Thursday, November 20, 2008

The 21st Century Challenges of Resurgent India


For decades after independence, however, the Indian economy remained moribund. While Nehru's Congress party government made significant investments in higher education under Education Minister Maulana Azad by establishing institutions of higher learning such as IITs (Indian Institutes of Technology), the pervasive License Raj hampered the entrepreneurial spirit of India. Fortunately, that began to change with the reforms initiated in 1991 by then Indian prime minister P. V. Narasimha Rao and his finance minister Manmohan Singh (now prime minister) in response to a balance-of-payments crisis. These reforms limited the scope of the License Raj (investment, industrial and import licensing) and ended many public monopolies, allowing automatic approval of foreign direct investment in many sectors. Subsequent governments of both major parties sustained and extended the reform process and accelerated India's economic growth.

Early investments by Nehru administration are now beginning to pay dividends. India has a large pool of English speaking college graduates. The nation is second only to the United States in production of doctors, engineers, and PhDs. Many of the world's top CEOs and business leaders are alumni of India's prestigious institutes of technology and management. With the large presence of IIT graduates in places such as Silicon Valley, India has become a highly respected brand name as a source of top talent around the world. What began as the massive but temporary Y2K work for India around the turn of the century, the country has now become a preferred destination for high-tech and business process outsourcing from the United States and Europe.

The economic reforms in India have unleashed the talent and the energies of its people at home and abroad to help build its economy and restore its place in the world as a major force. Many entrepreneurs of Indian origin (NRIs) are now setting up shops in India to do heavy-duty research and development as well as some manufacturing. With them, they are bringing US foreign direct investments ($13b in 2007 and growing) from large investors and Fortune 500 corporations to their home country, which helps create jobs and sustain the virtuous cycle of intellectual and economic development. Last year, the Indian GDP grew 9% and it is expected to grow another 7% this year, in spite of the current global economic crisis.

A recent Indian government advertisement in Fortune magazine explains the reason why India's economy has remained relatively unscathed by the global economic crisis. It says: India has taken a generally conservative approach to globalization, moving slowly to open its markets to the rest of the world. Moreover, the domestic Indian market has remained strong. The ad quotes Ron somers, president of US-India Business Council, as saying, "India's internal market is so massive that it can sustain shocks better than many countries." The fact is that India's economy does not depend much on exports to the rest of the world. It is, therefore, relatively less connected to the problems in the developed world. In fact, it stands to benefit from a dramatic reduction in commodity prices, such as oil, due to the world-wide economic slowdown.



The BBC reported yesterday on the "Hindu Terrorist" plot involving Indian military officers, a female priest and a little-known Hindu outfit called Abhinav Bharat (Young India).

The report said: It was in the aftermath of the 29 September bomb blast in the predominantly Muslim town of Malegaon in the western state of Maharashtra that the term "Hindu terrorism" or "saffron terrorism" came to be used widely. That was because the state police's Anti-Terrorism Squad (ATS) arrested 10 Hindus following the blasts and has said that it wants to arrest several more.

One of those detained was a female priest, Sadhwi Pragya Singh Thakur, aged 38, who has been accused by the ATS of being involved in the Malegaon blast. Her detention shocked members of the faith. So too did the arrest of a serving Indian army officer, Lt-Col Prasad Srikant Purohit, who the ATS says is the prime accused in the case.

According to an Indian writer Yoginder Sikand, some in India's Muslim minority have been radicalized by the actions of the Hindutva groups and their allies in the state and local governments. America's 'global war on terror' has provided a convenient cover to these Hindu groups and to fiercely anti-Muslim elements within the Indian state machinery to launch a concerted campaign of terror against Muslims. Large numbers of Muslims in various parts of India continue to languish in jails on trumped-up terror charges, suffering brutal torture as well as routine insults to their religion by police officials.

A rudimentary study of world history suggests that if the Indian political system can not find a way to marginalize and isolate Thackeray, Advani, Modi and other fanatics like them, India will continue to face threats to its secular constitution, its political stability, and its economic growth.

