerce Minister Kamal Nath told the Financial Times in a typical comment. "The future is India."

Hubris, of course, is the stuff of politics everywhere. But the future will not belong to India unless it takes action to embrace it, and that means more than high-profile vanity projects like putting a man on the moon or building the world¹s tallest tower. It means showing that the world's largest democracy can deliver real progress to the hundreds of millions who have never used the phone, much less the Internet. And in important ways, that just isn't happening.

India has many reasons to be proud, but considering it remains a world leader in hunger, stunting and HIV, its waxing self-satisfaction seems sadly beside the point.

[flute202020]

Read this article just now and was thinking about posting it here and saw it here. While it important to not loose sight of the task on hand in our euphoria, I think we keep getting this "a nation with so many problem, drinking water,literacy, malnutrition etc., why do they need to spend money on moon mission or world's tallest building".

I don't agree with this line of thinking. A nation will have to chalk out its plan in all spheres. We should not clip or limit our ambition because we have other great problems. Also, a chandrayan, a tallest tower etc. will create its own pride and self confidence in a still large cynical Indians.

[CLR James]

Flute,

This hyper development is largely a metropolitan formation. This is more of less true all over the world, including the US (if you visit Utah or North Dacota),  but is particularly accentuated in India. We have strong concentration of money, technology and buzz activity of development in limited urban centres. Mumbai emerges as a swanky metropolis glittering enough to rival any city in the world; the buildings in Pali Hill increasingly begin to look like Beverly Hill mansions; Our own silicon valley crops up in Bangalore, Hyderabad is lit up to Cyberabad drawing so much electricity that farmers do not have any money to water their fields (it is they who voted the CEO of Andhra Pradesh Mr. Chandra Babu Naidu out of power). This spectacular 'shining' cannot unfortunately hide the ugly truths described in this article. Meanwhile, to quote from a Newweek special issue on India last year, there are three Somalias in India.

Even if the poor were to gain

pride and self confidence

from richie rich edifices like the world's tallest building, are the globally mobile urban upper middle classes of India ready to share their despondency in return? It is good to remember that the last boyant third world country built twin tallest buildings in the world was Malaysia. We know what happened there subsequently. They have since recovered to a good extent, but the recovery was sober and slow, not driven by unrealistic euphoria.

[flute202020]

Flute,

This hyper development is largely a metropolitan formation. This is more of less true all over the world, including the US (if you visit Utah or North Dacota),  but is particularly accentuated in India. We have strong concentration of money, technology and buzz activity of development in limited urban centres. Mumbai emerges as a swanky metropolis glittering enough to rival any city in the world; the buildings in Pali Hill increasingly begin to look like Beverly Hill mansions; Our own silicon valley crops up in Bangalore, Hyderabad is lit up to Cyberabad drawing so much electricity that farmers do not have any money to water their fields (it is they who voted the CEO of Andhra Pradesh Mr. Chandra Babu Naidu out of power). This spectacular 'shining' cannot unfortunately hide the ugly truths described in this article. Meanwhile, to quote from a Newweek special issue on India last year, there are three Somalias in India.

Even if the poor were to gain

pride and self confidence

from richie rich edifices like the world's tallest building, are the globally mobile urban upper middle classes of India ready to share their despondency in return? It is good to remember that the last boyant third world country built twin tallest buildings in the world was Malaysia. We know what happened there subsequently. They have since recovered to a good extent, but the recovery was sober and slow, not driven by unrealistic euphoria.

CLR, my intention was not to ignore or deny problems. India has problems and huge problems, but the only way forward is with economic activity. Any social equity efforts will have to happen hand in hand with other spheres of nation building. Impressive edifices, strong defense, space exploration are all things that need to happen hand in and with social equity related efforts. If the cake is not generated, what do we distribute? Until 1990s, our cake was so small that nobody had anything, now atleast we are able to produce a bigger cake each year, atleast part of the problem is being addressed, that too is an achievement, nothing wrong in celebrating it. At the same time, we have to work on distributing the same. it will take sometime, its ahuge population, no other nation ever succeeded with so many people, so it will take time. year by year there is progress on that front too.

Also, I don't think malaysia's problem was "tall buildings", they had other basic micro economic related issues.

[CLR James]

Amen to that Flute. Only when the cake is generated, we can say "Let them eat cake!"  . But good words.

About Malaysia, yes, more than tall buildings, the market crashed, amongst other reasons, because the government was caught inflating forex reserve figures. That was a taller story!

[Aloo Kashmiri Ul Haq]

The issue of malnourishment, I think it has to do with just our diet that is predominantly carbohydrates. I am sure even I would be considered malnourished considering that I consume almost no proteins at all.

[fineleg]

The issue of malnourishment, I think it has to do with just our diet that is predominantly carbohydrates. I am sure even I would be considered malnourished considering that I consume almost no proteins at all.

You don't like dal?

[sgusa]

The issue of malnourishment, I think it has to do with just our diet that is predominantly carbohydrates. I am sure even I would be considered malnourished considering that I consume almost no proteins at all.

I think they use a calorific measure rather than a nutrient measure when they measure malnutrition in such cases. Yes both kinds are considered malnourishment, but the first one is acutely life threatening, while the second would have a chronic effect on your quality of life.

[proloy]

If any analysis can go wrong, it will.

[dhruvdeepak]

If any analysis can go wrong, it will.

  nice one!

[vincent]

Whatever definitions of malnutrition are, we should realize that hundreds of millions of Indians live on more or less one meal per day which is malnutrition of any kind. This number is certainly the highest in the world in a country where people are spending millions of dollars to celebrate a wedding during 4 or 5 days. Not very different from Thailand , where they are holding a grand gala dinner this week for international celebrities, who can afford it, at 30,000$ per head for a 5 course meal. But then again. Thailand does not have that many starving people as India, so they can probably afford some extravaganza.

[sgusa]

Whatever definitions of malnutrition are, we should realize that hundreds of millions of Indians live on more or less one meal per day which is malnutrition of any kind. This number is certainly the highest in the world in a country where people are spending millions of dollars to celebrate a wedding during 4 or 5 days. Not very different from Thailand , where they are holding a grand gala dinner this week for international celebrities, who can afford it, at 30,000$ per head for a 5 course meal. But then again. Thailand does not have that many starving people as India, so they can probably afford some extravaganza.

I dont suppose any country as any many starvin' marvins (South Park ref) as India. The question is, is the % of populace in thailand that are hungry is > % in India (prob not )