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article imageCover Story: India, the Silicon Jewel of the East

By Paul William Roberts     May 13, 2004 in Business
TORONTO, Digital Journal ― Paul William Roberts is an award-winning journalist, professor, novelist and translator who currently resides in Toronto. Born in Wales, he studied Sanskrit at the Hindu University Benares and at Bangalore University, where he received his doctorate.
In a special, in-depth investigative report, Digital Journal brings you India through the eyes of one of the most celebrated journalists in the world.
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"India’s economic growth since 1980 has been among the fastest in the world. Social indicators for literacy, education enrolment, disease and mortality and tender have steadily improved and poverty has fallen since the mid-1970s…" ― Report by The World Bank (2001)
2.50 a.m., New Delhi
Turning out from Indira Gandhi airport onto Highway 8, the Jaipur road, I am surprised to find my taxi ― a gleaming new Maruti SUV ― decelerating from 80 to 2 miles-per-hour as it slinks into a rush-hour calibre traffic jam of mostly huge commercial trucks. It’s not even 3 a.m. The handsome young Sikh driver is looking like a caged beast, his head darting from side to side, eyes narrowed, assessing the potential of a space between two carriers decked out like a sultan’s concubines with fringes of jingling chrome beads concealing their rusting chassis’.
“What’s the problem?” I ask him. “Army vehicles?”
“Traffic situation. Very bad,” he mutters, shaking his head.
“Four hours before dawn?”
Three years earlier, during my previous visit to Delhi, the traffic had been hell on either side of the day for the same few hours that traffic is bad in any metropolis on earth now. Could it have deteriorated so rapidly? I tried to think of another city where you’d find a three-lane bottleneck on the freeway in the middle of the night. Even hot contenders for Worst Traffic Hell on Earth like London and Tokyo were more or less deserted through the wee hours. Even truckers have to sleep. But apparently not Indian truckers, many of whom live in their vehicles, putting in a 150-hour week on behalf of transportation for a paycheque so piddling that it seems like a bad joke to westerners, who generally pay out more for a lunch, for dry-cleaning, cab fares… even peanuts.
The air is thick with diesel fumes, and almost every trucker is expressing periodic fury via blaring air-horn solos. On every side the huge gaily painted 10-wheelers bulge with sacks, crates, skids and boxes, as if somewhere on Highway 8 there is a teetering mountain of stuff always waiting to be carried through the night and into the waiting arms of commerce, in Delhi and beyond, from Cape Comorin to the Himalayas. The sight reminds me of an old Pathe newsreel reporting from Boom Town on a hyperactive economy in the making that would be the salvation of all. The place must be hopping, I think, conjuring up an image of every road throughout the length and breadth of the subcontinent chockablock with fat trucks laden down with wares ― a ceaseless river of stuff drifting from manufacturer to wholesaler to retail client, and thence to the largest middle-class consumer market on earth.
This was my 36th visit to India. When I tell people about the nation’s tremendous economic growth, about the changes I’ve seen over 30 years, about its awesome potential, I can often see that they don’t believe me. There are those westerners who have never visited the subcontinent but feel they know the place well enough from TV coverage of communal riots, natural disasters, and Mother Teresa. There are also those who have braved a visit, endured ten five-star nights, seen lepers and the Taj Mahal, bought a silk rug and a sari, then fervidly thanked their god when they were safely belted into the seat carrying them home. They don’t just not believe me ― they know I’m wrong.
Why does the image of India as a global basket-case persist when there is, as we have seen from the World Bank report and shall see further, so much evidence to the contrary? We need a little background before we can answer this question. But we also need a little context ― the commodity so often lacking in TV news reports.
J.K. Galbraith once told me that during his period as US Ambassador to India he was never certain whether he would be reprimanded for his economics or for his politics during a meal or meeting, but that it was always one or the other. Of all the ‘Non-Aligned Nations’, India was the only one to be truly, obstreperously non-aligned. This basically meant that neither the Soviets nor the Americans could bank on the fruits of any quid pro quo arrangement. Such arrangements are usually never spelled out, but most nations understand that the price of a hydroelectric plant or mountain tunnel is a little more than pure gratitude. The kind of gratitude required is the kind of knee-jerk political loyalty India has never displayed to anyone since the Second World War, in which two million Indian soldiers risked their lives fighting for the British, only to find that the sacrifice was so little appreciated by Winston Churchill that he refused to send food and humanitarian aid during the Great Bengal Famine of 1943-1944, commenting, “I hate Indians…They are a beastly people with a beastly religion.” Food was available but it was sent to Holland. More intelligent and compassionate men than Churchill perceived that his callous bigotry would echo in eternity. Field Marshal Alan Brooke noted that Churchill “…seemed content to let India starve, while still wanting to use it as a base of military operations.” Lord Wavell, the British Viceroy, summarized the situation even more succinctly in 1944: “The Bengal Famine was one of the greatest disasters that has befallen any people under British rule, and damage to our reputation here…is incalculable.”
‘Terminal’ is what it ended up being. Indian support was needed to fight the Japanese, who were heading toward British India like the East wind. Mahatma Gandhi asked for what seemed reasonable: In return for an agreement in principle to India’s independence after the war, Indians would fight for Britain. “I did not become Prime Minister of England in order to preside over the liquidation of the British Empire,” was Churchill’s reply. Back then the United States was blessed with its last great leader, Franklin D. Roosevelt, who greatly favoured Indian independence, and was not blind to the irony of Churchill claiming to fight a war on behalf of freedom, while denying freedom to the second largest country on earth. Roosevelt exerted considerable pressure ― indeed, so much pressure that Churchill was forced to tell him a lie to make him back off. He telegraphed Roosevelt to tell him that he had “no wish to allow Indian Muslims to be governed by the Congress Caucus and Hindu priesthood when 75 per cent of the Indian soldiers were Muslim.” In fact, less than 35 per cent of the Indian army was Muslim. Possibly Roosevelt knew this, because he remained unmoved, insisting that Churchill dispatch a mission to India ― the Cripps Mission ― a few days after the fall of Rangoon. To Churchill’s delight, the mission failed, and he wrote to FDR: “I feel absolutely satisfied we have done our utmost.” Roosevelt was certain Churchill had undermined the Cripps Mission. He telegraphed back, urging Churchill to try again, adding that Britain’s unwillingness “to concede to the Indians the right of self-government was at the root of failure.” Churchill, evidently, spent an entire night ranting and cursing. But out of the deadlock between Washington and London the Quit India movement was born, and with it, Indian independence.
