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September 29th 2012
Professional fortune-tellers politicians. Manmohan Singh. And its underlying optimism re ects the attitude of many ordinary Indians. The man glances at one and lets his conjectures y.A. Maya Valecha and Anupam Yog Missing map? Sadly. Sarang Shidore. Mark and Gilly Tully. polio has just been eradicated. Paresh Patel.com/node/21563185 The Economist September 29th 2012 1 . turned 80 on September 26th. Himanshu Bhatt. too.I. India will soon be the world’s greatest power. The soothsayer is surely right. and keep the gains coming. Aditi Phadnis. a slumping rupee. He sees an elderly leader’s death and a dynastic marriage. Nandan Nilekani.com/specialreports An audio interview with the author is at Economist. bureaucrats. India faces 1 CON T E N T S 3 Politics Power shifts 4 Gujarat’s chief minister The candidate 6 The economy Express or stopping? 7 Manufacturing On a hiding to something 8 Education A billion brains 10 Cities Concrete jungles 12 India abroad No frills 13 The tragedy of the commons An uphill walk ACKNOWLEDGMENTS In addition to those mentioned in the text. the relentless spread of mobile phones. Ajay Mathur. low-ceilinged home of a fortune-teller with a green parrot. Manish Tewari .com/audiovideo/ specialreports A transcript of an interview with Narendra Modi is available at Economist. economists and analysts generally come up with a dimmer prognosis than the Delhi soothsayer. data from last year’s national census look good: fast-rising literacy. B. It is more intolerant on this issue than either China or Pakistan. Income per person is up. Montek Singh Ahluwalia. Sanjit Das. The economy is worth almost $2 trillion. T. making it the world’s tenth-biggest. then subsidises a lot of it for consumers). Syed Akbaruddin. the author would like to thank the following for their help in preparing this report: Bharat Agrawal. For a bundle of rupees he sets the bird to work. more girls in schools. big and fast-growing.K. Yet his analysis of India’s prospects may not be so far o the mark. Nick Bisley. a current-account gap that is hard to nance. Dalal. and so on. Dinesh Navadiya. The country is more stable than ever (aside from a brief spell of trouble in Assam this summer). A general election is due by mid-2014 at the latest. Pankaj Pachauri. M. the boss of Mahindra Group. a leading manufacturing and technology rm. But the greatest pains are self in icted: locals and foreigners discouraged from investing. The prime minister. picking from a selection of cards. paved roads are becoming more widespread. rural poverty down. about the impending political drama. Anant Nath. Jairam Ramesh. They must become bolder. Navdeep Suri. Annual growth is down to about 5%. Ninan. Suhel Seth. In many ways India seems set on a promising path. but strength will follow. Gautam Bambawale. says Adam Roberts PICK YOUR WAY through the narrow alleys of a south Delhi slum to the dark. By the mid-2020s it will be more populous than China. we think our Indian readers can face political reality. reckons this is the worst conjunction of political and economic problems he has seen in his adult life: I can’t remember any year worse than this. Lalitha Kamath. The challenge is to manage this change. India censors maps that show the current effective border. T. Those who want to see an accurate depiction of the various territorial claims can do so using our interactive map at Economist.N. Basharat Peer. There will be political turmoil in the next two years. from a peak of 10%. including weak global growth and high oil prices (India imports 80% of its oil. Sid Singh. Siddique. who have much to feel pleased about. Akash Kapur. insisting instead that only its full territorial claims be shown. even as the economy goes through a tougher patch. An assassination looms.A. a scal de cit that could provoke a nancial crisis. It is a razzle-dazzle prediction for a sixth of the world’s population. A political succession is inevitable in a country where the median age is barely 25. Sanjiv Goenka. and some members of his cabinet too are getting on. Partho Banerjee. It is young.S PE C I AL RE PORT I NDI A Aim higher India’s prospects have dimmed as politicians shrink from big reforms. Shivshankar Menon. After a decade of rapid economic growth. Sporting triumphs lie ahead and riches will fall upon Indians. Nair. Anand Mahindra. Indian readers will therefore probably be deprived of the map on the second page of this special report. Pratap Bhanu Mehta. industrialists. Unlike their government. External problems hurt.com/asianborders A list of sources is at Economist.
0 1. ODISHA 91. bids for land The core of the internal problem is often summed up as goto set up factories.329 means dodgy deals no longer Thiruvananthapuram Exchange rates.4 and below 7.4 0. has dropped by 67% so far this year. Mr Singh did announce some limited economic reforms this Is there a way out? The country’s rst batch of liberalising month.135 72.6 ASSAM 736 NAGALAND 2. will be reassured only if they see politicians deliver setax rules. which could allow the inuntil recently the nance minister.3 41. This parliament is on course to sit for Inviting more foreigners to invest in India would help senless time than any other in India’s independent history.158 things have got worse.2 NADU scandals that also nger buLAKSHADWEEP 2.86 ¤1. Their dead hand explains 1 foreign capital look increasingly wrong-headed.637 India su ered blackouts for 31.5 KASHMIR 1.1 NICOBAR ISLANDS* 1. was precipitated by a balance-of-payments crigenerally his government has failed to carry out profound resis. foreign investment and a revenue squeeze.801 1.2 Gorakhpur PRADESH 68. and domestic private rms The ruling United Progressive Alliance (UPA) coalition.1 rather. But the 1. such as Vodafone. Most important.5-7. but 112. The IMF has said that the scal de cit could rise to booted upstairs to become president. peatedly blocked reform.0 103.0 Amarnath Cave Srinagar JAMMU & 12.1 TRIPURA GUJARAT MIZORAM 33.6 1.0 una R A J A S T H A N deeper problem is organisaPatna 1.848 Population. Netas betiment and plug the current-account hole. 3. but industrial production contracted this summer. that means slashing His successor.064 72. 2003-12. Sonia laxed labour laws could help get them sta ed. safest to do nothing. Fortunately in July he was rious reforms.4 ning o cial earlier this year. But it.4 reaucrats.315 1. ment all are now stuck in bulging in-trays.957 Bangalore Like politicians.5 GOA 84. India’s economy is in a bit of trouble.6 1. held back by o cials.5 and above 6. bureaucrats working in an ossiinto domestic airlines. Pranab Mukherjee.4 Kolkata product distributed by the 807 RH † Ahmedabad 1.9 1. That spread uncertainty. and vestors.4 C H I N A 27. Palaniappan Chidambaram.864 2.851 1. probably beyond 2014.057 Population by state.182 MANIPUR 2.181 Babus have been a proMAHARASHTRA 1. More reprime minister and a dithering dynastic party leader. In ation may at last be dipping. Faced with slowing buoyant. rightly.4 Mumbai 25. he looks short of political means.8 Ga 1. Perhaps another economic emergency would force a second form. Tenders for road construction. allowed to set up supermarkets in some Indian states and buy Now add unhelpful babus. got the PUNJAB AKHAND 1.5 2.4 HARYANA blame for the dramatic power 0. That means. a host of a tempting menu of his intended economic reforms to boost conmeasures is waiting to be passed or implemented. But reforms.052 blem since Mughal days. Beyond that. A land-reform dence and raise investment and growth. in 1991. Chennai 1.056 n g 199.15 LANKA Sources: Ministry of Statistics angry that even honest deciInteractive: Compare contrasting GDP and and Programme Implementation. March 2012. m GDP per person. briskly sets out subsidies by more than a token amount.043 Pune B a y reaucracy now works to rule.SPEC I A L RE P OR T INDIA t Line of c o n rol PAKISTAN ADMINISTERED KASHMIR old may be gone.557 KARNATAKA ANDAMAN AND stuck. ForNetas and babus eign direct investment.42 £ 1.648 1. much of what does not happen day-to-day. Yangon No civil servant is remotely ino f Hyderabad terested in pushing something ANDHRA B e n g a l PRADESH along.194 two sweltering days.7 worth of pipeline projects 4.716 WEST state-run railways to (mostly) 849 BENGAL MYANMAR Surat state-run power stations.050† MADHYA PRADESH 3.9 CHANDIGARH* the economy are still run or 000 PRADESH 1. Welfare spending Gandhi. But continued caps and restrictions on ed system bequeathed by Britain.5-9. 2011 = 1. 2011.677 Delhi N cuts of this summer.056 N UTTARPoliticians. when L PRADESH E P Gurgaon DELHI* CHA NA 600m people in the north of A L 16.209. The public is so 100 rupees = US$ 1. are refusing to invest. *Union territories population levels across India’s states at: †March 2011 sions are sometimes conCensus of India.7 60. A welcome new 1. applications to supply goods to local governvernance . September 17th 2012 SRI stay hidden. babus Puducherry S e a are worried by corruption PUDUCHERRY* TAMIL 300 km 1. and retrospectively tried to rewrite investors.com/indiastates12 strued as favouring special interests. March 2012 = $1. Outsiders may now be yond Congress share the blame for paralysis. has been stalled.4 6.8 BHUTAN ARU Neemrana U T TA R 3. Services and consumer spending are still dominated by Congress. Yet with a do-little bill could make it easier for industry to set up factories. rst. which last year hit a record $47 billion. $ P A K I S T A 2 CHH AT TI SG A KER ALA The Economist September 29th 2012 .7 10.507 A r a b i a n 0. The licence raj of GDP growth. % 9.6 B I H A R 504 Jam e s 666 MEGHALAYA 3.1 25. Congress’s coalition could switch from a widely abused system of food rations to allies (together with obstructionist opposition parties) have recash transfers into individuals’ bank accounts. so babus consider it 2 awkward years.7 BANGLADESH 708 tional: a wretched public coal JHARKHAND monopoly gets too little of its 1. politicians (netas) who do not rule. Thomson Reuters Economist.5m freedom-of-information act na GDP per person.361 SIKKIM 2. passed no signi cant legislation and is mired in sleaze. bizarrely attacked foreign independent central bank to start cutting interest rates. round of big reforms. which provoked considerable political upheaval.5-8. about 9% of GDP this year. Bu1. lamented a senior plan61. Growth is down. but too much of the commanding heights of HIMACHAL 6.1 ISLANDS* National totals: 33.4 8. There are three years1.853 na 1.
