From 1991 to 2016…

What is significant about a time-frame of twenty five years? Well, a quarter century is more than enough to experience a catastrophic slide to failure and extinction or a steady upswing in fortunes, resurrecting from extreme straits to unbelievable success and prosperity. As with individuals, so with countries.

The last quarter century has seen India scripting her success from virtual penury to phenomenal progress and prosperity. I was among the millions of expatriates careering in the middle east during the 1990s, as the country was literally scraping the bottom of the barrel as a cumulative consequence of inept management of an economy, that had to grow from scratch, linked to complexities of a highly diverse, largely illiterate, poverty-ridden populace at the time of attaining political freedom. The economic policy during independence was influenced by exploitative aspects of colonialism, and by exposure of the leadership to the redeeming features of Fabian socialism. Hence policy veered towards protectionism, with strong emphasis on import substitution, industrialization under state monitoring, intervention of the state at micro level in all businesses especially in labour and financial markets, a large public sector, and central planning under a highly restrictive regulatory apparatus.

India’s Five-year Plans resembled central planning in the Soviet Union. Major industrial sectors such as steel, mining, heavy machinery, telecommunications and insurance, and public utilities like water, and electricity, transport modes such as railways and airline were all under state management since the 1950s. Private enterprise remained mostly stymied under stringent licensing regime between 1947 and 1990. The Indian economy remained virtually closed to the outside world. The currency, the Indian rupee, was non-convertible; high tariffs and import licensing prevented foreign goods reaching the market, and labyrinthine procedures of a bureaucracy frustrated any easy endeavour at entrepreneurship. The government also prevented firms from laying off workers or closing factories. The lurking memories of colonial exploitation and championing of socialistic ideals coupled with belief that the country could rely on its domestic markets, and not international trade, for development, were the guiding factors. Central planning and the state, rather than markets, would determine how much investment was needed in which sectors.

The story continued on these lines till the end of 1990, till the country became mired in serious economic crisis due to mounting fiscal deficits and burgeoning balance of payments.  The government was close to default, with its central bank refusing new credit and foreign exchange reserves plummeting to a level where India could barely finance three weeks of imports. The government was constrained to respectively pledge two lots of forty seven tonnes and twenty tonnes of gold to Bank of England and Union Bank of Switzerland as collateral to get IMF to agree to bailout loan to discharge balance of payment obligations. The other negative fall-out was the string of conditions set by IMF as qualification for obtaining financial assistance. India had no option but to implement them and the same ranged from industrial de-licensing, sale of public sector equity, increase in prices of fertilizer and other regulated commodities, elimination of subsidies, to opening up of the economy to foreign investment, substantial devaluation of currency and easing of all controls. Being an expatriate, I was one of the beneficiaries of home currency devaluation but wondered how Indian agro products and industry would be able to counter the might and compete with the financial heft of multi-national conglomerates. It looked as if the country’s agriculture and commerce would be swamped by corporate behemoths from advanced economies. But later events proved that my apprehensions, as of thousands of others so used to a climate of state control and captive markets, were unfounded, as Indian commerce and industry not only flourished by competing quite capably with foreign products and registering its mark in world markets, but many Indian companies also scaled up to become multi-nationals themselves. While apples from Himachal Pradesh and Kashmir, and oranges from Nagpur and Punjab continue to hold their own against Washington Reds and Fuji’s crunchy apples, India’s Basmati rice and huge variety of mangoes and other agro products such as spices, tea, coffee and array of dry fruits command an impressive presence in shopping malls worldwide. The nation’s industrial successes  manifest in the form of world-class players in IT and Software, small cars, auto ancillaries, textiles and garments, gems and jewellery, pharmaceuticals and healthcare services. In e-commerce, India’s Flipkart and Snapdeal are competing quite comfortably against Amazon and Ali Baba, as are app-driven taxi services like Ola and others against Uber. The rise in commodity prices and general cost of living have been offset to a great extent by substantial increase in income levels. The entertainment and hospitality industry are riding an ever rising wave of success with Indian TV channels and movies, arts, music and festivals, chains of hotels and restaurants enjoying unprecedented popularity in many countries around the world. Constituting a ratio of one Indian in every global headcount of six people, the Indian diaspora is virtually everywhere. Many of the corporate multi-nationals have Indians at the helm.

