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Ideas under progress
The next section in the book, "Imagining India", contains the ideas that are being debated, shaped and molded in the Indian society today. Nilekani starts this section with state of school education. There is much that is wrong with India’s primary education, despite the excellent mage of Indian education in the eyes of the outsiders – after all, they only meet the highly educated finance, IT and engineering professionals from India. Nilekani discusses several of the challenges in Indian education, including the limited attention paid to primary education, the increasing politicization of even excellent institutions like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs), lack of accountability by the teachers, the overall failure of the state education system which has forced the society to seek private education at considerable cost, and the use of reservation policies as bargaining tools by politicians.
Another idea in progress is the role of urban centers, and the love/hate relationship that politicians have with them. The Gandhian heritage (“India lives in its villages”) makes it difficult to acknowledge that much of the growth in the future is going to be based on cities. The sooner India takes up the urban problems in a no-nonsense way, the better it would be able to manage the impact of growth on the rural and urban areas. Nilekani speaks hopefully of government programs such as Jawaharlal Nehru National Urban Renewal Mission as one of the catalysts for reform.
Speaking about infrastructure, Nilekani makes the usual points about the lack of different types of infrastructure, but believes that it has now become a key political point such that politicians can no longer ignore it. He then discusses the efforts to build a common market and credits the Vajpayee government for most of the progress that has been made. Much of the momentum has, however, been lost in the last five years under Manmohan Singh.
Ideas being debated
Then, Nilekani moves on to a third set of ideas, those about which there is fierce disagreement in the society. He starts this section with economic reforms. Nilekani feels that politicians have not openly embraced reforms as an idea and they are falling back into populism. He writes about a few aspects of reforms that no politician has been bold enough to handle, in particular the caste-based reservations and the role of subsidies. However, he feels that reforms have begun to succeed as a political argument. A case in point is Narendra Modi, who is feted for the economic dynamism of Gujarat, despite the reservations about the role of his administration in the 2002 massacre of Muslims. But then, the Congress government has resorted to populist programs such as the Rural Employment Guarantee Scheme.
One of the key points that investors have always made about India is that the country is firmly set on a path of economic reforms, and no party will be able to reverse the process. But that argument addresses only one half of the issue: the point really is not about the direction, but the pace of reforms. If Indian reforms stop after doing the easy bits and there is not enough political or social will to handle the difficult ones, then the biggest opportunity in the history of the country may be lost. I only wish it does not turn out to be the case. Everyone knows the next set of reforms needed is more challenging, most of them related to the various subsidies and price distortions. It is not knowledge, but political will and implementation that are required. Unfortunately, the current government under Manmohan Singh has done precious little to push reforms forward in the last five years.
Nilekani’s next topic is jobs and labor. He traces well the cornering of privileges and resources by the workers in the organized sector, leaving little for the rest. He also points to the fact that organized workers end up setting the political agenda, simply because they are more organized. I was staggered to read that 14 million people are entering the job market every year. Nilekani also mentions that the IT and BPO sectors have created 1.6 million jobs so far. Contrast these two figures and the problem becomes apparent. There is therefore no surprise when Nilekani says, “A population of India’s size, and with its upcoming demographic surge, cannot rely on the services sector to create the mass of jobs it needs, and a large mass of unemployed and seasonal workers is a recipe for instability.”
As the next idea that is being hotly debated, Nilekani discusses the state of higher education. There is little that is unknown in the chapter. People from foreign businesses, who are used to dealing with highly educated Indians, may find it surprising that most of India’s higher education is failing to produce people with good skills. Politicians, again, stand in the way of improvement. It is saddening to read Nilekani’s description of how he and the Gujarat government successively offered to finance new facilities in IIT Bombay and how the then Education Minister, Arjun Singh, obstructed it. But Arjun Singh was not alone; BJP’s Murli Manohar Joshi too did his best in trying to interfere with IITs and IIMs. I was also shocked to read that St Stephen’s College in Delhi, one of India’s most reputed educational institutions, announced that it would reserve 50% of its seats for Christians. Why?! The whole aspect of reservations remains a mess that is dragging India down (although I must confess I do not have data about how well the Supreme Court’s decision of excluding the creamy layer from the “Other Backward Castes” reservation is being implemented).