Most assume that Mr Singh’s government. once a model of rectitude. Still. allies ourished in the south and Congress roared in big Andhra Pradesh. 7 Politics Power shifts Weaker national parties. are bound to hold widely divergent views. No one really knows what he stands for or whether he can lead. such big reforms will happen soon are nil. The central bank would probably trust him to rein in public spending. If Congress were pushed out it might be replaced by a pro-growth gure from the national opposition. So it was with Congress in 2009. in the spring. perhaps with new allies. Rahul Gandhi the son. India has had a few of these in the 1990s. The ruling party in Delhi often su ers so many setbacks that it is hard to believe voters will support it again. But the gloomsters may be half right: India’s politicians are not. it ain’t happening. or even most. the ruling party has been thumped in big states.SP EC I AL REP O RT I NDI A 2 One other important reform would simplify trade inside India. FICCI. says Prithviraj Chavan. and tried to make the case for them this month. The time for adding to the current. a noted historian. Nobody ever gets to interview either him or his mother. the outcome was still unclear. and 1 3 The case for gloom Yet sceptics see a more alarming possibility: that India’s politicians are not really interested in reform. as the next article will explain. In recent years she had repreatedly blocked reform e orts by Mr Singh. the party president. Alternatively. Politicians show no wish to be bolder. Rajiv Kumar. Mr Modi says he has a mission to serve his country. The next budget. perhaps people distrusted the opposition BJP’s candidates. He wants to promote industry and would surely get the babus working again. Mr The Economist September 29th 2012 . it would replace a tangle of state levies with a single. These three months are crucial for India’s economy. yet to general surprise it was re-elected with a bigger mandate than before. new voter habits and corruption are changing India’s politics MAKING POLITICAL PREDICTIONS in India is risky. could be right. and its opposite. This special report will try to steer a path between the two. his new e orts to reform are unlikely to win much support from the public. and national a airs can appear as an amalgam of assorted local rivalries. limited reforms is short. Narendra Modi. Singh’s warning in August that slower growth threatens national security sounded like a vain cry to his fellow politicians. earning only a poor fourth place in the state election there this year. More than usual now rests on who holds political power. The party’s electoral prospects look poor. On September 18th Congress’s main coalition ally. and bigger changes would be far more awkward. Politics in India is big and messy: hundreds of millions of voters. As this section of The Economist went to press. is tarnished by presiding over the most corrupt government in India’s independent history. Andhra Pradesh provided more Congress MPs in 2009 than any other state. is bound to be populist as it will be the last before the general election. having learned from the defeat of the most recent reforming government led by the Bharatiya Janata Party (BJP) in the general election of 2004. grandson and great-grandson of prime ministers was by now supposed to be reviving the party. As usual. But that looks like a defensive strategy. it is hard to see the party implementing the big reforms that it has failed to push since 2009. even a minority government after 2014 might have the stomach for more reform than the current one. distrusting the centre to dish out revenues fairly. but now a local leader’s desertion has shattered the party there. has too obviously enriched a destructive band of robber-baron politicians. Mamata Banerjee. Almost any explanation. and some say that prime ministers who know their tenures will be short try to get more done than the timorous and long-serving. letting more foreigners into the retail business and slightly cutting diesel subsidies. perhaps with more public funds going to her state. India does not have long to wait for an election. merging with doubts about market reforms. Worsening the scepticism is widespread dismay over crony capitalism. Given a rush of state elections over the next year. rural ones were impressed by new welfare measures. But having led a dreadful campaign for Congress in UP. But optimists think that if at least one or two of them do. Growth in the past decade. describes it as India signing a free-trade deal with itself . Ramachandra Guha. ahead of the general one. Concerns at local and state level often trump national ones. Yet state governments and the opposition are blocking it. A dispirited senior member of government in Delhi frets that an old broad consensus in favour of reform has broken. One property billionaire with good contacts in government says that if it’s not done by the end of October. Explanations varied: urban voters liked rapid growth. Mr Singh likes to say that ordinary voters more than politicians grasp the bene ts of reforms. Instead a strike was called for September 20th and street protests erupted. in a tirade before television cameras said that her party would quit the national government and no longer back it in parliament unless the limited reforms announced a few days earlier were rolled back. he seems to have lost his nerve. caused a political storm. the country’s mood could improve. next page). can hang on until 2014. stronger regions. Sonia. points out that India’s cheerleaders as well as its pessimists tend to overstate their case. the populist chief minister of West Bengal. Maharashtra’s chief minister and an advocate of reform. such as Narendra Modi (see box. by instinct. reformers. But building a constituency for bigger reforms anything beyond letting foreign supermarkets in will be endishly di cult. or preparing to assume high o ce. the reform of public pensions and the like. Known as the Goods and Services Tax (GST). They act when pushed. But even the limited reforms anounced this month. say the optimists. unless Congress is forced out sooner. Voters gave that party no credit for helping create conditions for economic growth. from vastly di erent backgrounds. But Congress will feel growing pressure to dish out public funds directly to its voters. And although he had a hard-won reputation for good economic management. Some close to her had thought she might be bought o on this occasion. It is an obvious way to boost trade and growth and lure investors to a bigger single market. Congress has also done badly in massive Uttar Pradesh (UP). The next general election is in 2014. head of the biggest business lobby. Mr Singh. such as Gujarat’s surly strongman. Public anger with the corrupt and the super-rich has risen. The chances that all. national one. The liberalisation of 1991was pushed by outsiders and was relatively easy to implement. along with high commodity and land prices.