To this day, many Indians wonder how the course of their history would have gone had they allowed Japan to invade. Would they have been tempted, after Independence, to follow the highly successful Japanese model of export-led economic development? At the very least it would have been a foil to Fabian socialism, which failed everywhere it was implemented, just as the Japanese model succeeded everywhere.
But India’s first Prime Minister, Nehru ― a brilliant intellectual ― was mesmerized by the Soviet Union’s economic success and devoted to socialism. The result, of course, was statism ― a pullulating jungle of bureaucracy with interfering tendrils in every pie. But recovery from the disease of colonialism is notoriously slow. By the mid-twentieth century few Indians even knew what their country had been like before the European invasions. It is, however, worth reminding ourselves what the colonists found there when they first arrived, if only to grasp the extent of their plunder.
At the close of the sixteenth century, India’s wealth sustained more than a hundred million people. There was an abundance of arable land and the state of Indian agriculture compared favourably with any of the western European countries. Right down to the subsistence-oriented peasant, everyone saw a good return on land and labour. There was a large and vigorous skilled workforce turning out not just cotton but luxury items for the barons, courts and ruling classes. Consequently, the economy produced a fabulous financial surplus. For example, the annual revenues of the Moghul emperor Aurangzeb (1659-1701) are said to have amounted to $450 million or more than ten times those of his contemporary Louis XIV of France. According to an estimate of 1638, the Moghul court of India had accumulated a treasure equivalent to $1.5 billion. By the early eighteenth century, India was the leading manufacturing country in the world. Of course, ‘manufacturing’ then meant handloom textiles and handicrafts. The economist Angus Maddison states that India, at that time, had a 22.6 per cent share of the world’s GDP. Paul Bairoch confirms that it had a 25 per cent share of the global trade in textiles. “More important,” he writes, “there was a large commercialized sector with a highly sophisticated market and credit structure, manned by a skilful and in many instances very wealthy commercial class.” Methods of production and of industrial and commercial organization could stand comparison with those in vogue in any other part of the world. India had developed an indigenous banking system. Merchant capital had emerged with an elaborate network of agents, brokers and middlemen. Its bills of exchange were honoured in all the major cities of Asia. It should thus come as no surprise that English travellers to India found a dynamic and commercial economy that was in no way stagnant or backward.
Given the above factors, one is forced to wonder why a modern industrial economy did not emerge in India, and why, instead, it became one of the world’s most impoverished countries. I asked these questions of Sat Mazumdar, a Marxist labour leader in Calcutta. “The English began by robbing and plundering soon after they took over Bengal in 1757,” he told me, going on to paint a devastating portrait of British colonial rule. “Their Lancashire mills crushed our handloom textile industry and threw millions of weavers out of work in the nineteenth century. As a result our textile exports plunged from a leadership position to a fraction. Simultaneously, the indigenous banking system, which financed these exports, was also destroyed. Since the colonial government did not erect tariff barriers, Indian consumers also shifted to cheaper English mill-made cloth and millions of handloom workers were left in misery. In the process, British colonial rule ‘deindustrialized’ India, and from an exporter of textiles, India became an exporter of raw cotton.” Mazumdar then quoted a contemporary observer of the situation, Sir William Bentinck, who noted that “the bones of the cotton weavers were bleaching the plains of India.”
Tea was served in his stifling, cluttered office, and, seemingly oblivious to the Britishness of his visitor [myself], Mazumdar calmly continued his condemnation of British rule. “Britain taxed the Indian farmer heavily,” he stated. “It changed the old land revenue system to the disadvantage of the farmer, who had to pay revenue whether or not the monsoon failed. Agriculture lost its capacity to generate savings, and a series of famines followed during the bad years in the last quarter of the nineteenth century. The worst one, in 1896-97, affected 96 million people and killed an estimated five million. Food also declined in areas where jute, indigo, cotton, tea, and coffee plantations were set up by the Europeans. Although these cash crops were profitable, the surpluses remained with the Europeans who transferred them to England. The railways commercialized the food crops by moving them over long distances, and the enlarged national market sucked up the surpluses, which the peasants had earlier stored away for bad years.” The consequence was that agricultural production remained stagnant for a century.
Mazumdar sighed, staring up at the ineffectual ceiling fan. He looked tired, drained ― as if he were living this history as he told it. “After paying the cost of its huge imperial establishment in India,” he continued, “the British government transferred its surplus revenues back home. Since India consistently exported more than it imported in the second half of the nineteenth century and early twentieth century, Britain used India’s trade surplus to finance its own trade deficit with the rest of the world, to pay for its exports to India, and for capital repayments plus interest charges in London. This was a massive drain on India’s wealth.” Mazumdar leaned forward and stared at me, raising his voice for the first time in emphasis. “Eight per cent of our gross national product was transferred to Britain each year.” He paused, then stood, wagging a reproving finger. “Britain impoverished the Indian masses,” he told me, but in a tone that suggested nothing more serious than a broken window, “and we financed their industrial revolution.”
I was blushing with shame. Summed up thus, it was a damning indictment. Some of my ancestors had greatly enlarged our family fortunes after lengthy stints in Victorian India. I wondered whether I had grown up living off the misfortunes of Mazumdar’s grandparents. “So,” I said, at length, “now that India’s free and England has lost its colonies, India will become richer and England will grow poorer, no?” It did, after all, seem to be what was happening.
“Precisely,” said Mazumdar.
Karl Marx had predicted that the advent of railways would usher in India’s industrial revolution. He was most often wrong where his brilliant grasp of economics was thwarted by his failure to comprehend the cultural factors within which economies function. The proletarian revolution he predicted for England occurred instead, much to his surprise, in Russia.