For all its glory, has liberalization, and globalization, been an unmixed blessing? It is not, as like most things in life, it has come with much smooth and some rough edges cutting at sections of societies. The skeptics claim that it has benefitted only the upper crust. Facts, however, are otherwise. Concluding presentation of path-breaking budget on 24th July 1991 in the parliament, against the background of economically dire straits in which the country was in at that point of time, Dr Manmohan Singh, India’s then finance minister, commented, ‘India is now wide awake. We shall prevail. We shall overcome’. Those words rung true as, going forward from then on, statistics reveal that 138 million people have been lifted out of poverty line, a commendable record by itself. Yet it pales in comparison with China, which started the liberalization process way back in 1978; China achieved a more impressive poverty reduction feat by lifting 800 million people above poverty line between 1978 and 2012, also transforming itself into the world’s factory churning out goods at low prices, and making enormous strides in infrastructure development.

Nonetheless, India’s progress post liberalization carries considerable lustre given the country’s size and diverse polity set amidst the demanding pulls and conflicts of a parliamentary democracy. All through the 1960s, 70s and 80s, India was probably the world’s biggest mendicant, a bottomless barrel for foreign aid, soaking up forty percent of the funds of International Development Association, the soft-loan window of World Bank. A major feature of my earlier career years in shipping was having to handle relief ships, vessels carrying food-grains donated by international relief agencies such as CARE (Co-operative for American Relief Everywhere) and CRS (Catholic Relief Society). I recall my school years in the 1960s, when India faced successive droughts in 1965 and 66. The country literally sustained on steady supplies of grain from America. It would be no exaggeration to say that those years meant a ‘ship to mouth’ existence for the country. In sharp contrast, India was in a position to successfully tackle drought years in 2014 and 15 drawing from buffer stocks of grains generated through high-yielding farming practices developed by India’s agro-scientists. In 1991, India was a member of G77 group of developing countries. In 2016, India is a proud member of G20, the group of most powerful countries in the world. Even though India is still a recipient of international funding, borrowing on commercial terms, it is also more of a donor to world’s financial institutions. The country was a net food importer earlier but today it is a net exporter of food-grains. Where the country was hardly an economic entity by global reckoning in 1991, today India is the world’s third largest economy in terms of PPP (Purchasing Power Parity), with only the USA and China ahead of it. It is also the world’s fastest growing economy.

Many challenges still remain in a country of 1.25 billion people deriving strength from the unique diversity of its culture, and the almost absolute freedom constitutionally guaranteed to all citizens of what is authentically the world’s largest democracy. It is also the youngest democracy, both as a nation  riding its seventh decade of independent sovereign status and in terms of demographic component of nearly 800 million people below the age of thirty years. Hitherto, the private sector was the main engine of growth in a market driven economy, averaging a GDP growth of 7.7% per annum over last thirteen years. The social impact across all sections of societies has not been to the desired extent, which is indicative of failure of successive governments in the form of tardy implementation of appropriate measures, bringing about policy changes and speeding up pace of reforms. India holds the potential of a USD 20 trillion economy if committed and strongly dedicated leadership can deliver efficient governance to productively tap the capabilities of her 800 million young citizens. With right effort, the world will see a USD twenty trillion economy emerging in the next twenty five years. It is not really necessary that it should happen only under a democratic system of government. It may even be a benevolent dictatorship, as in Singapore. The end result matters regardless of the type of government. As Alexander Pope observed in an earlier era, “For forms of government let fools contest; / Whate’er is best administer’d is best: / For modes of faith let graceless zealots fight; / His can’t be wrong whose life is in the right”.