Usually built around a charismatic individual who becomes a state’s chief minister. Infantmortality rates are down and prosperity is up. says a Congress leader. letting mobs vent their rage after Hindu pilgrims died in a train re. says that analysis is unfair. A newspaper editor in Delhi thinks India is getting ready to make the Gandhi family irrelevant . talking of his mission to serve: I am interested in doing something for my country. shortly after he took over as chief minister. Nitish Kumar. an anti-graft campaigner. Many distrust and despise him for what happened in 2002. but it is less debilitating than in many other places. Pressed about the riots. It would then be in a good position to impose its choice of prime minister on its coalition partners. notably in the southern state of Karnataka. are in the ascendant. is matched by a strong agricultural record. These states control roughly half 1 The candidate Narendra Modi wants to be India’s next prime minister RESPLENDENT IN A pink shirt. Mr Modi says. his eyes burn with determination. say over 170 seats. This is an article of faith. As for the bene ts to ordinary Gujaratis. Unfazed. when he became popular.000 people. which remains in uential in the opposition grouping. appeasement to none. Nitin Gadkari. When he talks of seeing himself as destined to triumph. were killed in riots. said only a secular candidate could lead India. But they are really a collection of regional leaders.SPEC I A L RE P OR T INDIA 2 meanwhile no other young leaders can rise. The rank and le of his Bharatiya Janata Party (BJP) love him. This happens in Kerala and Tamil Nadu in the south and Himachal Pradesh and Punjab in the north. It gets little support in India’s south. Regional dynasties. thinks a national two-party system as in America would raise standards. No politician stirs as much anger. an observer of the party. In June a close ally of the BJP. he says his local popularity proves them to be politically irrelevant: This question has no use I have 4 faced ten elections of various kinds in my state. things like literacy. outshining Congress’s indecisive Rahul Gandhi. The lesson from India’s states. east or north-east. Narendra Modi chuckles when asked if he is a dictator. and no rising stars are being held back. yet projecting itself as clean is tricky. The crumb of hope for Congress is that the national alternatives are weak. Yet many other states. Polls show him to be the most popular gure to lead the country. is that a regular alternation of parties in power tends to deliver the best results. Smaller national parties do not look promising. He fared poorly as a campaigner in the 2009 national election. Without their own state as a ef. Mr Modi’s time could come if the BJP got a big victory in 2014. Mr Gandhi’s restraint in reaching for power is admirable. as the burly Mr Modi. a junior minister and loyal friend of the Gandhis. justice to all. the position of women and infantmortality rates improve. As parties compete to o er better public services and other social goods. The state has been calm since and Gujaratis seem mainly to want to forget the riots. notably in India’s south. Ramachandra Guha. The Economist September 29th 2012 . having toned down its earlier. But it matters less and less to voters. Mr Modi agrees and calls himself secular too. the Gandhis look unrooted. The Hindu nationalist movement. A level of detachment is built into his personality. with a neatly trimmed white beard. Sachin Pilot. Corruption has not been eradicated. lead within a team or su er criticism are absolutely baseless . Other BJP leaders are wary of Mr Modi. luring manufacturers from the rest of India. says a political observer in Delhi. and the BJP is unsure of its ideology. says Gujarat’s chief minister. mostly Muslims. He faces two main challenges. Other observers are more sceptical. Gujarat’s industrial success. Rahul Gandhi intrinsically doesn’t want it. The party tries hard to be seen as ghting corruption. Modi wants to get ahead opposes its one-time protégé. they matter. says the party has a galaxy of leaders for 2014. Mr Modi is its likeliest candidate. Mr Modi cites more girls at school and fewer drop-outs from education. with power and money to spread around their states. He appeared to turn a blind eye. the RSS. electricity and e cient bureaucratic support. he says. when over 1. the historian. odious. He leaves little doubt about his wish to become prime minister. says Mr Dasgupta: reshaping the country’s right wing but seen as too divisive to lead. too. The Gandhi dynasty still holds together Congress (which lacks much ideology beyond broad secularism) and helps to settle leadership spats. form of Hindu nationalism but also muddied its old pro-market stance. preferring the BJP’s party president. the plentiful supplies of gas. The rst is Muslims and other minorities. or grudging admiration. a Hindu nationalist. the chief minister of Bihar. It opportunistically backed Anna Hazare. for its well-built roads. His fellow politicians do not know how to handle such a con dent loner. Elsewhere many are sure he is a monster: A mass murderer who should be in jail. says Swapan Dasgupta. If not. Think local Regional parties ll the gap. It has had its share of scams and crookedness. The second challenge is distrust inside his own party and among national coalition partners. the quick allocation of land. Courts have found him guilty of nothing. head of the BJP in parliament’s upper house. a direct swipe at Mr Modi. The people always supported me. but not his plans for a powerful anti-graft ombudsman. Investors ock to Gujarat. Suggestions that he cannot compromise. and it lacks ideas for making things better. Now Mr Modi is trying to reshape his image. do much better on social indicators. Arun Jaitley. The hope is that Gujarat’s leader would replicate such gains elsewhere. If the party wants to campaign on the economy and e cient government. wielding near-presidential power over a territory that often has a country-sized population. he could turn out to be India’s Barry Goldwater.
2 billion from a scheme supposed to Muslim and the more secular Hindu votes and the BJP the more help sick villagers. A series of outrageous scams (see table 1) 5 The Economist September 29th 2012 . Nationally. what happens in Delhi too. has to woo around 1m voters. says India now has 365 roundNotional the-clock satellite channels. says a high-pro le Congress gure in Money is needed for the usual stu : posters. Many political leaders are The others are Nitish Kumar in Bihar. And everything is big. when pricier electricity was imported instead. irrigation schemes and toll roads are typically overpriced class voters who swing between parties depending on how they and often late because they are built by rms with political ties. especially. education. Congress still gathers in the this year for pocketing $1. but voters overwhelmingly rewarded nors and parties maintain their close relations but making them him for delivering better roads. Voting in India is generally clean and honest. The most has left voters resentful at the huge losses of revenue involved. What is new is the arrival of oating middle-class voters They run some of India’s wealthiest states and preside over more than 600m people. and several ministers were sacked earlier identity politics of old. a Dalit (the lowest there are no audits of political parties. but the media and mobile phones. as in America. but parties also raise huge quantities of cash to win they are increasingly well-informed thanks to cable news. Television helps shape reactions to national issues such “2G” 2008 Dodgy sale of mobile-phone licences $39bn as corruption. sometimes The costs are real. us of property and political funding. For evidence. Even the limited hope of letting private doCaste was still a factor. reward favoured groups. More wealth created by entrepreneurs. Mr Sardesai thinks TV lets voters vent anger against the “CWG” 2010 Crooked contracts for Delhi Commonwealth games $ millions system and judge leaders from close by. politics will become cleaner if and when Inelected in Gujarat mostly because he runs the place e ciently. which rely least on Delarice. He reckons it is the single most cheering thing in Inraces also expect pre-election goodies. Mr Hazare’s dramatic street campaign and public “Coalgate” 2004-09 Shady allocation of coal blocks $34bn fasts were made for TV and earned non-stop live cable-news cov“Adarsh” 2010 Mumbai home for war widows taken by the powerful $ millions erage. the lower house of the national parliaies expand and schooling improves. land and public goods strongest leaders. He identi es. Jayaram Jayalalitha in Tamil sighs a commentator in Delhi. trips to vilMumbai. hilesh Yadav and family in UP. improving transparent. In UP one politician was recently lmed telling o cials it Yet some voters are beginning to drift away from the rigid was acceptable to steal. lionaires. Mr Modi in Gujarat and Sharad Pawar. Aksustained only because they have huge war chests. mobile and privately employed. food mixers. good job. with government jobs. schools and hospitals. Growing inequality spreads dismay. local organisers and the like. It wants a Even state assemblymen have massive constituencies. education tried to close functioning power stations so he could take a cut quotas and other handouts. in turn. urban. 7 transparent and e cient delivery of food rations to the poor. and caste still counts: Mayawati relies on Dalit jects in exchange for 30% equity in them. If holding leaders accountable for their performance becomes a national habit. Raman Singh. A political party is said to clear business profervent Hindus. rallies. Punjab this year. India’s new airWhat is new is the arrival of a group of oating middleports. campaigning is expensive and dirty. TVs. seems forlorn at the moment. Another government leader calls the middle class a lages. India may be passing through an American-style robberThe mightiest satraps pay the least baron phase. social elections. as lost revenues or as stolen goods dian politics is rotten. Young India wants good policy. driven by a commodity boom and a shift from a attention to national parties. so politicians regularly dian politics. who swing between parties depending on how they They are unlikely to unite as a coherent perform. throw up the nections and access to natural resources. law and order and lifting the economy. invoters re-elect him because their incomes are rising and public novators and manufacturers might loosen political ties. Leaders. literate. an ally of Congress in Maharashtra and nationally. as well as many city-based and caName Date Description loss* ble ones.SP EC I AL REP O RT I NDI A 2 of all India’s public spending. Mr Modi keeps being reMore likely. Such hatred would be understandable because much of In*Maximum estimated by the Comptroller and Auditor Source: The Economist General and others. Politicians want the lifestyle enjoyed by the country’s bilMostly young. thanks to computerisation and the spread of ID cards. A leading Congress gure rails that Nadu and Mayawati. A power minister in one state reportedly referred to as vote banks . not on promises of rewards for their particular group.6bn lead to public hatred of politics . One satrap is believed votes and the Yadav family on middle-ranking castes and Musto have become the biggest property developer in India. not on promises of rewards for their group third force of politics. rice. They inclosed to an open economy. who often in uence such as telecoms spectrum. in These voters may be starting to decide results. In India many voters in tight new caste . perform. saris. especially as a tiny minority grew rich beyond the dreams of avprosperous ones. A typFor now they are in a minority. but have great veto power over national matters. the more changes will take time. it will be in part because of an explosion 1 Cleaning up? in television watching. heroin. West Bengal. Around 100m voters in 2014 ment. but they will increase as citical MP in the Lok Sabha. universally outed. a leading news preSelected Indian scams senter and editor since the 1990s. but worries that it might Karnataka 2006-10 Illegal mineral pillage $3. There is such a deep nexcaste) who ruled UP until earlier this year. says that locate public goods. Gloomier commentators see an outclude three women: Mamata Banerjee in right Russian-style kleptocracy. will be rst-timers. But such services are getting better. The billionaires too often ourish thanks to political conhi for discretionary funds. Rajdeep Sardesai. whisky and even. lims in UP. O cial limits on party spending are look at Mr Kumar’s triumphant re-election in Bihar in late 2010. We are creating an oligarchy. dish out cash. dia’s economy shifts away from a system in which politicians alThe chief minister of Chhattisgarh.