For another take on India’s economic past, I went to see Gurcharan Das. Dad is a Harvard-educated novelist; dramatist; journalist; former CEO of Procter & Gamble India; Vice President and Managing Director of Strategic Planning for Procter & Gamble Worldwide; and currently a consultant to industry and government. It is hard to imagine a western CEO of a global corporation writing plays and novels. It would incite suspicion. In India it is not exactly the norm, either, but no one finds it that surprising, let alone suspicious.
An immaculately dressed, kind, gentle and humble man, Gurcharan Das nodded as I presented Sat Mazumdar’s views. They were, he said, the classic analysis of India’s poverty. They were also wrong. “The land tax was not actually exorbitant,” Das explained. “By 1900 it was only five per cent of the agricultural output, which was less than half the average per capita tax burden. No doubt there was a drain of wealth from India to Britain, especially in the nineteenth century, but it was only 1.5 per cent of GNP every year ― not eight per cent. It has been argued too that India’s payments to Britain were for real military and civilian services,” Das continued, seemingly glad to be the bearer of good tidings, “and to service capital investments, which increased India’s wealth. Also, the overhead cost to maintain the British establishment ― the so-called ‘home charges’ ― was in fact quite small. If India had maintained its own army and navy it might have had to spend much more money. It is true, however, that India had a balance of payments surplus which Britain used to finance part of its deficit, but India was partially compensated for it through the import of gold and silver into India. Only a part of this was minted for coinage. Most of it went into private hands.”
What about the charge that Britain had ‘deindustrialized’ India?
“Indian industry did decline in the nineteenth century,” Das conceded, citing figures. “India enjoyed 17.6 per cent of the world’s industrial production in 1830, while Britain’s share was 9.5 per cent. By 1900 India’s share had declined to 1.7 per cent while Britain’s had grown to 18.6 per cent. But this decline was caused by technology. The machines of Britain’s industrial revolution wiped out Indian textiles, in the same way that traditional hand-made textiles disappeared in Europe and the rest of the world. Fifty years later the Indian textile mills would have destroyed them any way. Our weavers were simply casualties of technological obsolescence…”
I felt oddly relieved to hear this. As if sensing my response, Das tempered his answer somewhat. “This is not to take away from the weavers’ great misery and enormous suffering,” he said. “If the British Raj had been more sensitive to their plight, it might have erected trade barriers in India to cushion the impact. Hand-made textiles might have survived a little longer.”
Sat Mazumdar’s grim Marxist interpretation was even more inaccurate in what it omitted, Das told me. “After 1850, Indian entrepreneurs began to set up their own modern textile mills, and by 1875 India had begun to export textiles again and slowly recaptured the domestic market." Again, he rattled off figures. “In 1896, Indian mills supplied only eight per cent of total cloth consumed in India; in 1913, 20 per cent; in 1936, 62 per cent; and in 1945, 76 per cent. Both British and Indian capitalists made large profits during the First World War. But while the British businesses remitted their wartime profits to England, Indian businessmen reinvested theirs in new industrial enterprises after the war, when Indian industry began to grow rapidly. By the Second World War, the supremacy of British business had been broken. The Indian entrepreneurs were stronger and in fact in a position to buy out the businesses of departing foreigners.”
To Das, the economic importance of India to Britain was greatly exaggerated by Indian nationalists. They imagined the Indian empire to be hugely profitable when in fact it was not. It was, however, a view also shared by British imperialists from Cecil Rhodes to Winston Churchill. And it was not limited to the conservative right wing, for Labour Party leader of the inter-war government, Aneurin Bevin, told the House of Commons: “If the British Empire fell…it would mean the standard of life of our constituents would fall considerably.” The truth, it seems, is that, after the crude period of exploitation in the eighteenth century was over, Britain’s rising prosperity in the next century owed more to its free trade with the ‘new world’ and to its investments in America. Certainly a few Englishmen became very rich from India, but the profit to Britain as a whole was negligible.
“Whether Britain impoverished or enriched India in the end is really an academic question,” said Gurcharan Das. “What is more relevant a question to ask is why the forces of global capitalism in the second half of the nineteenth century and early twentieth century did not release widespread growth and development in India, as they did, for example, in Japan.”
The rapid building of railways and canals and the simultaneous expansion of foreign trade should have acted as a strong engine of growth. Furthermore, India had an experienced merchant class which had begun to develop modern industry. By 1914, India had the world’s largest jute manufacturing industry, the fourth largest cotton textile industry, the largest canal network, the third largest railway network, and 2.5 per cent of world trade. Why didn’t the transformation that Marx had predicted occur? India remained largely non-industrial and extremely poor at the time of Independence, when modern industry contributed only 7.5 per cent of national income and employed barely 2.5 million people out of a population estimated at 350 million. Why was there no industrial revolution?
The sociologists and economists have various answers that are variations on the same answer. Max Weber, who admired the richness of India, blamed the caste system. Gunnar Myrdal found that India’s social system and attitudes were an important cause of its low productivity, primitive production techniques, and low levels of living. He found that poor work discipline, contempt for manual work, lack of punctuality, alertness, and ambition, low aptitude for cooperation, and superstition were the result of inhibiting attitudes. They were compounded by unfavourable conditions, such as a debilitating land tenure system, low standards of efficiency and integrity in public administration, weak participation of people in local affairs, and a rigid and unequal social structure. Myrdal believed that these pre-modern attitudes and institutions had to be attacked directly, primarily through education, and that India could not wait to erase them as a by-product of growth and income. The only agent able to break the forces of stagnation, he felt, was the Indian state. But he concluded that the Indian government would not be able to do it because it was a ‘soft state’, incapable of imposing the social discipline required by the task.
The Indian economist Deepak Lall has similarly explained economic stagnation in terms of a low-level ‘Hindu equilibrium’ around the caste system, which brought stability in the context of political warfare, monsoon failure and climatic uncertainty, labour shortage, and an undervalued merchant class. Lall writes that “India’s social organization and agriculture system are a second-best Pareto-efficient response to its specific environment.”
Harvard economic and historian David Landes has recently reopened the politically incorrect controversy relating to geography and the weather. He blames India’s enervating heat.