Prime Minister Manmohan Singh himself has called the Maoist insurgency emanating from the state of Chhattisgarh the biggest internal security threat to India since independence. The Maoists, however, are confined to rural areas; their bold tactics haven't rattled Indian middle-class confidence in recent years as much as the bomb attacks in major cities have. These attacks are routinely blamed on Muslim militants. How long will Maoists remain confined to the rural areas will depend on the response of the Indian government to the insurgents who exploit huge and growing economic disparities in Indian society.

In 2006 a commission appointed by the government revealed that Muslims in India are worse educated and less likely to find employment than low-caste Hindus. Muslim isolation and despair is compounded by what B Raman, a hawkish security analyst, was moved after the most recent attacks to describe as the "inherent unfairness of the Indian criminal justice system".


Based on a quick review of India's current status and great potential, including its strengths and weaknesses, I strongly believe India is clearly on the road to greatness it deserves with its rich heritage as one of the oldest civilizations on earth and the world's largest modern democracy. India's challenge will continue to be in how well it negotiates the obstacles and potholes created by internal strife from growing religious and ethnic fanaticism, ongoing regional insurgencies, and increasing economic disparity.


libertarian said...

Great post Riaz. The historical perspective is important. Also the first time I've heard about Maulana Azad fostering the IIT's - did not hear about it when I was there - the talk was always about Nehru's vision.

The threat - especially the religious one is well-framed. As a member of a minority community (and married to an Indian from another minority community) I understand it cannot be glossed over. I'm not sure it is an existential threat - you are certainly not making that point - but it is a sometimes ugly reality. Ahmedabad in 2002 was not the only blot. Delhi in 1984 was much worse. They are instances of the state-backed mass murder - much worse than the garden-variety communal riot. Hopefully, we'll never do something like that again. On the bright side several attempts to spark communal riots (bombs, desecrating places of worship) have ended in dismal failure in the recent past.

A rising tide raises all ships. A giant Indian success means good things for itself and its neighbors. Hopefully we'll live to see a South Asian Federation that is the envy of the world.

Riaz Haq said...

Here's an excerpt from a post I wrote for this blog on Nehru and Maulana Azad:

"In spite of his deeply held socialist beliefs, Nehru was a pragmatic leader and believed in India's industrialization. He recognized that India
needed a strong higher education system to support industrialization.
The renowned IIT system was, therefore, started in 1951 by Prime
Minister Jawaharlal Nehru and Education Minister Maulana Abul Kalam Azad with the first IIT in Kharagpur inaugurated by Maulana Azad on Aug 18, 1951. Maulana Azad was also the person who brought Birla and Nehru together after Liaquat Ali Khan as Finance Minister in 1938 started investigating Birla for his cash contributions to the Congress
party. Recognizing the contributions of Birla and Tata to Congress in the struggle for India's independence, Nehru gave special treatment to
both of the industrialists and asked them to help in India's

I wish we had a Maulana Azad in Pakistan in the early days of its existence. He was a prolific writer, a major scholar and a great visionary. Unfortunately, his contributions have not been appropriately recognized in South Asia.

libertarian said...


Agree. In the area of statesmanship, seems like Pakistan was at the shallow end of the gene pool. The one great statesman - Jinnah - exited way too early. It would have been very interesting to see how Pakistan evolved had Jinnah lived as long as Nehru did.

Riaz Haq said...

The BBC is now reporting on the "Hindu Terrorist" plot involving Indian military officers, a female priest and a little-known Hindu outfit called Abhinav Bharat (Young India). The report says: It was in the aftermath of the 29 September bomb blast in the predominantly Muslim town of Malegaon in the western state of Maharashtra that the term "Hindu terrorism" or "saffron terrorism" came to be used widely.





libertarian said...

The BBC is now reporting on the "Hindu Terrorist" ...

BBC has to sell its stories. They took their cue from the left-leaning press in India sensationalizing minor incidents. Truth is that Hinduism has a far more tolerant world-view than any of the Abrahamic religions - sarv dharma sambhav (all religions are equal). The facts bear this out: non-Hindu religions have seen an increase in the share of the Indian religious pie since 1947 - not just absolute number increases. There seems only one way to reconcile that with an 80% Hindu majority.