an average of just 21km 1 How the BRICs stack up Selected economic indicators.0 2. said this month that three-quarters of Indians now have access to a mobile. which produces small consumer goods are those targeting such buyers. blackouts are common and labour has become as expensive as in China. On one 4. take up a job. Assamese students in Kerala and Bihari diamond polishers in Gujarat all move as freely around their country as Americans hop from state to state. Yet the rosy forecasts were drawn up when the economy was roaring ahead and it seemed that another decade or two of similarly high growth would deliver a big mid-income economy.4 6. The Transport Corporation of India. Now that prospect is in question. on average. a maker of phone handsets. The big Indian rms that are doing best such as Mahindra and Mahin6 dra. They are travelling far to visit a hospital. Indians are also increasingly well connected. Now.5 1. They agreed that India could achieve much more than the 3% stopper-train growth rate that was the norm before reforms in 1991.000 a year. though only 5%. A decade ago few would have cared. even though the Chinese.6 -2.0 20. Economist Intelligence Unit 2 Brazil 2. especially in food prices.2 The Economist September 29th 2012 .2 5. a carmaker. for example.4 4.6 18. usually a mobile.1 -2. two-thirds have electricity and nearly half TV. Doubters had long been saying that India’s potential rate of growth was bound to be lower than. China’s. A similar number own bicycles.7 6.6 India 7. are three times richer. so far.8 34.6 Russia 4.4 31. reported in May that every one of 17 important road routes was clogged.6 9. say. Odishan coffee pickers in Karnataka. That mobility should give India an advantage over countries like China that penalise farmers when they leave their land.6 5. enroll at college. ports and railways are overwhelmed. Ericsson.380km from Delhi to Mumbai. since only 9% had a phone of any kind.5 23. according to census data from last year. But they gave warning that it could not keep up an express-train speed of close to 10% because its economic engine quickly overheats.200km train ride. According to a new report by PricewaterhouseCoopers. The next few years are likely to see much slower expansion.0 48. 63% of householders have a phone. lower levels INDIA’S TRAINS MOVE slowly.3 51.2 28.7 China 9. The endless rows of concrete houses with trailing wires seen from the windows tell a story too. which makes motorbikes. The same census showed that of India’s 247m households. is falling back to older. Hero MotoCorp. To drive the 1.2 8. Recent years have brought high in ation. a logistics rm. 2011.4 -2. The consultancy reckons that this gure will rise to 570m within a decade.8 -8. % Indicator GDP growth Inflation Unemployment Investment/GDP Savings/GDP Current-account balance/GDP Budget balance/GDP Sources: IMF.S P E C I A L RE PO R T INDIA 2 The economy Express or stopping? India’s growth rate.000 and $4.3 8. Roads. or Hindustan Unilever. have a car. supercharged for a decade.8 -1. takes an average of nearly three days. your correspondent never once lost his mobile-phone signal. creating a market worth $1trillion.6 6. in 2010 some 470m Indians had incomes between $1. through 615 stations. That gives passengers plenty of time to observe their fellow riders.
which promises 100 days workers got grumpy. especially from 70-odd branded shops at home. then the railways minisI remember that old watch ad. admits over a vegetarian growth would require a slew of big secpeople is harder still. measures. India has a voracious appetite for energy to become paranoid again about generating growth. but the mestic sales rose by nearly one-third last fuel remains massively subsidised. he suggests. Raising passenger fares is politican’t imagine anything but an improvement on a dreadful year: cally impossible. Growth is shattering. lifting rural incomes and Sta are now rewarded for e ciency in using boosting consumer markets. who has just taken over as the government’s chief economic adSeen in that light. The government could even break up or sell o Coal India. the creation of produc(formerly Pondicherry). The rm says the delays are getting worse: the road net- still cheerful. but the 1 coal to keep the lights on even though there are new power stations. poorest people. but it is risthriving manufacturing niche. Anand Mahindra. India hurts when it is growing at 8. Twelve years ago the company relied on with kerosene. fertiliser and food. Already he is the that this sort of spending does less to help largest private employer in Puducherry the poor than. along with other new welfare uniqueness. sales to foreign distributors. ing fast: during Mr Singh’s rst governHe employs 3. argues N. To subsidise the fares. and multi-brand ones in banking or IT. One obvious remedy would be to deregulate the distribution of coal. Simpler designs and more land acquisition. the boss of Venus Jewel. leader forced him out. Most of been allowed to oat more freely.5%. a Parsi businessman in Mumbai. Singh. graphic designers and marketing and still runs it. India is exploBusinessmen. mostly British. tried it in March. Despite slower economic Fiscal policy is generally pro igate. ourishing. But sustained rapid agers. are getting hard to nd. He is amazed by glued by ranks of well-educated women in 2010. an academic and former chief economist at the IMF loaded lorries on crowded roads.000 people and expects ment it was just 1. keeps on ticking’.K. to include things like mountains of untrained labour but hardly to speed them up. At the and minerals. consumers love his products. Even so. That. ly. ter. Each of them takes an average of 13 little. Politicians naturally prefer to spend. inveighed against the paralysis in growth-enhancing reabout 5% was almost welcome. His parrapidly. a Delhi-based econotheir own productivity and follow complicatmist. Its leather bags are stitched and Congress did free petrol prices in Russia and South Africa. internal market to sell o cuts. pushing many goods o the tracks and into overuram Rajan. Sevantilal Shah. are On a hiding to something The Economist September 29th 2012 7 . They calculate Surjit Bhalla. He expects 200-300 joying buoyant consumer demand. along year. He said India had to raise fuel prices argues Cyrus Guzder. India could do with many more like it. When Dinesh Trivedi. We should not try to get back to forms and an unholy alliance of some businessmen and polithe highest growth path. import or shift enough time Mr Rajan had not yet been appointed to his new job. says domestic sales are work is growing by 4% a year but tra c by 11%. Sri Lanka. booming markets in Malaysia. Finding capable shop manDilip Kapur. a big diamond polisher and producer in Surat. them have been working there for ten or 15 forms tend to be introduced only little by He sees manufacturing as essential to years. All this suggests that potential American and Australian. At a meeting in April Raghbeing raised. been allowed in. his party that’s what I hope we’ll say of India soon. growth. says he The railways are no better. Today 70% of its revenues come close to what India has today. and ticular worry is energy. we lost of paid work a year for every rural housethe core strength. Yet their wages are Single-brand retailers.6%. say. he says: We have lunch in his garden that he tried and failed ond-round reforms. stores in India within ve years and also has ON THE FACE of it. to be kinder to investors in order to attract capital. for the rst time in nine years.000 soon. and in theory quite a lot of capacity. That is not a huge share. DoDiesel prices went up this month. to relieve poverty now represents 2.SP EC I AL REP O RT I NDI A 2 an hour. ‘takes a licking. and over the years the rupee has how many customers in forgotten corners of blue saris on a shady factory oor. but the skilled workers he needs hours to make a bag which a Chinese worker auction. points out that spending on welfare ed spec sheets for a wide variety of designs. says Mr Kapur. freight charges keep Economists are more cautious. but probaleather (the costliest input) and run an bly also raising labour costs. Many of the daughcould produce in three. Nor have India’s politicians shown much appetite for reforms to improve matters. a product that spoke of hold. have ters of his present sta are studying for jobs rising by 13-14% a year. but only after years of scams. particularly those enMr Kapur’s bags of success sive. of the Mahindra Group. he says. I lost the ability to brand. ing failure. but cannot dig. the slowdown in economic growth to viser. the rm is doing remarkably but since labour costs make up only a small Congress is fond of entitlement schemes well. anyone trained who can work independentrepetition got the time down to nine hours.5% of His workers’ skills. Hidesign is a manufactura massive and badly run state monopoly. wealthiest corners. an MP from Bihar and economic adviser to the BJP-led governA ourishing Indian leather business ment of 1998-2004. labour laws and tax. share of the total he was saving little and his such as NREGA. given a weak global economy. ticians that blocks change. Mr Bhalla worries this to rise to 5. such as IKEA. says Mr Kapur. Some scarce goods are now sold by his brand. serve a GDP. one of India’s tive jobs. Worst. is helping some of India’s Instead he decided to raise quality. but reIndia want $100 bags. who founded the business look set to follow. for 94% of its growth is nowhere near double digits but income.
