India is suddenly in top gear. Trouble is, it never took driving lessons.
THE latest Indian economic survey and vote-on-account have unleashed a whole spectrum of opinion on the health of our economy and the success of our reform process. GDP growth, tax revenue and fiscal deficits have been discussed with great enthusiasm both on television and in newsprint. Countless seminars are being held where forecasts are made on virtually every item, from M3 supply to rural bank credit. The 'state of the nation' is being debated ad infinitum.
Hooray for democracy, and hooray for our economists. But something is terribly wrong. Nobody is asking some equally important questions. Is the Government more efficient and transparent after five years? Is there more competition within our industry? Are shareholder rights being protected? Is there free flow of information so that emerging opportunities can be exploited? Is there a better-educated citizenry which can contribute meaningfully to national income and productivity? Do we have adequate mechanisms to protect public trust?
More than any macro-economic yardstick, these are the issues which will determine the success of our reforms. These social, cultural and institutional factors form the backbone of a true free-market democracy. They remove market imperfections, create healthy competition, minimise waste, invite public participation, spur new ideas and generate investment in the country. More transparency in government will mean less uncertainty, corruption and cost of doing business. Companies which are forced to fiercely compete for domestic market shares will be forced to become customer-friendly and innovative, and more globally competitive. Greater shareholder democracy will put a tighter rein over incompetent management, and reduce asset stripping, bankruptcy and bad debts.
Viewed in this light, five years of reforms have produced little change. Misplaced priorities and intellectual hypocrisy are as strong as ever. We may now have a choice of over 20 different soaps and 10 different television networks, but our Government still cannot adequately supply water and electricity. We can now buy Audi, Mercedes and BMW cars, but our cities continue to be clogged with potholes and smoke-spewing traffic. Those who fulminate over the 'sell-out' of economic sovereignty to transnational corporations (TNCs) refuse to explain how India will bridge the $30-billion investment gap per year which is required to bring this country up to the level of Guatemala, Haiti and Sierra Leone. Critics of counter-guarantees in the power sector fail to agitate over lifetime guarantee of employment to millions of Government workers, that too without any performance bonds. Indian NGOs, who scream from the rooftops whenever the Government bans a book or imposes cuts in a movie, are mute over the fact that illiteracy is the most pervasive form of censorship. Environment and gender equality draw a huge number of do-gooders, but nobody protests against the criminal neglect of society when 20 times more public money is spent on paying Government salaries than on healthcare.
Our private sector is no better. Every company now claims to be "pursuing excellence", has a "Vision 2000", seeks "Total Quality Management", and believes in "empowerment of its employees". Never mind that consumers get shoddy products, simple things like share transfers take forever, and that the average company receptionist is still rude. Senior industrialists will troop to high-profile management seminars by the likes of Michael Porter, and then return to their offices to diversify blindly into housing finance, telecom, hotels and software. Most end up losing money, not their own but that of their banks and gullible shareholders. Management hype is now our largest import from the West.
But perhaps most depressing is our social behaviour and cultural direction, lending an almost Kafkaesque quality to life. The urban elite attends fashion shows by Ralph Lauren and art auctions by Sotheby's, and all but forgets that India is still a Third World nation. Meanwhile, the countryside is still devastated by plague and tropical diseases. Stockmarket speculation has become the largest national fad and our media pays reverential attention to finance whizkids opining on the BSE index, never mind that it has minimal bearing on economic expansion (firms can neither buy their own shares nor borrow from banks upon their market capitalisation). Young people are no longer interested in other socially relevant pursuits, they are too busy listening to on-line stock quotes on Times FM. Very soon all courses except the MBA will find no takers.
India is currently in drift, and looking at the wrong yardsticks of progress. We have already lost 40 years of opportunity, and have neglected fundamental human conditions such as basic education, health and safe drinking water in favour of huge steel complexes and advanced nuclear institutes. This has created what is arguably the world's largest population of the disenfranchised and helpless ( ours is the only country in the world which feels it necessary to educate people on prime time TV on basic hygiene and sanitation) and no amount of economic tampering can solve problems of this magnitude overnight. Macroeconomic benchmarks are important, but it is time to start paying attention to things which cannot be measured easily but mean more in the long term.
(Subhash Agrawal, an international business strategy consultant, will write a monthly column for Outlook)