My own experience, however, has taught me to be suspicious of such easy cultural or geographic explanations. I have known many successful Hindu entrepreneurs who have been both extremely religious and highly aggressive in business. The ‘Green Revolution’, which transformed the Punjab into the ‘breadbasket of India’, proved that the Indian farmer can respond quickly to market-based incentives. Brahmins will plough their own land if they have to; and Rajput Thakur barons will shed their feudal ways for the sake of a commercial opportunity. There are, furthermore, substantial populations of non-Hindus in India whose communities have also been stuck in the same rut of stagnation. Other Asian countries, such as China and Indonesia, were equally backward without any ‘Hindu equilibrium’ to explain away the stasis. And Singapore, despite its enervating tropical heat, has achieved Western levels of prosperity.
Economic historians, on the whole, however, no longer seek explanations of India’s economic backwardness in culture ― the otherworldly values of the Hindus or the immobilizing effects of the caste system or the conservative habits of the merchant caste. They look to economic factors that motivate a businessman to invest in a business ― the size of the market, the capability of suppliers, the costs of production, the distribution hurdles, the availability of technology and the state of competition. Amiya Kumar Bagchi argues that it was lack of effective demand that limited business opportunity. Indians were just too poor, he says, to buy modern goods and services. With such weak purchasing power the market remained tiny, and this prevented entrepreneurs from investing. But does the lack of demand provide a sufficient cause? If the domestic Indian market was small, surely the entrepreneur could have supplemented it by producing for overseas markets? Morris D. Morris says that backwardness is the result of supply constraints, however. An Indian entrepreneur, Morris thinks, was beset by formidable uncertainties because of a shortage of technology, skilled labour and capital ― all of which raised the cost of production. According to Rajat Ray, the Indian businessman did not export because he could only make inferior quality products, which were not acceptable to the world market, and he did not have the technology to make a better product. To Ray, technological backwardness was the Indians' single biggest failing. For those unaware of his work, Ray was writing a hundred years ago. Ironically, the same situation largely persists in India today. Why? And if it is so, why do I talk about India’s emergence as an economic superpower?
Did the British exploit India so profoundly that it has taken this long for the subcontinent to recover? The answer, curiously enough, is that the British probably did not exploit India enough. Had Britain made the massive investments in India that it did in the Americas, India would have become prosperous and thus a much bigger market for British goods. An impoverished India was most certainly not in Britain’s economic interest. On the whole, Indian nationalists have failed to comprehend that capital is a progressive and positive force, no matter how exploitative it may appear. Marx himself certainly understood that capitalism is the only efficient way to accumulate capital, make investments, raise output, and increase productivity.
Britain’s main failure was to remain detached when it came to development and economic growth. Unlike the Japanese government following the Meiji reforms after 1868, which actively promoted the country’s development, Britain neglected India. It did not actively encourage investment either by Indians or by Englishmen. And it made no attempt to educate the Indian masses. At Independence, 83 per cent of Indians were illiterate. The British education system in India produced only a thin upper-crust veneer of extremely well-educated Indians. During the same period, the Japanese (and the Koreans) concentrated equally on educating their masses. By 1950, more than half of Japan’s and Korea’s masses were literate. Although Britain built railways and canals, it made no effort to provide credit to entrepreneurs or farmers in a capital-starved country. Nor did it sufficiently protect the infant Indian industry that came up in the nineteenth century (although it did from 1921 onwards). But what colonial power ever helped its colony to industrialize? The simple sad fact is that the British did not understand how to make an economy grow. They knew only how to keep the budget balanced. Even when I grew up in Britain, during the fifties and early sixties, there was still among the upper classes a faint distaste for ‘trade’. A gentleman did not soil his hands by going into business.
But everyone was learning the wrong lessons from history. From India’s experiences with Britain, its new leaders drew the conclusion that foreign trade and foreign capital were responsible for domestic poverty, and they closed the doors of the economy to pursue a policy of self-sufficiency. In doing it, they wasted a golden opportunity. A collective amnesia gripped New Delhi, and for years everyone seemed to forget that India had an ancient tradition of trading long before the British came, and had indeed once enjoyed enormous prosperity through its exports and imports. As midnight’s freedom watched dawn break over an independent India, free Indians became increasingly pessimistic about their ability to compete in the world economy, let alone regain their historic pre-eminence as a great trading nation. The gates were firmly closed. And India’s share of world trade declined from 2.4 per cent in 1947 to 0.4 per cent in 1990.
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It was the kind of night you only get in India: The moon hanging like a golden drop of honey in the black bowl of night; a warm breeze heavy with the scent of jasmine and bougainvillea; the distant strains of hymns chanted as some temple’s god was put to bed in his shrine mixing with the warbling wail of eastern pop music and the atonal blast of car horns fighting the eternal traffic jam. Dinner was served on the roof of a sprawling, weather-worn mansion, where something like a little village of straw and bamboo huts had been built and decorated with dozens of little lanterns. The servants probably lived in them, but the effect was of sitting somewhere far from the city, far from the present. As is so often the Indian custom, men and women sat at separate tables. At mine there were just three of us: Myself, a ninety-two-year-old German who had lived in India most of his life, and Pandit Ravi Shankar, legendary master of the sitar, one of the world’s greatest musicians and, for as long as I can remember, India’s unofficial ambassador-at-large. Indian music without Ravi Shankar would be like European classical music without Mozart and Beethoven. Impossible to even imagine.