Sadly Mr Rajan. have done well (though Tata’s Nano. At a Maruti factory near Delhi this summer. Manufacturers also complain about the high cost of credit in India. thankfully they account for only 14% of GDP (against about a third in China). the state-run rms. A hole in the middle Yet optimists need to address another problem: the structure of employment. is not yet the triumph it was billed as). the lead instructor of Flying Fox. Jonathan Walter. but India is not. There is plenty of anecdotal evidence that skilled workers are becoming scarce. The out t’s British owner-manager. but this opportunity came along. As Chinese wages rise. So he reckons that the country will return to a high growth rate. many still poorly educated. says he had extreme di culty recruiting the ten types of masons he needed to work on his campus. also in Neemrana. The problem is not so much the onerous labour laws but nding skilled people. More than other sectors. of the sort that thrives in China and drives exports. the country needs huge quantities of skilled labour that will not be easy to come by. This may ease a bit as in ation subsides. In particular. contrasting it with the late 1980s when the country felt like a warmer outpost of Soviet thinking. Raj Kumar. IT and outsourcing companies such as TCS and HCL are performing well. he says. The man in charge of building a university. As for the rotten bits of the economy. for Indian customers they need social skills to cajole the reluctant into the walk up the hill. A weaker rupee will make the country more attractive as a base for exporters. near 9%. India’s carmakers. workers can end up getting paid different rates for the same job. Manufacturing makes up just 15% of the economy. And its own booming markets o er a growing incentive for manufacturers to overcome their problems. a tourist spot some 130km south-west of Delhi. like his a able and clever predecessor. you might have a few niggling doubts. Kaushik Basu. He is particularly pleased that India has persistently high national savings and investment which in his view can be sustained. that led to clashes which left an HR manager dead. When rms persuade unions to allow contract labour to increase exibility. much the same as in the 1960s. lacks political clout. More factories could provide more jobs for the 13m people that join India’s workforce every year. % 100 Services Industry Agriculture 1951 55 Source: CEIC 3 Education A billion brains 80 60 40 20 0 A better education system calls for more than money CLIP ON A harness. And if services are to keep expanding. He puts faith in the expanding young. And the service sector already makes up 59% of GDP (see chart 3) and is still growing rapidly. To deal with foreigners his sta need good English. has an impressive (if not entirely relevant) quali cation as a Master of Philosophy in ancient Indian history. urban and literate population and in new technology. Mr Basu remains an optimist on the economy. Indian labour costs are high and laws are restrictive. Agriculture still employs roughly half of all working Indians. As you whizz. allowing interest rates to come down. But there seems no prospect of a big leap in Indian manufacturing in the near future.SPEC I A L RE P OR T INDIA Something missing GDP by sector. In private. I had planned to do my PhD. despite global worries. which is very di erent from that in most East and South-East Asians economies. a cheap small car. once the current uncertainty and urgent scal problems are dealt with. by and large. lift your legs and hurtle down a wire towards the sharp corners of a 15th-century Rajasthani fort. most se- nior o cials say something similar. Was the zipwire serviced by someone who knew what he was doing? Is the safety adviser any good? Who is trained in rst aid? Fortunately the sta in Neemrana. 7 8 Your country needs you The Economist September 29th 2012 .1 60 65 70 75 80 85 90 95 2000 05 12 Fiscal years ending March 2 prime minister was at his side and clapped. many of whom are much less productive than they might be. The missing middle is industry and manufacturing. it su ers from India’s entrenched bureaucracy and wretched infrastructure. despite some recent slippage. countries such as Bangladesh are well placed to pick up business. are on the ball. explains that getting and keeping reliable workers is his greatest headache. A manag.
an NGO. the shortage is of people who are literbrisk. 40% of Indian stugineers when it needed nearly 4m. Khajuri Khas. the tens of millions. discrimination against nearly 4m. A migrant from Manipur. 2010 India had just over 500. Sharath Jeevan. or willingness to Schools and Teachers Innovating for Results (STIR). the biggest gains in education must come after school: in vocational and higher education. China more than Chinese. carpenGross school enrolment rates. And she keeps records: case census. is bright and Generally. The rude and troublesome. argues the In 2010 group’s founder. The government seems to have recognised the 366. month) and well run. local education is extremely bad . To make India more competitive. One private school in east Delhi has CCTV cameras in evarchitects ery class which allow the headmaster to monitor his teachers. like many of her students. low-caste children. but may mean more bureaucracy. A senior government economagazine. the Right to Education act.4m schools. In newspaper marriage ters and electricians are like gold-dust. though. Russians or BrazilThe shortages extend far beyond the India ians.5% of their income on education. The navolves parents. rice transplanters and harvesters are booming in Punjab beand some other help. In one small school. 200 chilquickly it o to the next job.000. There is plenty of rote learning.000 day-meal scheme set up here and there decades ago to get poor children into school each day is now running nationwide. says nding Source: World Bank mist worries that parents almost spend skilled sta is next to impossible because too much . student-teacher ratios and the like. is pay. That could raise quality. Singh. they that eagerness is evident. are private. when it To improve matters. Then they move to a nearby state Chandigarh for an engineering company says that sales of tracschool for the afternoon.H. she inate. A On a morning in a poor quarter of east Delhi. tional literacy rate is up from 52% in 1991 to 74%. 2010 or latest. N. Even some low-skilled labour is in short supply. thinks the country needs to recruit 4m new teachers needed and to retrain 8m. even illiterate ones.SP EC I AL REP O RT I NDI A 2 er overseeing hotel construction near Del- vertising English medium schools. and dents now make some use of private edu45.000 problem. dren sit rapt before young women teachers in a series of small. The editor of a new prosperity. A mid500. training is crucial. It also requires every private school to reserve 25% of its places for poor locals. A survey in 2011 by ulative shortfall of core professionals inRussia Credit Suisse suggested Indians typically volved in the building trade could be in spend 7. cause fewer casual labourers are migrating from Bihar. An agent in ill-lit rooms each morning. the MP from Bihar. The quality of needed teaching is variable.000 civil enBrazil By one estimate. The OECD predicts that by 1 9 The Economist September 29th 2012 . But the public sector gets plenty of money too. There is no lack of interest in education. sometimes teachers do not even turn up for lessons. Even Parents like Ebyon because it is cheap (80-150 rupees a poorer farmers now buy machines to share. an 18% rise on last year. at a civil cost of about 120 billion rupees a year. prospective grooms and brides often A survey by the Royal Institution of Secondary Tertiary mention their quali cations before their Chartered Surveyors estimates that in 0 20 40 60 80 100 120 age. the rest for universities). grade in ation and sometimes ogging. is designed to lift school results by setting minimum standards for school buildings. Quantity is not the issue. They gather in lots of funds from anxious just over parents. Ebyon. manufacturer moans that even if you nd capable sta . are turned away. and 45.000 of India’s 1. The headmistress. with around 300m students. A new law. looks or caste. Education is seen as a quick route to construction industry.K. But the best schools are getting on with it. The Caravan. Spreading good ideas could do more to transform schools than simply scattering money around. K. Small towns display garish murals or uttering notices adnow gathering such examples of good teaching habits to share elsewhere. according to the paan spitters . Critics say fees for the rest will rise or standards will fall. trained and ready to work. setting aside about $11 billion for education this year (three-quarters for schools. % agement schools.000 architects when it needed OECD cation either private school or top366. playing elds. ads.000 Some teachers accept bribes from students in return for exam passes. Some 97% of school-age children enroll. though over half when it drop out before completing secondary school. But gains beyond that are coming far too slowly. though. Alice. tutors and manhi’s airport says good plumbers. books tors. It predicts that by 2020 the cumping-up by tutors. too. India had Some 500. studies of why some students ourish and others do not. The basics are improving. com4 A vital test puter-training colleges. enjoying a free midday meal. Better nutrition should engineers mean more concentration and better results.
