But only just. India also has a government too big to manage itself and close to insolvency; its record in per capita income, literacy, poverty eradication and health are way below respectable levels; jobs are still scarce to come by in one of the world's most closed economies; the begging bowl was passed around seven times in 40 years; and two-fifths of Indians still can't afford the food needed to keep themselves going.
However, Bimal Jalan, eminent economist and former finance secretary, doesn't think this is a sorry state of affairs inviting gloom and doom. In his latest book, Jalan argues that while the underachievement in the five decades has been spectacular, there is immense scope to take advantage of the recent global changes in technology, trade and investment. India can, in the next 20 years, achieve the impossible—eliminate poverty, create jobs and deliver all social services—only if the government realises one home truth: there's no such thing as a free lunch.
So what's new, cynics may ask. Not much, really. Considering the vein of two of his earlier works—India's Economic Crisis: The Way Ahead (1991) and Indian Economy: Problems and Prospects (1992), a volume he edited—this could be the concluding, and boldest, chapter of an economic argument that is quite the mantra of the '90s. Which is, simply: after four decades of centrally planned development, the state has proved incapable of leading from the front. This and other emerging global economic realities demand that it make way for market forces in all manufacturing and major distribution areas. But since the poor are so uncomfortably many, the state can possibly retain some social services and welfare measures, which anyway aren't high on the private enterprises' priority list..
But the book is not all old wine between two very well-produced covers. Brewed over a long time (in the antiseptic environs of Fund-Bank, detractors might add), it deals the government a hefty punch where it hurts most. The public sector, for instance. As Jalan admits: "In an earlier work I had said while sick and smaller units should be sold to the public, 'the solution will have to be found primarily within the framework of public ownership'.... Today I would favour a much more aggressive policy in disinvestment.... Public debt and interest liabilities must be reduced in the next few years, and the only feasible way is to reduce debt-created assets in the PSUs." Also, "all PSUs which dominate the market in any product should be broken up, and one or more of the components should be sold to the public."
Other suggestions: liberalisation of consumer goods import over 3-5 years along with an export push; aligning personal and corporate taxes at a low level; replacing the control structure by public surveil-lance of private economic activity; and fiscal prudence as the key—a constitutional limit to peg revenue deficit. With all this and an annual growth rate of 7-8 per cent for 25 years, Jalan concludes, poverty can be wiped out, and jobs and real income raised dramatically.
To question this hope is to rewind the chicken-egg tape—what comes first, growth or equity? That's a sterile debate. Despite the '95 Human Development Report's rejection of 'trickle-down', Jalan can't be blamed for embracing the high-growth path as the only solution, while bankruptcy stares us in the face. Even the pink brigade, the target of his epilogue, can't dispute that we have to get out of the mess first.
One could still ask, why the mess and why so long? As part of Government at a crucial period in India's economic history, Jalan had the greenroom view of the unfolding drama. Still, it's the quintessential question mal posée: the answer depends on who's asking and who's replying. Ground realities are far different. The lender must ensure the borrower is earning enough money to pay back. And at a time when global capital is moving towards developing nations like a UFO scouting for a landing zone, India has a lot to offer: low wages, huge employables, a ravenous and semi-protected market, low social overheads and a government so sure of its failure that it's clinging desperately on. Beggars don't have the luxury of choice.
