India 2020: The Uses of Crisis

India goes from crisis to crisis, but that may not be a bad thing. In fact, if you imagine the country to be a jungle, these small events are equivalent to small fires, one that prevents big fires from happening. India, chaotic and crisis-prone, can be relied upon not to have a big upheaval, even if the Hindu extremists get the power to run the country. One would expect them never to get there, given the extreme complexities of Indian democracy, which will always ensure a coalition of interests, rather than one extreme view, gaining ascendency. 

But, apart from the prevention of big crisis, the perpetual state of crisis is helpful to move the country forward. Though largely unacknowledged, the Indian government has scored some significant victories over the last couple of months, passed a raft of unpopular reforms, stalled for years, within a few weeks, got rid of an obstructionist ally, and promoted a new group of Ministers known for their effectiveness, and importantly, honesty. With the new team in place, and an existential crisis, a general election due in 18 months which may throw the Congress government out of power and alter the country's political equations for good, around the corner, the Government may be more inclined to act than they were able to in the last three years or so. Besides, as the India's economic growth is stalling, the fear of God is making them move: Despite the huge sense of entitlement that some of these politicians are bestowed with, even they know that there may not be any second coming if they screw up now.

This is indeed my big hope about India, despite its recent run of corruption and crisis. I see that the Indian politics have finally changed. The vote bank politics, which emerged a strong force in the 80s and have dictated the country's political configuration since, is receding slowly under the pressure of middle class aspirations. Indian middle class is showing up, not as a columnists' imagination but a rather practical political entity, and demanding better lives. Some savvy politicians have understood this: Despite initially winning vote-bank victories, they have successfully turned themselves into development messiahs. Gujrat's Narendra Modi may be its finest example, but Bihar's Nitish Kumar, Uttar Pradesh's Akhilesh Singh Yadav, Rajasthan's Ashok Gehlot and Madhya Pradesh's Shivraj Singh Chauhan are all in it. And, this message is spreading: India's Anti-corruption movement, as it claims its prominent victims, is surely having an effect, and changing the political context. The general elections due in 2014 will be the first time this middle class muscle will be flexed on the national stage: The politics may completely change thereafter.

Surely, while we are on the subject of crisis, we must also take cognizance that the big external payments crisis, that in 1991, was the context of Manmohan Singh's initial economic reforms. This time around though, Indian government attempted to sleepwalk through the worldwide recession, hoping, somewhat correctly, that its domestic demand will not slow down because of the worldwide crisis. This assumption may have proved correct, but this has changed India's economic configurations somewhat. Suddenly the great Indian IT services companies, at least some of them, are struggling, and Indian exporters, particularly in the fledgling manufacturing sector, are finding it hard to sell to their European customers. Indian government could do very little to change the fortunes of these companies. What it had done rightly is to focus on industries which ride on domestic demand, such as retail, and could help the domestic manufacturing and help stem job losses. One would expect, in the coming months, the government will continue to focus on sectors which will create jobs in the immediate term, retail, aviation, transport, hospitality perhaps, as well as on those which may absorb the excess middle class workforce left stranded by the slowdown of export-facing sectors, such as education. Crisis is helpful not just to avoid bigger future crisis, but, as in case of India and given our lethargy and inclination to do things at the last moment, it is good for initiating action. 

As they say in India, everyone can use a good famine.  


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