a computer-education company. Aspiring Minds. by and large. then sells much of it back to villagers as cheap rations. In the absence of piped water. Some private groups. Over the next decade he wants to educate 7m more for industries such as hospitality. Politicians such as A. the rest of the family in the new home. but it is a step in the right direction. a Gurgaon-based company that assesses students’ employability. schools and jobs to go to rural areas instead. have good public services and social indicators despite slow urbanisation. or nearly 14% of the age group. both private and public. however. such as nance. poorly built brick houses with beaten tin doors. health care. want people to stay out of cities. but resisting it also comes at a price. a professional-services rm. Too many people end up with worthless quali cations. 78% struggled in English and 56% lacked analytical skills.SPEC I A L RE P OR T INDIA 2 the end of this decade India will churn out more graduates than Cities any other country bar China. In theory. or Narendra Modi. such as Kerala and Tamil Nadu. UN Population Division 0 The Economist September 29th 2012 . is not what it might be. Ernst &Young. rather than leaving their entire fortunes to their children. The fund is meant to help train 62m workers in courses of varying lengths over the next decade. A few trees have been planted. rickshaw-wallahs and hawkers who saw their shacks attened.6 0. According to the survey only 17% of the graduates had basic skills. India’s cities. some 12% of the world’s total. says this would involve a rise in the number of students to 40m. and would like the internet. notably the publicly run institutes of technology and of management. Concrete jungles A mainly rural country is ill-prepared for its coming urban boom SAVDA GHEVRA IS a township of narrow. are charmless and badly put together. the Azim Premji University (after the founder of Wipro) and the Shiv Nadar University (after the founder of HCL). illegally. Flies swirl over open sewers.J. Mr Pawar’s group is now building a university to promote research that will be immediately useful to business. And even identifying people for further training might not be easy. 55 tankers bring in supplies daily. it has struggled to nd enough credible partners to spend its money well. the retail trade and banking. such as the NIIT. Several tycoons. west of Delhi.8 1.000 slum-dwellers displaced when Delhi hosted the 2010 Commonwealth games: sh-sellers from beside the stinking Yamuna river. Public funds are also being deployed to lift skills. The government is pouring money into a National Skill Development Fund. the quality is often wretched. An o cial estimates that 44% of state-managed food vanishes as leakage . They are paying higher salaries for good faculty. on the back of which the country’s IT sector ourishes. sighs a noted economist. 7 10 The slow road to the city India’s population. India’s o cial count of higher-education institutions. Some pockets of higher education work well. electricity. it o ers teaching as well as research into biofuels. tailors. Some were taken to Savda Ghevra. But funds are likely to be forthcoming. luring Indian academics from foreign universities and encouraging research as well as teaching. A lot of private education is useless.000 of them last year and found that not even 3% were ready to be taken on by IT rms without extra training.9 0. However. pukka ones. Farmers get subsidised diesel to run pumps. at a cost of around $200 billion.000 engineering graduates a year who could soon be working in its IT rms and beyond. have endowed universities such as the OP Jindal University (named after a steel family). also produce reasonable graduates. That discourages migration. Many management colleges do little teaching but lure applicants with promises of getting them jobs when they have graduated. supposedly a great Indian strength. some 833m. the NIIT’s founder. The country produces over 500. A corner house is for sale at a scarcely believable 2. The next push is to expand their work into other sectors. Some have sold their plots. but overall the feel is little better than that of a shanty town. The NREGA scheme creates low-paid make-work jobs. the survey concluded. much public spending ows to the sticks. biotechnology. are living in 640. and in many states it also encourages corruption. The number of students currently enrolled is 15m.5 1. says Rajendra Pawar.000 villages. have toilets. Abdul Kalam.2 0. Part of a planned knowledge corridor of new universities in Rajasthan.3 Urban Rural 1960 65 70 75 80 85 90 95 2000 05 10 15 20 25 30 35 40 45 50 Sources: World Bank. The government also pays in ated prices for most wheat and rice. giving it 24m graduates aged between 25 and 34.000 engineering graduates a year. to dodgy property traders. The government is pushing to increase enrolment to 30% of the age group by the end of this decade. He says his group has trained over 30m people in technology. is nearly 26. given plots and told to build. Some 92% of the graduates were de cient in programming or algorithms. banking and insurance. Now they have homes and electricity. Meanwhile private money is ooding into tertiary education. Village life is often hard for 1 Found wanting Education in engineering. It may not be San Francisco yet. a former Indian president. for example. the world’s biggest country total. That sounds glum until you realise that it also means India produces around 100. That is one reason why the country remains mostly rural (see chart 5). Savda Ghevra represents progress of a minimal. but many families have been split: the father sleeping somewhere back in Delhi. allotting 10 billion rupees to it for this year alone. wireless networking and more.P. Two-thirds of the population. surveyed 55.500. The leafy campus in Neemrana is rising up beside a maze of Japanese factories.7m rupees. The area was set aside for some of the estimated 500. unsatisfactory sort. Only a minority of homes. Gujarat’s chief minister (who talks of rurban life). bn F O R E C A S T 5 1. Soon the campus will also provide space for start-up rms. Since rural voters collectively have clout. Some states. So far. There is a long way to go before engineering graduates in India become employable.
women and members of religious or other minorities. says Mr Guzder. In China just over half the population is now urban. Property in the city has run riot. Even Gurgaon. Mumbai is especially bad. Delslums and rotten management.India’s 100 biggest cities. gangsters and smugglers. Rubbish was collected Delhi gets plenty of public money. gridlock. who now runs the city. a sanctuary for 300. other cities. not migration. Mr Revi estimates that by 2031 India will be short of 100. poor public health and a broken and clogged road system. especially in heavy rains. Some urban centres will become megacities. it became famous for squalor. director of the Indian Institute for Human Settlements (IIHS). is a ourishing la. their incomes and consumption almost always go up. But we have no urban infrastructure. a city in Gujarat of 4. no widening of roads. Inland. says that India’s 100 biggest cities. the JawaKumar Das. with 16% of its total population.000 inhabitants. which have helped pay for a newish metro. India’s entire western seaboard could turn into a single conurbation. Any big metropolis can tap a central fund. Mr Guzder says the entire Mumbai metropolitan region is overseen by a single town planner ( and she is retiring soon ). Surat. for new infracade the growth in Surat’s population averaged 5% a year. but markets are opaque and development too often depends on cronies with political connections. Cows munch on plastic bags in the streets. Bangalore. Much land is privately held. and even Japanese doand transport improved. no provision of police. Aromar Revi. That is changing as counfrastructure. but many are grim and badly run. a bridge connecting the southern part of the city to the north. stretching from Ahmedabad in Gujarat in the A far more encouraging example can be found farther up north. Several delivered. Called Lavasa. So in future India’s urban popuin controversy and hardly o ers an urban model for one-sixth of lation will rise much faster. Even slum-dwellers are often productive manufacturers and traders. like Savda Ghevra. each with at least 10m people: Ahmedabad. engineers and the like to manage cities. the planet’s population. provided there is enough water. Delhi and its environs could be a hub for 60m-70m trading hub that not long ago was a wretched dump like Gorakhpeople. a business district near Delhi. contribute 43% of its national income. Some are seeing improvements. call centres or almost anywhere else. Within two decades Inpur. contribute 43% of its national income.000 professionals planners. has plenty of glass towers but falls slum-dwellers are often productive short on sewerage and power supplies and is only slowly acquiring public transport.000 acres of hilly private land by a reservoir near Pune in Maby around 5m a year. Gridlocked MumSome rich folk are trying to get round the problem by startbai can appear to be falling to bits. it is now being built on The number of town-dwellers. Miraculously. A cricket eld on the city’s edge is so thickly strewn with rubbish you can hardly see the ground beneath. but do the drains work? 2 people of low caste. Putting o urbanisation can also mean postponing prosperity. have a leg. lifting assorted development indicators. ulation.5m people. Manoj ting metros. good indue to natural increase.SP EC I AL REP O RT I NDI A Gurgaon looks good. is growing 25. are also getSome 96% of residents pay their municipal taxes on time. But there is plenty of growth in smaller places too. But it is mired try-dwellers see opportunities. past Mumbai and south to Thiruvananthapuram in Kerathe coast. Yet many urban spaces. doubling by mid-century. He heads a new university that will train people to ll the gap. India is ill-equipped to make such places attractive drivers of growth and better living. E ective managers cleaned up. York. Towers shoot up. says a senior gure in construction and retailing. Mumbai. notorious for thuggish religious politics. Hyderabad and Chennai. among structure. Municipalities also need planning skills. after a reported (but never con rmed) outbreak of dia will probably have six cities considerably bigger than New pneumonic plague. by 1 The Economist September 29th 2012 11 Already 53 cities have at least 1m inhabitants. It looks pleasant enough: a town to walk in. I see no improvement in thinking about cities. streets were swept and public services nor funds. blames the city’s woes on a deep nexus of property and political funding . . the fastest of any city in the world. with 16% of its total popacy of poor planning and management. ing a city from scratch. currently 377m. Since then it has been transhi. Prithviraj Chavan. In 1994. Historically most urban growth has been harashtra. Villages are usually the places with the worst schools and health care and the least productive work. says that over the past deharlal Nehru National Urban Renewal Mission. including Bangalore and Ahmedabad. Gorakhpur is a sprawling city near the Nepalese border in eastern Uttar Pradesh. According to his planners.000 inhabitants. When farmers leave the land to work in factories. especially around the Sea Link. formed. the Parsi businessman. According to What it takes one vision. the improvements were sustained. the chief minister of Maharashtra. It has 670.