Such passionate espousal of liberalization and globalization may appear to be a little inconsistent especially in the context of recent events playing out in various parts of the world arising from Brexit and the resultant convulsions across Europe and America, creating a backlash against easy movement of goods, services and people. There is regressive leaning towards conservative policies, protectionism, right-wing ideologies and a mindless fetish with identities, all of which are bound to balkanize and destroy societies. Irrespective of the value attached to identities and traditions, the hard fact is that growth is not possible by operating within its confines or blindly clinging on to it, as it is not viable in a strongly interconnected, interdependent and globalizing world that will keep growing through trade, travel and migration. Societies and communities opting to remain cloistered do so at their peril. There is no stopping, or even regulating the speed of cultural fusion and economic interconnection, the juggernaut of technological innovation and global communication. These are, as generally believed, not driven by the forces of capitalism or the momentum of progressive and beneficial change. Actually it is merely a socio-economic phenomenon that has been relatively dormant at certain times and hyperactive at other times throughout history. Presently we are witnessing an acutely volatile phase of the aforementioned recurrent phenomenon, which, on the whole, has led to decreased poverty and increased prosperity over the last quarter century of its hyper-active phase around the world, as exemplified by the progress of China, India, South Korea, Singapore and other Asian economies. The velocity of events across regions ultimately trends towards expansion of a cosmopolitan culture, tolerant and accommodative, eventually enveloping the globe in its sweep.


36 thoughts on “From 1991 to 2016…

  1. It’s interesting to read this history of India and look at globalization– How it is experienced–from outside the perspective of my own country (the US). You’re right that the US is seeing a backlash against globalization among the lower paid workers in both major US political parties right now. It’s a difficult thing to figure out how to make sure our own workers are able to make a living, facilitate trade, and make sure that the workers of the world are also able to make a decent living. I believe we are in for a bumpy ride. I suspect that facilitating entrepreneurship in the US would be helpful.

    • Thanks Georgia, for your observations. Globalisation and liberal values may be undergoing stress for the time being. It may even be the case that many countries would be erecting barriers to protect jobs and ring-fence trade and industry from external competition. These are very shortsighted approaches that will only serve the ends of political parties who are out to ride on issues that will secure and keep them
      in power for whatever length of time. Creation of employment and harnessing the capabilities of people require well thought out strategy and far-sighted policies. Post liberalisation, the success stories in India’s private sector are mostly from first generation entrepreneurs and not as much from large and established players in the corporate sector. There are thousands of MSMEs (Micro, Small and Medium Enterprises) contributing substantially to the country’s growth. In fact, the MSME sector accounts for major share of India’s exports. Probably, there is a lesson here for all countries, which is to facilitate entrepreneurship at all levels, without limiting it to the major corporate houses. There has to be more employment generators than employment seekers. Also, the message must go down to all youngsters, from blue-collar factory workers upwards,
      that life is all about continual skilling, knowledge updation and hard work. Today the complaint is about immigrants and outsourcing reducing opportunities at home. And so erect barriers to protect your turf. Tomorrow AI (Artificial Intelligence) and Robotization are going to take over many occupations, displacing millions of people from their jobs. What will happen then? Better start looking at solutions now.

      • Yes, Raj. You have such depth of spirit to encourage others to live and love. It is through these things that we must all work together. You are such great inspiration to others, Raj, and I thank you for it.