My faith in the good sense of the majority is intact - notwithstanding Modi and Thackeray. I don't agree with clubbing Advani with the other two.

Anonymous said...

Her detention shocked members of the faith.
Sorry to nitpick..There is no "faith" concept in "Sanathana dharma" or what is crudely called "hinduism". Its based on "Ista devta"(choice of path(god..crudely)) since all path lead to The One. Again, in case of tribals and all, they are nature worshippers which is the original "hinduism concept"(temple worship is just a few thousand years old..with code brought out by Adi Sankaracharya). Abinav Bharat "allegedly(ATS)" also planned taking out some top RSS leaders, so its not pure black and white thing. I personally sympathize with this new terror group, if the allegation is true. This will shake up some sleeping politicians for good. The ATS allegations leaks are difficult even for a bollywood script, i will keep my fingers crossed for court to sift through the evidence. Mumbai ATS is a very professional force(they forced Dawood to flee to Pak for his life), so if this allegations are false, it will hit their credibility hard big time.
just my thoughts..

Riaz Haq said...

Here's an excerpt from a piece Shabana Azmi wrote for Hindustan Times on Aug 24, 2008:

Things very rarely catch me by surprise any more. Yet I am taken completely unawares by the viciousness of the attack against me for a remark I made in a recent television interview that I was denied a house in Mumbai because I am a Muslim.

I am being called ungrateful, wretched and even a liar. But these are the same people who applauded me and called me a hero when I took on Imam Bukhari.

To read the rest, please visit

Anonymous said...

If you care, in Mumbai and in communally sensitive areas, Hindus rent out places only to Hindus and Muslims only to Muslims. While rejecting people of other religion, brokers always mention that it is for their own safety, coz when pot boils, there will be less chance for either community to escape riot mob. This was shown in an NDTV(or HT..not sure) hidden cam expose. So this not a case of "Muslim victimization". Its just people being cautious. This is a total non-issue.

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Anonymous said...


curse of india, is that we donot know to work as a team. Individually they could be great achievers. As you have put it correctly there is a price of democracy, which india pays and it is fine.

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Sinister plans




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Here's the latest report on India's right to food bill:









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Stance changed



Mayraj said...

The biggest flaw in democracy is that there is a tendency for the elected representatives' interests and those of the public will oppose each other. Elected representatives whether they are in a developing country (where this shows up quicker) or a developed country can act to serve own interests first. For the public's interests to be served the public needs to be informed, educated and not too busy to impose their will on their representative not just at election time but between elections. Also their needs to be proper money management no matter whose interests are to be served.

When this does not happen, elected reps will run country into the ground. Has happened in US, UK, Greece, Pakistan,. It is hoppening in Germany in slow motion. and when the population ages and expects govt help is when it looks like there will be no money in the till or maybe before if the govt owned banks acting as hedge funds lose big!. In India it will happen as soon as delicate balance of debt bought by locals is disturbed. This happened with oil crisis when India sought IMF help. Can happen again for many reasons. Anyway, due to farmers misuse of water and fertilizers means they will come banging on govt door for aid and not amount of debt will be bought by Indian public to make up for that need! Then the discipline of the bond market, being imposed on Greece will lead to same debacle.

In India IMF intervention meant market was opened and India became this outsourcing hub. But, this small change will not be enough to satisfy angry masses needs.

My assumption was Germany was immune to US, UK developing/ country problem. But this revealed I was deluded.. Yeow! And Germany is the linchpin of EU and Euro. How can Merkel be stern with Greece and not with own states and state owned gamblers? Of course all German parties are guilty, so maybe they cannot see what their own behavior has wrought until it smacks them down.
Pakistan had major problems with its nationalized banks. I never dreamed that Germany would show that state owned banks can make a mess in a country as evolved as Germany.

Riaz Haq said...




India's Muslim community is among the poorest in the country.








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State of Gujarat Muslims


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More than 1,000 people were killed in the violence in 2002.


Mr Modi has always denied any wrongdoing.
'Vent their anger'






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Here's a NY Times story about child slavery in India:










Their lawyer denied the charges at a bail hearing.



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