even if most foreign-affairs experts wisely eschew any talk of an incipient superpower. After decades of facing inwards. There are few people to handle di cult cross-regional topics such as water resources or climate change. The country’s economy is more closely enmeshed with the rest of the world than ever. a model that other cities could copy tomorrow. tra c that ows and the can-do culture of Surtis. against just 16% two decades ago. dust or noise at the municipal dump is strangely thrilling. It has too few border guards. That States 12 Germany goes down better with its foreign partners than its sermonis10 France ing of old.200 tonnes will be burned daily in German-built incinerators. think-tanks and commentators are only just beginning to show an interest in foreign matters beyond Pakistan. 7 in foreign a airs. By last year India’s two-way trade was worth a total of $794 billion. even if he came long after nimbler leaders from Britain. reversing its policy. It is e ciently run by private contractors. For instance. overtaking London. it’s a realist approach. On a sweltering monsoon day the lack of smell. concedes a senior o cial. The machine that guides India abroad is slow and cautious. It helps that the local economy is thriving. Its three main con10 Britain cerns today are America.000 trees to help make the place greener.3m people. Nothing Mr Singh does is electrifying. scuppered an Indian water-sharing deal struck with Bangladesh. more yovers and a Bollywood theme park modelled on Disneyland. Pointlessly strict secrecy rules lock up o cial foreign-a airs documents for good. Mr Das says given the right motivation and belief in o cials.SPEC I A L RE P OR T INDIA 2 2031 it could have 9. less than a fth of China’s and roughly the same as tiny Singapore’s (see chart 6). The city’s sewage works are similarly impressive: e cient. Manmohan Singh implored a gathering of businesspeople. the democracy activist.341 India nuclear deal agreed with 6 Singapore George W. China 23 Japan and its immediate region. sober and generally sensible DOWNTOWN YANGON. dishing out aid and soft loans worth billions of dollars every year. In March SIPRI. but far too many pen-pushers in the coal and steel ministries. and mutual trade worth $5 billion by 2015. Some even wonder how much of a grip the national government in Delhi is able to keep on foreign policy. Burberry. and few linguists uent in tongues helpful beyond Asia. set few hearts racing. When he was a boy. Foreign trade is now equivalent to 43% of GDP. Shashi Tharoor. Regional satraps who bully Mr Singh on domestic issues have also caused sudden foreign-policy reversals. concludes C. Many turned out to hear a speech from India’s prime minister during his rst visit in May. a Congressman from Kerala and one-time under-secretary-general at the United Nations. Slums are being cleared and parks being created by the river. We’re not trying to cut a grand gure abroad. many people in Patna. ies. Mr Tharoor notes that the foreign service has only about 800 diplomats. Raja Mohan. And it is an enthusiastic joiner of international groups. Keep a place in your hearts for India. A group of resident Bengalis in a hardware shop. Put less kindly. he had to study by lantern light. are now connected to the grid. Size of diplomatic corps Even so. a foreign-a airs expert. others cities are capable of similar improvements. textiles and petrol products doing particularly well. On a shoestring All this speaks of rising ambitions. Dynamic Indian rms establish themselves in new markets without government help. This year rms planted 200. diplomats and soldiers. The municipal engineer says the entire city has clean piped drinking water. There are posh car showrooms. commercial and other interests in Africa. ’000 Population per ing abroad. Overstretch is evident: a single o cial in Delhi has to liaise with 19 Latin American ambassadors. is home to a large Indian diaspora. customs o cials. MYANMAR’S once-shuttered main city. the boss of a jewellers’ association. The boss of a diamond rm says his home town has been reshaped and feels great. Bush seven years Source: Shashi Tharoor ago. His talk of a cross-border bus service. Central Asia and elsewhere. India’s state is a 65-year-old who has fat in all the wrong places. In spring this year a Tamil ally of Mr Singh’s government helped to get India to vote against Sri Lanka at the UN over war 6 Diplomacy lite crimes. enjoy cheap credit and diplomatic backing. thinks India is trying to do more but is devoting far too few resources to achieving its foreign-policy goals. Next on the list is a rapid bus transport system. its goals diplomat. the country is fast becoming a donor. but they grumble that rivals. Bangladesh. shrugged when they heard that Mr Singh was in town. says Mr Tharoor. Long a recipient of aid. with a 10% share of the world’s total. a Swedish think-tank. It also has a growing appetite for energy. Indian universities. Over 90% of households are said to be connected to sewerage. and retailers like Jimmy Choo. When residents felt able to trust o cials and their plans. ’000 are limited: to ensure that its 0 2 4 6 8 foreign relations serve its big United 20 16 transformation at home. India’s star is risLatest. Even the rubbish is being put to work: soon about 1. buying materials for a goat cage. they happily contributed to the city’s success. the local chamber of commerce and a prominent city journalist all give the same answer: governance. Sensibly. What made Surat work? An assortment of businessmen. India is still punching well below its weight 12 . computerised and run largely on electricity from a biomass plant red by methane. so as yet there is only a small corps of experts outside government to help advise policymakers. Last year Mamata Banerjee. Cultural ties via India’s The Economist September 29th 2012 India abroad No frills The country’s foreign policy is frugal. Even the grimier end of town is uplifting. Armani and Gucci are due to open soon. 321 China Relations with America 162 Brazil have thrived ever since a civil 1. mineral. into a stilted and awkward a air. with diamond polishing. That he got to Myanmar at all was an achievement. ranked the country as the largest single importer of weapons. Investors like its reliable power. notably state-owned Chinese ones. We run a no-frills policy. The same day he turned a historic meeting with Aung San Suu Kyi. South Korea and elsewhere. Bihar’s capital and his home town. But the means are limited. West Bengal’s chief minister.