  2. So interesting to read about liberalisation and globalisation of India, Raj. I remember studying about the Five Year Plan for the Soviet Union in history class, but never know it also applied to India as well. From exporting grains to having a nation that boasts a wide range of IT and communication skills, it is no wonder the country is only third behind the US and China. It has worked hard and today it has a vast array of resources at its disposa, and it will be interesting to see where the current Prime Minister Narendra Modi will guide the country too. I hear he is very much in favour of the younger generation 🙂

    • Narendra Modi is one of the best leaders to arrive at the scene in a long time. He is charismatic, capable and dedicated to the goal of development. In just two years of being in office, he has been able to make his presence felt on the global stage while aggressively advancing India’s interest all the way. But the challenges of making things happen in a vibrant democracy taking on board concerns of all sections of society and conflicting interests are indeed daunting and, therefore, results will be slow in coming. Let us remain hopeful that the best efforts are able to register its impact to bring in desired progress, benefitting not just India but also other countries around the region. Thanks Mabel for your feedback.

      • From what I know and heard, India has a big population with so many different communities, languages and religions. It will certainly take time for Modi to unite the nation and bring national goals to the fore and international stage. But, step by step, and each step can go a long way when it comes to governing a country.

      • You are hitting the point precisely here, Mabel. You are right in your info of India being not only a populous country, like China, but also highly diverse, unlike China. Diversity manifests in the country’s multi-lingual, multi-religious and multi-cultural feature. There are over eighteen official languages, a myriad of cultures, and virtually all religions enrich the country’s secular fabric . While India gifted the world the major religions of Hinduism, Buddhism, Jainism and Sikhism, it was hospitable in accommodating other faiths such as Christian, Judaism, Zoroastrianism and Baha’i. Christianity came to India through St Thomas in 52 CE, much before it could make its presence in Europe and elsewhere, and Islam several centuries later. India sheltered Jews at a time they were persecuted in other parts of the world. One of the oldest Jewish synagogues in the entire Common Wealth can be seen in my home city of Kochi in India. Rig Veda, the world’s oldest literature, Sanskrit and Tamil, the world’s oldest languages, Mahabharata and Ramayana, the world’s oldest epics, Upanishads and Yoga, the world’s oldest philosophy, are all from India, widely acclaimed as the world’s spiritual capital. Bharat Varsha, as India was known several centuries ago, was the richest and most civilised region on earth. Based on such heritage and inherent strength, India is sure to gloriously restore its prominent position among the comity of nations.

  3. As ever, dear Raj, your article is fantastically wide-ranging and well-informed – a pleasure to read on this Saturday morning. There is much talk these days about paradigm shifts, about the inherent failings of Neoliberalist Capitalism (can we talk about it?) to foster equality of reward, rather than its opposite, at which it seems spectacularly successful. Some refer to this newly nascent paradigm – if indeed it is so – with the umbrella term ‘Post-Capitalism’, perhaps in a bid to avoid being charged with promoting something similar to past failed Marxist doctrines. What do you say, can I ask, on whether Neoliberalism has had its day, that the inequalities it spawns are increasingly sources of malcontent, potential disobedience and unrest?

    • You are touching upon a thought-provoking issue, Hariod. The world’s dilemma, as far as one can see, appears to be the lack of a foolproof economic system that will afford equality of benefits for all. In India, and the erstwhile Soviet Union, we have already seen the failure of socialism, centrally controlled, state owned enterprises. Successive governments experimented with socialist ideals in India for forty four long years, from 1947 to 1990, and the country was facing total ruination. Neoliberalism apparently is a better balance between classical liberalism and Fabian socialism. India’s experiment with neoliberal policies started from 1991 and has just completed twenty five years. On balance economically, the country is in a substantially stronger and self-sufficient position today after twenty five years of liberalisation, than its earlier forty four years long passion chasing socialist dreams. Looking at the success story, neoliberal policies will continue to be pursued for a further indefinite period in not only India and China, but also in South Korea, Japan and other growing economies in Asia. That said, this is not to claim that neoliberalism is the final answer to all problems. We are already seeing its ill effects in the growing numbers of precariats in Europe, America, Japan and other advanced economies. If neoliberal policies are allowed to go into overdrive in financialization and other excesses, the negative impact thereof is bound to be felt by Asian economies as well. Perhaps the emerging situation may throw up a new slogan exhorting precariats of the world to unite for they will have nothing to lose but their insecurities. Thanks dear friend for your observation. I really enjoy my exchanges with you as much as you enjoy them…

      • Thankyou for your considered response, Raj, and I agree that financialisation seems to be one of the most pernicious of Neoliberalism’s effects, resulting once again in its twin evil, the widening of the (in)equality gap, as wealth transfers in unearned income for the rentier class and banks. But what else does the system do with its excesses of accumulated capital, other than propagate yet more financial ‘services’, the very thing the world does already have an excess of?