As is so often the case with true genius, Shankar is a quiet, self-effacing man. At 82, he’s delicate in appearance, small and bird-like, and his performing career now spans seventy years. Like Mozart, he was a prodigy, and the German gentleman who was with me at the table had last met him sixty-nine years earlier when Shankar was performing in Berlin. I had met him previously too, but more recently, in 1977. We had a mutual friend in George Harrison, the Beatle, who had just died of cancer. Ravi had spoken with him the day before he died. “He was ready,” he told me. Tears welled up in both of us as we recalled what a good and beautiful human being George had been. To break the sombre mood, I reminded Ravi of what to me is one of the funniest moments in music history. At the concert for Bangladesh flood relief, which was headlined by Harrison and Bob Dylan, but organized largely by Ravi Shankar, there was a change of the rock ‘n roll mood as Shankar and his musicians came on stage to play. After telling the audience that Indian music was a little more serious than what they’d been hearing, and requesting that people not smoke, the Indians began to summon up sounds from their instruments. After a minute or so, they paused, eliciting thunderous applause. Then Ravi’s plaintive, gentle voice could be heard, saying, “Thank you. If you enjoy the tuning so much, I hope you will enjoy the playing more…”
Our host that evening was Sharon Lowen, an American who came to India on a Fulbright Scholarship in the early seventies and never returned. Today she is considered one of the top two or three greatest living exponents of classical Indian dance. The party was to celebrate Ravi Shankar’s recent Grammy Award ― his third ― but the only American touch to the evening was a cake shaped like a CD, emblazoned with musical notes.
There is something between westerners who have adopted India as their home, something shared and sacred. When they meet each other, they never mention it, but it is tangible. I do not know of another country that inspires such deep and abiding affection. Love is what it is ― a love that goes too deep for words, haunting, fragile, bittersweet.
Ravi was trying to think of a country in the world where he had not performed. But it turned out to be merely an area of northern Brazil. I tried a few improbable locations: Iraq? North Korea? Togoland? Western Samoa? But he’d played them all. What’s more, he had detailed and happy memories of each place. A pioneering global soul, able to live anywhere, he still always returned to the land where his music had its deep roots. But what were the changes he’d noticed in India since Independence?
“Oh!” He looked like a man who’d been asked to name his lovers in order of preference. His eyes twinkled, then he grew serious. “When I first started performing,” he said, “Indian music, Indian culture, were a novelty in most western countries. People came out of curiosity. Most of the audience was western. Then there was the sixties. But the interest was largely drug-inspired. It didn’t last. But it encouraged a few to go into it more deeply ― especially the musicians. I made a record with Yehudi Menuhin (the great violinist). I don’t think it was a good record. But it encouraged other musicians and orchestras to experiment with fusion of eastern and western forms…” The record with Menuhin had been called “East Meets West,” and, for me, was most notable for its superlative series of solos. Two undisputed masters of their individual instruments played their hearts out ― but East never once met West, except to nod approval. “Today,” Ravi continued, “it is so different. We Indians are everywhere. My audiences ― no matter where they are ― largely consist of expatriate Indians. But it is not just the music. Our culture is everywhere. In the universities, in the bookstores. I don’t mean just the philosophy and the yoga. I mean our contemporary writers and artists.” He listed a dozen or so names, from the Naipauls through Vikram Seth to David Davidar ― he was clearly an avid reader ― and then we veered off on a tangent, speculating how long it would take Salman Rushdie to outlive his welcome in New York by writing a virulently anti-American book.
“I think he has some ego problems,” speculated Ravi Shankar.
I should have been concerned about the escalating communal violence in the Gujurat before leaving for India. Now I was there, however, I should have been concerned about the imminent nuclear holocaust that was sure to result from a war between India and Pakistan due to begin any minute. At least, that was CNN’s opinion. The American embassy was also telling its citizens to leave the country, or cancel any plans to come. But I wasn’t concerned. Relax, my Indian friends kept telling me. There’s not the slightest chance of a war. They roundly condemned the right-wing Hindu nationalists who were burning Muslims in Ahmedabad, too. No punishment was too severe for such evil and un-Indian behaviour. “You have to remember,” said my friend, David Davidar, wunderkind head of Penguin Books India, who had also just had his own first novel published, “that we have elections coming up. It’s all just vote-gathering hot air.” Others blamed the US for trying to push India into a war with Pakistan so it could move in and take over the region. I was surprised to find opinion had shifted so drastically against the Americans since my last visit. “Except it’s not personal,” said Davidar. “With the Americans everything tends to be personal. With us it’s political. We love America, but we don’t like this dramatic increase in meddling with other countries’ affairs. And we don’t like the bullying. It is widely perceived by Indians that America does not play fair, does not want an even field ― in trade, in anything. They desperately want into our economy now its star is rising, but they don’t like playing by our rules. They can’t forgive us for kicking out Coca-Cola, too…” He laughed his deep rich laugh.
Davidar had single-handedly transformed Penguin India from an insignificant outpost, largely neglected by its parent, into one of the most important publishing houses in the world. It is no exaggeration to say that he alone is responsible for putting modern Indian writing in English on the map. Offered every plum job in publishing the world over, he has elected to stay in India, where he runs a company that could hold its own in efficiency, productivity and innovation with any in New York or London.
“It’s widely perceived here,” he added, “that America is on the wane. We’ll always have good relations with them, but they have to recognize that throwing their weight around no longer works. They’re not the only ones who want into our market, and they’ll have to get in line with the rest ― make offers, not give orders. We don’t like what’s been going on in Afghanistan, but, let’s face it, we have our own problems with the Islamists too. Hostility isn’t going to serve anyone well, is it?”
He pointed out how many Indians in the US had achieved key positions in nuclear science and the computer industry. “Way out of all proportion with our numbers. And Indians remain Indians, wherever they are…”
I realized some years ago that most Indians I discussed the subject with assumed all politicians were corrupt. That communal violence of the most horrendous kind and threats of nuclear war could merely be ways of generating extra votes in an imminent election was nothing like as shocking to the people I met as it would be to the average Canadian or American. As for anti-American sentiment: Americans don’t even realize how much they are despised for their trade and foreign policies in Canada, so they may never grasp how they’re viewed in Asia.
An elderly and rather dignified lady who performed social work among the poor in Bombay, mistaking me for an American, even shocked me somewhat by asking, “So, what’s it like to belong to the most hated nation on earth?” She was very far from being an exception to the rule, but Indians are very generous in spirit, and, as David Davidar noted, they don’t take these things personally. They tend to hate the crime rather than the criminal. Also, when you’re sitting on top of five thousand years ― maybe more, much more ― of continuous civilization, you tend to view a culture barely 200-years-old with tolerant amusement.