500m. Barefooted and bedraggled yatris o er a picture of conviviality. The Amarnath cave is revered as one of the most sacred sites in India. or at least to agree to India’s requests for more open trade. India’s foreign a airs seem better run than they have been for a long time. India wants America to preserve its ties to Pakistan. for example over Tibet and the Dalai Lama (who lives in India). they need to become more public-spirited HIKING IN KASHMIR.SP EC I AL REP O RT I NDI A 2 diaspora in America help. notably in trade. An occasional bird of prey swoops by. but that caused only a temporary ripple of bilateral irritation. the Agni-V. fried food. America is increasingly adopting India’s stance against extremist groups based on Pakistani territory. thanks to better roads. Well over 600. And India will increasingly engage with the West. The two Asian powers are developing closer ties. materialistic and messy democracies in which central governments are constrained by powerful states.1 13 Just in case Last. or threats have been so serious that the pilgrimage has been called o . This year 93 yatris died en route. In April it testred a home-built long-range nuclear-capable missile. most of them ill-prepared for the high altitude. such as who should run Kashmir. Respect nature and the names of their battalions. which in theory could strike China’s big cities. In Myanmar. And it is putting more soldiers and aircraft at permanent forward bases along the border. Butter ies seek out alpine owers. Cheery city boys and middle-aged men with pot bellies race ahead. as do stronger trade links. workers set up kitchens producing noodles. a tough walk over several days to a cave containing a phallus-shaped piece of ice. A decade ago it took two months to move several army divisions to defensive positions on a disputed border in the north-east. Awkward issues of old. worth just $2. marine exercises and anti-piracy e orts continues. 7 The Economist September 29th 2012 . now. And it is a big recipient of aid and investment from Japan. They daub rocks with instructions Slow and steady . the site of a humiliating frontier war 50 years ago that India lost. Though still poorly resourced. But over a few weeks each summer. India’s policy may lack frills. Ravishing views of glacial lakes. and elsewhere in the region. or lingam. the two Asian giants compete for in uence and energy supplies. But American ties with India will get more important. India is doing more to improve relations in its region. In the past there have sometimes been terrorist attacks. The two collaborate in Afghanistan. religious. Red communications wires snake up cli sides and around waterfalls. where India is a big civilian donor. India wants a stronger military deterrent. The air is still. On every ridge soldiers are on guard. no longer get aired. India has become modestly active in oil exploration in the South China Sea. cool and clean. One big reason is its second concern: China’s rise. At stops along a 32km path that at the peak reaches a height of 4. other Indians and Pakistanis have long vied to control this pristine territory. India is also trying to boost trade by building better border infrastructure and loosening non-tari barriers. has voted three times with America against Iran over that country’s nuclear programme (though it has been cagey over Syria). Close co-operation in counterterrorism. But they also vie with each other. The two powers’ interests are converging. would help moderate Pakistani behaviour. since no one else. But he explains with equal enthusiasm that India has made rapid gains in domestic military mobility. Unlike much of India. The yatris’ devotion is remarkable. The tragedy of the commons An uphill walk As Indians get richer and better educated. sugary tea and stodgy sweets. raising temporary tent cities. then slump. temporarily on the UN security council. exhaustion and exposure to bad weather. Marksmen in nests of sandbags look out for militants. And disputes continue along the still un xed India-China border. too. and says another $10 billion is lined up. but they feel no com. is a joy. thousands of Indian soldiers ascend zigzagging paths into a series of valleys near the line of control dividing India and Pakistan. should pass $100 billion in 2015. it o ers the luxury of open. Mr Singh says he is ready to visit his own birthplace in Pakistani Punjab if only Pakistan would do more to stop terrorists who attack India. India. but at least it has a clear purpose. The two countries also share the experience of running big. Crucially. it takes just two weeks. Last year America failed to sell India a big consignment of ghter jets.000 Hindu pilgrims follow a yatra. though there will be no formal treaty. Mr Mohan points to defence orders worth $10 billion for C130 and C17 aircraft. snowy peaks and immense green valleys make it easy to see why Kashmiris. and long overdue. America is now one of India’s biggest weapons suppliers. Ties with Australia will improve as it looks poised to announce that it will sell uranium for India’s domestic nuclear plants.9 billion in 2000. Farther east. happily exhausted. missiles and more. A China expert in India’s foreign ministry says that bilateral trade. Gone are the days when Indian leaders abroad somehow managed to appear arrogant. sparsely inhabited space. expensive. moralising and ine ectual all at the same time. India is forging links with democracies and those already close to America. certainly not China. in the Himalayan foothills. At the same time India is wary of China’s ability to make trouble. Then the annual invasion begins. Goat-herders and villagers work as porters and guides. This month the countries’ foreign ministers at last signed a deal easing their bilateral visa regime.
Both last year and this. Kashmir is slowly becoming more like the rest of India: wealthier. larly hard. more directly. and the high expectations of recent . Robust ownership of public spaces or obligation to the natural world success will come only when standards rise. especially years may need to be toned down. tins. Rajendra Pachauri. Soil degradation had cut farm output way below potential.com ing people by caste). Other woes included water shortages. It is a tragedy of functioning institutions. with better quality around them. 7 14 The Economist September 29th 2012 quickly than. China has Offer to readers done. The valley is lled with acrid smoke from damp. The reasons may inPlease contact: Jill Kaletha at Foster Printing clude culture (a history of dividTel +00(1) 219 879 9144 e-mail: jillk@fosterprinting. reprints or any copyright queries lights. Tel +44 (0)20 7576 8148 Small failures of considere-mail: rights@economist. notes Mr Pachauri. who heads TERI (as well as the Intergovernmental Panel on Climate Change). stalls. laments Mr Pachauri. The valley is seeing a construction boom. But in India. more peaceful but also gradually more despoiled. More of them will refuse bribes. That Mexico November 24th people generally respond with Previous special reports and a list of good humour is a tremendous forthcoming ones can be found online: asset for the country. A favourite word in India these days is jugaad. they are also increasingly ready to turf out politicians who have disappointed them. common goods seems particuA minimum order of five copies is required. the available. It will be a messy transition. Ordinary Indians will gradually body else’s job. meaning a spirit of innovating and making do. start to contribute.com and so is tax avoidance. Along with Beijing it is one of the most polluted cities on earth. with paths of mud and excrement. Local men hired to gather litter along the way simply hurl their bags into the glacial stream below. For all that Indians are accused of fatalism. is crowded with youngsters on jetskis. few people seem to have much of a sense of shared But eventually India has to move beyond jugaad. too. e-mail: rights@economist. We have no sense of individual responsibility. each summer brings a bumper crop of tourists. Delhi’s air got cleaner for a decade after buses and autorickshaws switched to liquid gas in 1999. create wealth as entrepreneurs and take better care of the enbetter educated. but such e orts are too rare.com/specialreports often comes an attitude that it is up to others to tackle the problems. The approach to the ice cave crosses a glacier-turned-rubbish-dump. Forest stocks were down. economic. Forests are a bit better protected and public transport in some cities has improved. Indians rank among the world’s least generous organ donors. pollutants in rivers and a dramatic fall in groundwater levels. the here and now is Corporate offer unimportant) and a sense of faCorporate orders of 100 copies or more are talism. melting glaciers aside. Yet tanneries. A ourishing democracy may respond more vironment. We also offer a customisation pressures of an overwhelmservice. but a welcome one. this will change as Indians become richer and es. Air pollution plagued 90% of villagers (who breathed smoke while cooking) and around a third of urban dwellers. ingly huge population.SP EC I A L RE P O R T INDIA 2 punction about leaving some ugly marks on the landscape. There have been street protests against corruption and innovative ideas for ghting it. paper mills and other industrial users dump waste and chemicals in it. strewn with plastic. often causing crashes. leaving the place in good physical shape. But now that military action has receded. political both leaders and ordinary people in India draw on values such as tolerance and openness that do their country credit. Kashmir got over 1m visitors. or. pay their taxWith luck. But with it economist. In much of the country the consequences of that process look devastating. gave stern warning that 50 years of rapid population growth had led to dire environmental prospects. Helicopters buzz above.environmental rules if you can get away with it age. whisking the wealthy and un t to the sacred spot. Please contact us to discuss your requirements.economist. say. This is true everywhere. That requires vironmental rules if you can get away with it. But the winter smog that bedevilled the city in the 1990s is now back. Fifteen years on. smouldering piles of part-burned rubbish. matters are worse. many of whom bathe in it. ponies and yatris that it has the despoiled air of a refugee camp. Altruism is thin on the ground. overloaded lorries. For example. And de26 Red Lion Square London WC1R 4HQ spite the indignant rage about Tel +44 (0)20 7576 8148 corruption. more responsible individuals and leadthe commons. The Energy and Resources Institute (TERI). please contact: crowds that barge on and o The Rights and Syndication Department trains. People have a tendency to want the government to x things. drinks cartons and mounds of waste half buried in the ice. religion (for the faithful. Near the ice cave the valley is so crowded with shacks. and outrageously wealthy tycoons are only slowly discovering philanthropy. elbows ying. paying or accepting Fax +44 (0)20 7576 8492 bribes is considered normal. extend private in everything from homes and cities to schooling and sporting property by encroaching on public land and out safety and enachievements (pitifully low. A report in 1997 by a Delhi-based think-tank. The next ve years are likely to be messy.com/rights Given how common such Future special reports failures are. The once serene lake in Srinagar. apart from cricket). www. such as providing websites where people can post details of bribes they have paid. But instilling respect for Reprints of this special report are available. terrorist. It is depressingly common to litter. but we carry it to a ne art. it may be di cult to The world economy October 13th get anyone to worry about a Information technology and geography particular example. Fast-growing economies with few rules often run into problems of this sort. paper. in the north. The river Ganges is considered sacred by Hindus. Everyone feels it is someers who dare to take decisions. you may have.com ation for others are ubiquitous: For more information on how to order special drivers who race through red reports. The mountain roads are clogged with straining. the capital. Yet that may change. such as enOctober 27th France November 10th vironmental despoliation. When a crisis erupts be it environmental. farmers allow pesticides and fertilisers to slosh in and the human waste from burgeoning cities goes in largely untreated. Groups such as WWF run projects It is depressingly common to litter and out with local governments to tackle the dam. says he is certainly more concerned than he was at the time. No longer special Years of insecurity and underdevelopment in Kashmir ironically served as a sort of nature conservancy scheme.