  4. Thank you Raj for this wonderfully descriptive enlightening post of the history of how those 25 yrs have taken shape I hope that the divide between those in prosperity and poverty continues to lessen. And I loved reading the exchanges too in your comment section.. Which enlightened me even further Raj..
    Wishing you a wonderful new week as we begin August..
    Blessings to you and Yours Raj..
    Sue 🙂

    • Thanks very much Sue, for your gracious visit and feedback. If I say I missed you here all this while, it will be an understatement. Your point on need for governance reducing gulf between rich and poor is very valid. However, it is also up to each one, regardless of societal strata, to do his share of continual diligence to achieve material progress in life. The Japanese call it kaizen. All that is possible for governments is to ensure equality of opportunities and prudent distribution of resources. Be it socialism, capitalism, liberalism, neoliberalism, state or private sector, and monarchy, dictatorship or democracy, there is no foolproof economic doctrine or system of governance. All these are instruments in the hands of people using them and will be as efficacious and damaging as the calibre of people involved in the process. How benevolently a dictatorship can operate may be seen in the example of Singapore. And how fast and with what degree of well-being a country can progress can be seen in the examples of Japan, South Korea and Germany.

  5. Do you think Manmohan was a better economist than PM? Could he have fared better if left to deal with his forte Economics? It makes me think of the saying ‘If u test a fish by its ability to climb a tree, it will alwys believe itself a failure.’
    In India there’s always been a wide divide between haves & haves nots. Population control & employment can smoothen many a rough road. I mean, my hospital sees a huge 60% vacancies, yet so many unemployed pining at the gates. They aren’t being given jobs to avoid giving them pension post retirement. Meanwhile 40 % employed are overburdened with workload of 100%. That’s a shame on both ends.

    • It is a big question whether Manmohan would have made a better economist than PM. Probably your guess is as good as mine. It is a fact he is considered to be a highly regarded economist, and he would have, given free reins, given a better account of himself as a prime minister. That he remained a puppet can be blamed on the congress party and the prevailing parliamentary system where an individual cannot rise on the strength of merit alone. Political base carries more weight than merit. Politics may be a hard and crude grind; nonetheless, the meritorious must enter the political scene in steady numbers to make a consistently qualitative difference and thereby contribute to the democratic process. Instead the so called elites prefer to stand and stare and complain against the system. They hardly take the trouble to exercise their franchise. The voting percentages in the northern, eastern and western regions of India are pathetic. As regards the employment scene in your hospital, why are people not complaining? How can you tolerate a situation where an establishment chooses to operate by overworking existing employees instead of filling up a whopping sixty percent vacancies? It will not happen in my home state where people are extremely vigilant about reacting sternly against inequities. Exploiting workforce is no way to promote establishment. There are world class medical facilities in my home city of Cochin with well paid doctors, paramedical and support staff. It is eventually up to the people to either right wrongs or close their eyes to inequities. Thanks, Sweety, for dropping by to participate in the discussion.

      • Yes, we complain & complain. Administration throws all letters into waste baskets.
        Anyway, voting is not the end of issue. For example, certain young fresh minds were elected in constituencies. However, when it came to giving power, the same old dullards were handed over portfolios instead of the winning young candidates.
        Shouldn’t there be a rule that whichever candidate wins should get portfolio?
        Otherwise its a case of attracting a bride by showing a smart young groom & then shackling her to a dying, withered man.