Ideas for the future
The fourth section in the book comprises ideas which are not being considered in the society, but which will nevertheless prove important in the future. The first of these is the power of IT. Nilekani argues for introducing a national identity card for citizens (and for using it to target subsidies directly to the citizens by way of a bank transfer for them to spend as they please). Now that Nilekani has become the chairman of the ID card authority, he is trying furiously to implement it. Perhaps direct cash transfer of subsidies will gain political acceptance if it is seen as a way to obtain votes. Nilekani also discusses the various other areas where IT can make a difference, such as land records and government services.
Health and social security for the aged are two topics that are not being discussed actively, according to Nilekani. As a result, he believes that lifestyle diseases are likely to explode – something that India is ill prepared to face. It is perhaps true, but even I found it difficult to place it in the same order of importance as several other economic issues. Nilekani also argues in favor of creating a sustainable social security system while the demographic dividend lasts. Environment, says Nilekani, is another topic that gets scant attention. The basic warning here is that unless India manages to achieve environmentally friendly growth, growth may not be sustainable. Perhaps true, but the chapter did not convince me – I still think there are more important, and more accessible, reforms that need to be carried out first.
Nilekani classifies India’s energy needs and solutions as another idea that is not being debated well. I am not so sure; most citizens face power cuts everyday, and when oil prices touched USD 150 per barrel, there was even some fuel rationing in some cities. However, it is not the solutions but the political will to implement them that is missing. India still relies too much on coal – Nilekani says that India is likely to import a staggering 95% of its coal needs by 2030. There is little resolve to carry out reforms in the usage of power. I read some years ago that all the states had agreed to charge at least half-a-rupee per kilowatt-hour for the power used in agriculture. But then, it looks like many parties are winning elections by promising free power to farmers. Nearly a quarter of total power generated was lost in transit (genuine losses or theft) in 2011. In the southern Indian state of Tamil Nadu, I regularly hear from my friends of power cuts of 9-12 hours a day! It is important to use the available sources well even as new sources are being sought. So far, China has shown great foresight in securing its energy and mineral needs by entering into deals around the globe, and India will need to catch up fast. I think Manmohan Singh has done India a great service by firmly sticking to his bargain with the USA, so that India can generate more nuclear power, potentially the only solution to the country’s future power needs.
Finally, in his concluding remarks, putting all this together, Nilekani passionately argues that “after a long and convoluted path, after many a stumble and wrong turn, a different kind of moment seems to be upon us. For the first time, there is a sense of hope across the country, which I believe is universal. There is a momentum for change.”
Just do it
Nilekani has done India a great service by putting a comprehensive and thought-provoking book together. After all, how many entrepreneur-industrialists have the intellectual ability and rigor to compile such a commendable treatise on India?
One point that keeps recurring through his discussions is the futility of the Nehruvian socialist model and the irrelevance of Gandhi’s economic ideas. India has paid dearly by holding on to both and the sooner the country gets rid of them, the better it would be. The other aspect that surprised me was Nilekani’s assertion in many places that the Indian government finances had become much more comfortable. He quotes several programs that the government has taken up, all of which need massive financial investment, but he says repeatedly that the government has enough money. India’s investment-grade credit ratings from Moody’s, S&P and Fitch hang in balance, thanks to the struggles of containing the fiscal deficit. India must get back to controlling the deficit, rather than expand the list of spending programs.
One thing that shines through in the book is his love for the country and his dreams for its future. Sometimes, I had the feeling that this passion had colored his vision and made him see the glass as ‘half full’ all the time. Earlier, I had read another book on India, “In spite of the Gods” by Edward Luce, who was the correspondent in India for Financial Times. In that book, Edward had done a great job of describing many of the social pressures and changes, but had left the conclusion much more open by listing out the areas on which India needs to work if it is to progress. Luce’s book had much less economic analysis than Nilekani’s. But, as the Economist magazine opined, both are indispensable introductions for anyone wishing to understand contemporary India.
As both the books make it clear, the trouble is not in identifying what needs to be done, but in actually getting it done!