Such continuity builds deep roots. An Indian from 3000 BC, for example, would still find much about modern India familiar, whereas an American Founding Father suddenly beamed down in contemporary Manhattan would probably assume he’d died and gone to Hell.
I remembered the kid I’d met selling chai for his father at a roadside stand somewhere in Tamil Nadu. He was on his school holidays. Was he going to sell chai when he left school? “No-no,” he said. “I am going have computer company and be rich. Just like this man named ‘Bilgay’ I saw on the television. He is richest man in world and all from softwares…”
“When Bill Gates comes to India,” said David Davidar, “he comes to see Nandan Nilekani. You want to know about our information revolution, you go talk to Nandan in Bangalore.” He gave me Nilekani’s mobile telephone number, as well as several other numbers.
One of the reasons there had been no technological innovation in India ― and thus no industrial revolution ― was, according to Gurcharan Das, that high-caste Brahmins scorned manual labour, thus you did not get any educated tinkerers. Without intelligent tinkering, Das claimed, there could be no innovation. They might not have been suited to spearhead an industrial revolution, but Brahmins were tailor-made for the other end of a technological age. For thousands of years they had done nothing but ponder the complex abstractions of Vedic philosophy, which demands of its practitioners an austerity and self-discipline that is physical as well as mental, and whose goal is omniscience, not just knowledge. Indian Brahmins were known to excel in the pure sciences already, making a considerable mark in the fields of mathematics and nuclear physics both in India and abroad, especially in America. But in the arcana of computer software, with its codes and obtuse realities, India’s ruling castes finally found the revolution they could lead: Information.
“India’s software sub-sector, one of the most dynamic in the world, has experienced a sustained and rapid upswing, with exports rising from $734 million during the 1955-56 fiscal year to $2.65 billion in fiscal year 1999-2000, demonstrating the continued strength of the sub-sector.” ― Report by the World Bank (2001)
When I lived there during the seventies, Bangalore had been a sleepy cantonment of broad boulevards and crenellated bungalows left over from the British Raj. On a plateau 7000 feet up, its climate was near-perfect ― one endless summer, in fact, only briefly too hot and never cold at all ― and because of this it was where every Indian with the means yearned to retire. Now it is Silicon Valley, home to India’s burgeoning and increasingly formidable computer industry. Out of literally hundreds (325 at last count) of world-class Indian cyber-corporations, none is more celebrated nor more successful in the brutally competitive global software market than Nandan Nilekani’s Infosys. Started by six computer engineers with a capital of about $400 barely a decade ago, Infosys is now worth billions. It has more than 100 managers who alone are worth more than a million dollars each from its stock’s steady appreciation — and a million dollars in India today is like a million dollars in America 40 years ago. Unlike the western counterparts, India’s sizzling stock market did not dismiss the Information Age as the recession of 2001 kicked in. Indian cyber stocks have continued to perform comparatively well ― probably because there weren’t so many of them issued by companies unable to explain what is was they actually produced, let alone able to produce anything remotely like a profit.
But all of this would have been unthinkable before the reforms of 1991. After the assassination by suicide-bomb of Rajiv Gandhi, then in the middle of an election campaign, the ruling Congress Party chose Narasimha Rao as Prime Minister ― largely because he was seventy years old, quiet, dull, and threatened no one. The party was carried to an easy victory on a wave of sympathy for Rajiv, but Rao still found himself heading a minority government. He was no fool, however, and had never been far from the top circles of power during a long and distinguished political career, from which he was about to retire when the call came. Something of an intellectual, he spoke nine Asian and European languages, and had a shrewd understanding of what good government required. No one in their wildest dreams suspected he would set in motion a revolution that would transform India more thoroughly and effectively than even Nehru’s Independence had done.
“These economic successes have taken place against a backdrop of India's well-established democratic system ― the largest in the world ― which provides its population with a significant degree of political freedom and stability…”― Report by the World Bank (2001)
What Narasimha Rao faced on his first day in office was, however, a financial catastrophe of unparalleled proportions. It had been long coming, but its main cause was the profligate and short-term commercial borrowing resorted to by Rajiv Gandhi’s government since 1985. When the Gulf crisis reared up and oil prices shot through the roof, India suddenly found it had no money to purchase petroleum. The nation's foreign exchange reserves had dwindled to a dangerous level and there began a flight of capital by non-resident Indians. By the time Rao arrived on the scene discussions had been going on with the IMF for a bailout package. Rao’s predecessors had not been brave enough to face the crisis. But he understood that India was essentially bankrupt, and therefore his first and most important decision was to find a great finance minister. Wisely, Rao did not trust any politician to do such a vitally important job; he wanted a professional. Eventually, he picked the reticent and soft-spoken economist Manmohan Singh, who for a long time had been governor of the reserve bank. While heading up the South-South Commission in Geneva, Singh had made a serious study of the East Asian economic miracle. It soon made him realize that India had to abandon many of its old and foolish protectionist policies. In applying for the IMF loan, Singh said he was aware that first India had to put its house in order. In the process of doing this, with Rao’s encouragement, he eventually swept aside all the follies, red tape, and bureaucracy that had thwarted, trussed and finally all but choked the Indian economy to death over the preceding 44 years.
Although the Economist, in a cover story that same year, called India an “uncaged tiger,” the reforms were not celebrated in India. Years of bungling failure had made people wary at best and generally pessimistic. It is possible that only the businessmen directly affected fully understood the enormous leap the country had taken. And even they were all too aware that the gates could just as easily be slammed shut again. So, while the golden sun of opportunity shone, they made plenty of hay.