      • I share your frustration to a certain point. The effort, however, must continue. Let more educated and dynamic youngsters enter the scene and be up for the reckoning. The Maharashtra CM for instance is the youngest chief executive of the state in the country today. In the centre, we have real capable guys in the ministry such as Nitin Ghadkari, Suresh Prabhu, Nirmala Sitharaman, Sushma Swaraj, Manohar Parikkar, MJ Akbar, VK Singh, Arun Jaitley etc. All these ministers are quite capable of delivering excellent performance. All of them may not be exactly young in chronological age but they are dynamic and full of youthful zeal. To comment specifically about your situation, it is of no use sounding out the administration dept of an establishment that is violating norms by operating with drastically reduced manpower. The issue must be strongly taken up by filing a case in the labour court and submitting a memo to the state labour minister. It will have an immediate effect.

  6. It really Is astounding what can happen in such a relatively short time, personally, yes, but also collectively. ‘Things’ are moving so fast that time seems sped up. What used to plod along taking 100 or more years in the way of ‘progress’ now feels like overnight transition.

    We in the West have benefited so enormously from the spiritual input of India. America at least really risked leaning into even more fundamentalism in our collective midst, whose heirarchy very much echoes a largely corporate-sponsored government. India is a country which, though I have never visited it, seems from the outside, at least to me, both enchanted and hugely challenged. Enchanted due to its rich cultural and religious inheritance, but challenged by examples set in the West. It’s like viewing a microcosm/macrocosm sort of thing. What plays out on the global screen now very much affects us at home. What happens politically in one country ripples out to all others. It really solidifies, at least for me, the Oneness of humanity and your concerns and mine are closer than it may have seemed in my parents’ generation, for example.

    I wish the very best for your country, Raj. May you flow with the changes as gracefully as time will allow. Aloha.

    • Many thanks, Bela, for your comments and well wishes. Living a life of harmony means a clear comprehension of the Oneness of all things, animate and inanimate, creating space for everyone in your compassion and love for the world around you, the realization that all living beings are moving temples of the supreme. A life of harmony can be lived by rising above our limited, ego-centric view of events and things and expanding our minds to accommodate a constant awareness of totality of the world, the entirety of humankind, and vastness of the universe in which planet earth is not more than a speck on the galactic fringes. Aloha my friend…

  7. Raj so interesting to read of all of the changes and challenges in India. We were watching a documentary on Mumbai recently and it made me realize how much we take forgranted in Canada, or at least how much I take forgranted. Sending warm wishes across the miles to you.

  8. I hope it all goes well Raj. I know the Caribbean with its similar weather shares similar plants, in fact, we probably have exactly the same plants because we are on the same latitude, which means our flora practically mirrors each other!

  9. Great article, Raj. It has been amazing to watch the phenomenal growth of India (and China) in my lifetime. Globalization is necessary for growth, but how to do it without growing pains is beyond me. I do believe ‘a rising tide lifts all the boats,’ so long as we can get over the manmade political and national boundaries.

    • The core realisation, that we are all primarily humans inhabiting planet earth and only secondarily citizens of nation states, must inform public discourse and societies everywhere. If such thinking constitutes the essence, then everything will fall in place. Thanks, Eliza, for your gracious visit and observations…

  10. I learned a lot about India here so I thank you for that, Raj! I hadn’t realized the young age of much of the population there. Interestingly, in the city where I live, a significant portion of the population is aging, which means that there will soon be a shortage of workers as many of them retire. India’s growth is phenomenal to see.

    • Vancouver BC is not alone as there are ageing societies in many countries. Japan and China are other examples. If creation of newer generations of people is not happening from within, the vacuum will eventually be filled by waves of migration. It is a natural process. Thanks, Christy, for dropping by.

  11. I am very happy to read that things have improved so much in such a short time in your country. India is a huge country with a huge population, so that is no mean feat. I hope the fortunes of your people continue to rise in the future. All the best to you, Raj. 😊

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