Four days after this appears in print, the counting of votes in the elections to the 13th Lok Sabha will be over and India will have a new government. If the exit polls showing the nda with an absolute majority do not prove to be wildly wrong, India will have its first stable central government in four years. This will not have happened a moment too soon. For, India has reached the make-or-break point in its struggle for nationhood. Challenges long postponed have grown to the point where if they are not met in the next two or three years, they will overwhelm the nation. What will follow is difficult to predict, but India could very easily follow Pakistan down the road to becoming a failed state. Averting this threat is the task that awaits the nda. It is a crown of thorns, and only the truly brave and sagacious will be able to wear it.
On the face of it, the suggestion that India is in danger of becoming a failed state is preposterous. It's enjoying the greatest price stability it's known in two decades; it has over $31 billion or 10 months worth of imports in its foreign exchange reserves and its short-term debt is very small. There has been a mild industrial recovery. Exports are growing in double-figure percentages. The 'feel-good factor' that the finance minister, Yashwant Sinha, is fond of citing is high. India has just won another war against Pakistan in the most adverse circumstances imaginable. Its restraint in the conduct of this war has won it near-universal approbation. The way is open for a far more constructive and equal relationship with the world's major powers than had ever been possible before.
Then why the dire forebodings? The reason is that the strength or weakness of a state is not measured by these yardsticks. It's perfectly possible for a country to be rich while the state is poor. It is as possible for a nation to flourish while the state decays. For, the state is the intangible seat of authority, legitimacy and power that binds society into a functioning whole. It manifests itself in laws and institutions to administer them. To enforce them, it enjoys a monopoly of legitimate coercive power. In the final analysis, it is the shared allegiance that binds a nation together. In democracies, this allegiance is freely given. To retain it, the state must provide justice, protection and a better life to its subjects. The social contract breaks down when it can no longer fulfill its part of the bargain. That is the spectre facing India at the dawn of the next millennium.
Even a cursory look shows how far the contract has already broken down in India. The judicial system is backed up to the point where the very notion of obtaining justice from the courts has become laughable. The police have ceased to deter crime and have themselves begun to prey on the people. The higher bureaucracy is almost completely unaccountable to anyone, while the lower has become an instrument of extortion. The social and economic infrastructure is falling further and further behind the minimum requirements for a better life. And the Kargil war has exposed how a decade of financial starvation has degraded the war-fighting capability of the Indian armed forces.
But the most serious problem before the country is one the intelligentsia seldom even talks about. This is the lack of jobs and the imminent unemployment explosion. In the dry data of the Planning Commission, while job seekers have been growing at 2.3 per cent per annum over the past four or five decades, the growth of jobs has averaged no more than 2. 1 per cent. But in the next decade, the number of job seekers will rise further while, with the exhaustion of the government's capacity to employ more and more people, the rate of growth of jobs will fall. This is happening when organised industry too is 'slimming down' and raising output without creating more jobs. Students coming out of schools and colleges thus face a nightmare future. In the '80s, their despair erupted in a dozen localised insurgencies. Most of these have been contained but since their root cause has not been addressed, they are time bombs waiting to explode.
Facing these multifarious challenges requires a clear understanding of the price of failure; an equally clear vision of what the future can be if the right decisions are taken, and a resolute implementation of these decisions. The task is Herculean, for the next government will have to do all this with the same impenetrable, unaccountable bureaucracy that has presided over the country's fate in the past. But nothing will be possible if the government does not first find its way out of imminent bankruptcy. For, without money, even the best of intentions will not build schools, colleges, hospitals, sewerage and waterworks, roads, bridges and power stations, and will not create jobs.
In 1997-98, the combined fiscal deficit of the central and state governments touched 10 per cent of the gdp. This year, the trends in central and state finances show that it is likely to touch 12 per cent of gdp, an all-time record. Since this gap has to be covered by borrowing, it means that the public debt is growing faster than the gdp. Interest payments on this debt are therefore pre-empting more and more of the available revenues in future years and the bankruptcy is growing worse. If it is allowed to continue, very soon the trend will be irreversible. It has therefore to be reversed now.
Every past, present and aspiring prime minister knows that the only way to do this is to eliminate the subsidies that riddle the economy and directly divert at least Rs 100,000 crore of savings into consumption. They know that every rupee of subsidy is one rupee less invested and one fewer productive job created in the economy. This is the crown of thorns the nda is on the point of inheriting. It must now have the courage to don it.