It was only fitting that the ubiquitous Indian cows, which sleep peacefully in the middle of busy urban intersections, also graze outside the offices of Infosys. Like the headquarters of Microsoft in suburban Seattle, the Infosys complex on Bangalore’s Hosur road closely resembles a university campus ― which is, of course, the idea. But, perhaps more than Microsoft, Infosys is both business and educational facility. At any given moment, of the 3000 professionals working there, two or three hundred of them are taking classes to update their technical knowledge and skills. In one spacious classroom filled with cutting-edge computer equipment, I eavesdropped on a heated discussion about customer service. In another, the lecturer was pointing out flaws in products by Infosys competitors. The company makes no secret of its commitment to hiring the best available talent and keeping its employees motivated in a ‘learning environment’. Besides stock option plans that have already made many Indians rich beyond the dreams of avarice, Infosys spends five per cent of its annual turnover on education, research, and the continuing development of its staff. It is primarily concerned with developing software for some of the world’s top corporations, which have kept its sales growing at an average of 40 per cent a year, from $18 million to $120 million in the past five years. It also designs, erects, and maintains Internet infrastructure for leveraging the power of e-commerce. It sells Bancs 2000, a software system, to banks, and it recently sold a warehouse management system to the American sportswear giant, Reebok.
Nandan Nilekani, managing director, is a handsome devil and smooth as butter. But he is not giving away anything to this nosy foreigner. What’s the secret of the Infosys success? “Teamwork,” he says. Only later do I notice it’s what he always says.
Narayana Murthy, the CEO, is a bit more forthcoming. A small, owlish fellow, somewhat blurred at the edges, he too is one of the six founders, and widely said to be the catalyst and the glue. According to him, the success is partly luck and partly chemistry. Possibly under the impression I was reporting for some New Age tabloid, Murthy then said, “Infosys makes you subordinate your ego and you invariably put the job above your own interests.”
This seemed to be a good thing for Infosys, at least. Next, Murthy launched into what he knew to be ‘good copy’. He’d done this before. Lots of times. “I got into the Indian Institute of Technology in 1962,” he said, “but I didn’t go because my father couldn’t afford the 150 rupees a month for the hostel.” That would be about five dollars his father couldn’t afford. But as a government education officer supporting eight children his entire monthly salary was less than $20. Murthy could announce this fact without either bitterness or irony because he probably now earned every second what his father had once earned every year. A billion dollars in India is beyond wealthy. To the average Indian it is incomprehensible. As I suspected would be the case, it was because Murthy couldn’t attend the IIT that he ran into the other five founders of Infosys. But there was a bit more too: As a student Murthy had been a committed Marxist. He now had the Bulgarian police to thank for relieving him of that burden. After being thrown into jail near the Yugoslavian border for no good reason, he spent a harrowing night without food or water. By dawn he was thoroughly disillusioned with communism. I couldn’t help feeling that these little personal tales were his way of apologizing for making too much money ― I was once human just like you…
As with Bill Gates, though, philanthropy now held out open arms to the Infosys Six, promising to take all the cash they couldn’t use. And in India, unless one is very discerning, philanthropy can tend to be a bottomless pit into which you pour money.
Bangalore was nothing like the sleepy little town I recalled fondly. It is an over-caffeinated and over-populated hive. It felt and looked as if someone had dropped another, much larger city on top of it. Here too rush hour seemed to be a 24-7 affair, and if you wanted to take an auto-rickshaw ― which had been my preferred mode of transport in the seventies ― you needed a cylinder of oxygen on board too or you’d be blue with carbon monoxide. At nightfall, the shops on Mahatma Gandhi Road were blazing advertisements for conspicuous consumption and the hyperboles of commercial success. You needed your imported Raybans or Oakleys just to look into windows lit with the meg-wattage of sports stadia. ‘World’s Biggest Kid’s Store’ bragged one. Another boasted ‘Finest Silks in India’. Bordering everything, everywhere, both text and context, was the word ‘Software’. Even the lepers hustling Brigade Road looked radiantly prosperous, as if they too had benefited from Information’s Revolution, also chauffeured home at close of trade.
The Bangalore airport was ‘International’ now ― no doubt because the 325 software companies did most of their business overseas and had to fly back and forth daily to their clients. But even the airport was just another remnant of the past. With liberalization, I learned, the companies got their own satellite link, allowing them to do virtually everything without leaving balmy Bangalore. As customers quit their offices in America, they e-mail software needs and problems to southern India, secure in the knowledge that trusty Indian engineers are busy solving their problems while they sleep, and will send back the solutions before dawn even breaks over the hills of New England. By log-on time Americans can sit with their coffee assessing the answers. Bizarre as it may be to contemplate, from medical records to state budgets, the information of America is increasingly processed through south India. In the Industrial Age the ‘means of production’ meant mills and factories as well as workers; in the Information Age it means only the technician and his terminal. To Marx, the means of production were the heart and soul of capitalism; whoever controlled them ruled.
Three-quarters of the software companies in Bangalore are Indian, but two-thirds of the investment in those companies is foreign. IBM, Texas Instruments, Motorola, Group Bull, and Sun Microsystems ― to name but a few foreign interlopers ― are also developing software in Bangalore. Why? For the price of one American engineer you can have five (probably smarter) Indian engineers. The cheap brains of India are doing for Bangalore what the cheap hands of Asia are doing for many East Asian cities.
Except no one is trying to ship cheap labour over to the States. Indian companies routinely lose 25 per cent of their workforce every year. London’s Financial Times recently estimated that one third of America’s Silicon valley hi-tech companies are now run by Chinese or Indian engineers. Hence the Infosys stock option plans and wages in the computer sector that have been climbing 20 per cent a year across the board. If you need what America takes, and you know America takes what it needs, the only solution is to do the one thing America will not do: Democratize business, spread the wealth around.
Like a starving man, India has jumped on computer science and devoured it whole. The speed of growth and the sheer scope of activities far exceed anything seen in the West, and are opening up the entire Indian economy through the sheer force of optimism bred from success. You can feel it on the streets; you can see it in people’s eyes; you can smell it in the eternal rush-hour traffic jams. India is indeed on the move, an unstoppable juggernaut of economic potential, picking up where it left off several centuries ago.
Yet India as economic super-power will not resemble any western model. Just as the egalitarianism of Islam will probably create modern states of a non-secular socialistic nature that will have no western parallel, so Hinduism’s bewildering multiplicity of belief systems and rigidly stratified caste system will also produce a society unlike any yet seen, with problems unlike any yet encountered as well as advantages yet to be recognized.