The next section in the book, "Imagining India", contains the ideas that are being debated, shaped and molded in the Indian society today. Nilekani starts this section with state of school education. There is much that is wrong with India’s primary education, despite the excellent mage of Indian education in the eyes of the outsiders – after all, they only meet the highly educated finance, IT and engineering professionals from India. Nilekani discusses several of the challenges in Indian education, including the limited attention paid to primary education, the increasing politicization of even excellent institutions like the Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs), lack of accountability by the teachers, the overall failure of the state education system which has forced the society to seek private education at considerable cost, and the use of reservation policies as bargaining tools by politicians.
Another idea in progress is the role of urban centers, and the love/hate relationship that politicians have with them. The Gandhian heritage (“India lives in its villages”) makes it difficult to acknowledge that much of the growth in the future is going to be based on cities. The sooner India takes up the urban problems in a no-nonsense way, the better it would be able to manage the impact of growth on the rural and urban areas. Nilekani speaks hopefully of government programs such as Jawaharlal Nehru National Urban Renewal Mission as one of the catalysts for reform.
Speaking about infrastructure, Nilekani makes the usual points about the lack of different types of infrastructure, but believes that it has now become a key political point such that politicians can no longer ignore it. He then discusses the efforts to build a common market and credits the Vajpayee government for most of the progress that has been made. Much of the momentum has, however, been lost in the last five years under Manmohan Singh.
Ideas being debated
Then, Nilekani moves on to a third set of ideas, those about which there is fierce disagreement in the society. He starts this section with economic reforms. Nilekani feels that politicians have not openly embraced reforms as an idea and they are falling back into populism. He writes about a few aspects of reforms that no politician has been bold enough to handle, in particular the caste-based reservations and the role of subsidies. However, he feels that reforms have begun to succeed as a political argument. A case in point is Narendra Modi, who is feted for the economic dynamism of Gujarat, despite the reservations about the role of his administration in the 2002 massacre of Muslims. But then, the Congress government has resorted to populist programs such as the Rural Employment Guarantee Scheme.
One of the key points that investors have always made about India is that the country is firmly set on a path of economic reforms, and no party will be able to reverse the process. But that argument addresses only one half of the issue: the point really is not about the direction, but the pace of reforms. If Indian reforms stop after doing the easy bits and there is not enough political or social will to handle the difficult ones, then the biggest opportunity in the history of the country may be lost. I only wish it does not turn out to be the case. Everyone knows the next set of reforms needed is more challenging, most of them related to the various subsidies and price distortions. It is not knowledge, but political will and implementation that are required. Unfortunately, the current government under Manmohan Singh has done precious little to push reforms forward in the last five years.
Nilekani’s next topic is jobs and labor. He traces well the cornering of privileges and resources by the workers in the organized sector, leaving little for the rest. He also points to the fact that organized workers end up setting the political agenda, simply because they are more organized. I was staggered to read that 14 million people are entering the job market every year. Nilekani also mentions that the IT and BPO sectors have created 1.6 million jobs so far. Contrast these two figures and the problem becomes apparent. There is therefore no surprise when Nilekani says, “A population of India’s size, and with its upcoming demographic surge, cannot rely on the services sector to create the mass of jobs it needs, and a large mass of unemployed and seasonal workers is a recipe for instability.”
As the next idea that is being hotly debated, Nilekani discusses the state of higher education. There is little that is unknown in the chapter. People from foreign businesses, who are used to dealing with highly educated Indians, may find it surprising that most of India’s higher education is failing to produce people with good skills. Politicians, again, stand in the way of improvement. It is saddening to read Nilekani’s description of how he and the Gujarat government successively offered to finance new facilities in IIT Bombay and how the then Education Minister, Arjun Singh, obstructed it. But Arjun Singh was not alone; BJP’s Murli Manohar Joshi too did his best in trying to interfere with IITs and IIMs. I was also shocked to read that St Stephen’s College in Delhi, one of India’s most reputed educational institutions, announced that it would reserve 50% of its seats for Christians. Why?! The whole aspect of reservations remains a mess that is dragging India down (although I must confess I do not have data about how well the Supreme Court’s decision of excluding the creamy layer from the “Other Backward Castes” reservation is being implemented).