A monster economy doesn’t come alone. It’s a package deal. Once the British had landed on their shores and planted the union jack the next thing Indians knew was that their children were suddenly learning all about Shakespeare and the Duke of Wellington in school but very little about Valmiki or Tagore. To this day, Indians are somewhat bemused by the prospect of westerners studying yoga or Sanskrit, but they’ve come to accept the idea. Few of them, however, really grasp the increasing seriousness with which western historians are beginning examine their culture. As the archaeological evidence mounts, it is becoming an accepted fact that Vedic culture was indigenous to India, extremely ancient when the Aryans arrived from the Caspian steppes, rather than imported with them. As links between the Hebrew Torah and the Vedas are followed up by a growing sub-discipline of scholars, it begins to seem less improbable that, as the Brahmins have always claimed, India was the origin of all major faiths, the Mother of the world. It is already conceded that ancient Indian mathematicians, not Arabs, invented the concept of zero, and as the Vedic treatises on science are examined by more open-minded scholars, more and more western academics are being persuaded to entertain the idea of a far greater antiquity and sophistication for Indian civilization than the old Victorian imperial historians allowed. Indeed, many Indologists openly state that if India had the climate of Egypt, where extreme dryness prevents decay for millennia, it would be easy to demonstrate that, as the Greeks believed, the glory of ancient India at least rivalled, if not exceeded and preceded, that of ancient Egypt. Also, from the earliest records on, we find that those who came in search of India’s material wealth, frequently left in awe of its spiritual treasures.
I don’t expect to find myself in a tropical Switzerland next time I land in Delhi ― God forbid ― but I have become accustomed to seeing staggering improvements. Everything is better, it seems, each time ― and not just for rich tourists. The changes are often subtle, impressions that cannot show up in any statistic, but which, over thirty years, are nonetheless indelibly real. Indians, surprisingly, are often quick to wave aside such optimism like a fly ― and there are still plenty of those ― citing the deceptively grim numerical realities. India’s per capita income, for instance, is $380. A year. This places it 124th out of 157 countries. Back in 1960, it was higher than China’s, but today it is only half. By purchasing power parity, the income rises to $1,580 ― still not enough, however, to raise its global rank. Half the population is defined as poor by the international poverty line of one dollar per person, per day; and a full third of the world’s poor live in India. An Indian’s life expectancy is 63 years which is lower than that in many similarly poor countries. Sixty-five out of a thousand infants born will probably die; two-thirds of all children suffer from malnutrition and are underweight. Seventy-one per cent of Indians cannot access proper sanitation. Four out of ten are illiterate. Thus, India ranks 134 out of 174 countries on the UN Human Development Index. It is definitely not good enough.
Why, then, is there still cause for tremendous optimism? For a start, just as my impressions of Indian growth are increasingly favourable, my sense of a West in decline becomes daily ever more acute. The numbers back me up too. Over the past two decades, China and India, sharing more than a third of the world’s population, have accelerated their economic growth rates impressively, China by eight to 10 per cent, India by five to seven per cent. This is the result of an increasingly open global economy, and linked to an idea in economics as old as Adam Smith: That if a rich country and a poor country are linked in trade, their standard of living should converge in the long run. If the growth rate is sustained, and literacy keeps rising, there is a very real prospect that people below the poverty line ― who live on less than a dollar a day ― will decline to a more manageable 15-20 per cent of the Indian population, from the current 50 per cent. This is already the experience of the East Asian countries. China will probably get there 10 to 15 years earlier. But just a decade ago, this would have been the impossible dream itself in India. Over the past seven years Indian literacy has already risen by 10 percentage points, from 52 to 62 per cent, where literacy rates in America are falling ominously.
Before y’accuse me, goes the old Blues song, take a look at yourself…
Answering the question of the theme of last year’s World Economic Forum India Economic Summit — titled Eight per cent Growth for 20 Years: How? — more than 100 business participants shared their views on India’s economic and social progress in a survey put together by the World Economic Forum. The results were presented at the close of the Summit in which more than 400 business leaders and representatives from governments took part. The Summit looked at how the Indian economy can fully harness its potential and build on its many competitive advantages. Concrete recommendations focusing on six areas (economic reforms, energy, geopolitics, financial services, manufacturing industries and trade investments) were presented and discussed with respective key government officials in corresponding dialogue sessions.
Survey Questions Yes No
Are you planning to increase your investments in India? 86% 14%
Do you think your sector will become more internationally competitive in the next five years? 88% 12%
Does privatization have a positive impact on the Indian economy? 100% Nil
Is the slow pace of reforms in the current economic climate a long-term advantage for the Indian economy? 12% 88%
Is regional cooperation key to further economic development? 92% 8%
Do you think India will exceed China’s competitiveness in the next five years? 6% 94%
Is your industry suffering from the current geopolitical uncertainties in the region? 54% 46%
Is Indian culture exportable? 75% 25%
Is the role of women in politics/business key to further economic progress? 73% 27%
" FACE=" verdana,arial ">Will the figure of 26% of the population living below the poverty level in India be reduced in the next 5 years? 79% 21%
Do you think India has benefited from globalization? 95% 5%
It takes a long time to see past the illusory surface of India to the reality beneath it. But when you do, when you realize that your western values are not really that valuable there, you begin to see a very different India. If the entire global economy collapsed tomorrow, for example, India would scarcely be affected. It is self-sufficient; it has recycled for as long as I can remember. There is not much waste. The Information brats would suffer, to be sure, but they’re resilient and could easily turn to domestic markets. But where America would be a terminal case and Europe riven by social upheaval, India would carry on more or less as usual. A good many Indians might not even learn of the catastrophe overseas, and if they did it would not really have much impact on them. If you spend your life wondering what life is like in Bombay ― knowing you’ll never find out ― the vicissitudes of life in Dresden or Lisbon cannot be of much concern.
India went after democracy before it pursued capitalism, quite the reverse of East Asian states that sacrificed liberty for financial security. The result is that all those human concerns, the ‘million negotiations of democracy’, have always been taken into account first, before things got done. But where, increasingly, things don’t get done because the million negotiations have been ignored, this places India at the forefront of truly dem
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