Ideas for the future
The fourth section in the book comprises ideas which are not being considered in the society, but which will nevertheless prove important in the future. The first of these is the power of IT. Nilekani argues for introducing a national identity card for citizens (and for using it to target subsidies directly to the citizens by way of a bank transfer for them to spend as they please). Now that Nilekani has become the chairman of the ID card authority, he is trying furiously to implement it. Perhaps direct cash transfer of subsidies will gain political acceptance if it is seen as a way to obtain votes. Nilekani also discusses the various other areas where IT can make a difference, such as land records and government services.
Health and social security for the aged are two topics that are not being discussed actively, according to Nilekani. As a result, he believes that lifestyle diseases are likely to explode – something that India is ill prepared to face. It is perhaps true, but even I found it difficult to place it in the same order of importance as several other economic issues. Nilekani also argues in favor of creating a sustainable social security system while the demographic dividend lasts. Environment, says Nilekani, is another topic that gets scant attention. The basic warning here is that unless India manages to achieve environmentally friendly growth, growth may not be sustainable. Perhaps true, but the chapter did not convince me – I still think there are more important, and more accessible, reforms that need to be carried out first.
Nilekani classifies India’s energy needs and solutions as another idea that is not being debated well. I am not so sure; most citizens face power cuts everyday, and when oil prices touched USD 150 per barrel, there was even some fuel rationing in some cities. However, it is not the solutions but the political will to implement them that is missing. India still relies too much on coal – Nilekani says that India is likely to import a staggering 95% of its coal needs by 2030. There is little resolve to carry out reforms in the usage of power. I read some years ago that all the states had agreed to charge at least half-a-rupee per kilowatt-hour for the power used in agriculture. But then, it looks like many parties are winning elections by promising free power to farmers. Nearly a quarter of total power generated was lost in transit (genuine losses or theft) in 2011. In the southern Indian state of Tamil Nadu, I regularly hear from my friends of power cuts of 9-12 hours a day! It is important to use the available sources well even as new sources are being sought. So far, China has shown great foresight in securing its energy and mineral needs by entering into deals around the globe, and India will need to catch up fast. I think Manmohan Singh has done India a great service by firmly sticking to his bargain with the USA, so that India can generate more nuclear power, potentially the only solution to the country’s future power needs.
Finally, in his concluding remarks, putting all this together, Nilekani passionately argues that “after a long and convoluted path, after many a stumble and wrong turn, a different kind of moment seems to be upon us. For the first time, there is a sense of hope across the country, which I believe is universal. There is a momentum for change.”
Just do it
Nilekani has done India a great service by putting a comprehensive and thought-provoking book together. After all, how many entrepreneur-industrialists have the intellectual ability and rigor to compile such a commendable treatise on India?
One point that keeps recurring through his discussions is the futility of the Nehruvian socialist model and the irrelevance of Gandhi’s economic ideas. India has paid dearly by holding on to both and the sooner the country gets rid of them, the better it would be. The other aspect that surprised me was Nilekani’s assertion in many places that the Indian government finances had become much more comfortable. He quotes several programs that the government has taken up, all of which need massive financial investment, but he says repeatedly that the government has enough money. India’s investment-grade credit ratings from Moody’s, S&P and Fitch hang in balance, thanks to the struggles of containing the fiscal deficit. India must get back to controlling the deficit, rather than expand the list of spending programs.
One thing that shines through in the book is his love for the country and his dreams for its future. Sometimes, I had the feeling that this passion had colored his vision and made him see the glass as ‘half full’ all the time. Earlier, I had read another book on India, “In spite of the Gods” by Edward Luce, who was the correspondent in India for Financial Times. In that book, Edward had done a great job of describing many of the social pressures and changes, but had left the conclusion much more open by listing out the areas on which India needs to work if it is to progress. Luce’s book had much less economic analysis than Nilekani’s. But, as the Economist magazine opined, both are indispensable introductions for anyone wishing to understand contemporary India.
As both the books make it clear, the trouble is not in identifying what needs to be done, but in actually getting it done!
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