[Skybird]

This is the article on Indian economy I tried to link above, and how it gets massively overestimated by the West. We sometimes argue that India is our "ally" in blocking China and Chinese infleunce and eocnoimic dominance, but honestly said, I am sceptical about that, very. The economic status quo from which to advance is way more positive and advanced for China than for India, despite China's growing demographic problem. I also see India abusing the West's naivety for its own agenda, turning India into a Western money grave. I think its relevant and important that we realise these things in the West. India could cause another major wakeup call to global economy soon, the turmoils form which can be quote devastating. And almost nobody in the West expects it, all see only the opportunity and short term profits and the chance, or better the unfounded hope, to just continue with the old golden ways and methods - but not the immense inbuild structural risk that cannot be evaded.


"The West is far too optimistic when it comes to India"

Indian economic historian Ashoka Mody has written a book: It's a powerful reckoning with 75 years of politics in his homeland. A conversation about current and former Indian politicians and the mistakes the West has made.

Mr. Mody, your book is called India Is Broken. Is India really broken?

The problem is, and that was the reason for writing this book: In the past 75 years since independence, we in India have failed to meet the demand for jobs. The backlog of that demand has continued to grow. According to my calculations, the Indian economy will need 200 million jobs in the next ten years to employ its working-age population. Over the past decade, job growth has been zero or negative. The Indian economy has not produced jobs. And is thus fundamentally broken.

What about the politics?

There is a government failure. Essential public services like education, health care, a functioning judicial system, quality of water and air - all these are hardly delivered. There is a dichotomy in India: on the one hand, world-class education and health care for the privileged. On the other hand, very poor education and health care for the vast majority.

Reading your book, one gets the impression that in 75 years since Indian independence, no politician has really cared about the well-being of the population.

Yes, that's the case; it's a big theme in my book. Almost every politician paid lip service to the Indian masses, but no one delivered. They ignored the interests of the masses. And now we see this shocking unemployment in the country.

East Asian countries like Japan and later South Korea and Taiwan experienced an economic miracle. Why did industrialization fail in India?

India focused on developing heavy industry in the 1950s. This focus created few jobs. Light and labor-intensive industries did not develop. This was different from Japan and South Korea or Taiwan. These countries differed in two main ways: They had early universal primary education and brought women into the workforce. Simply put, Japan, South Korea, and Taiwan created jobs in light industry, were more productive thanks to education, started a dynamic of increasingly educated and healthier successor generations, exported - and grew.

Why hasn't India invested more in education?

Creating good education is hard work. It's not just about building a school. You have to have good teachers. The teachers have to actually show up for work. Children need to be healthy and well nourished to absorb the material. Success takes time and a culture of cooperation and trust between all the political players: if you do your part, I'll do mine, and in five years there may be good results. Because many people are involved, it is difficult to link success to a single politician. So it's not worthwhile for that single politician to invest in education. It is easier for him to inaugurate a highway. Because this is visible.

Last year, the government announced that it would not participate in the Pisa study for the second time - in the last measurement in 2009, Indian schoolchildren were ranked second to last. Does Indian education have a quality problem?

Yes, since the 1990s, almost all children attend elementary school. But the quality of education is still poor. The biggest problem is the quality of teachers. It's a system that has become increasingly corrupt: teachers are now relatively well paid in India, so many want this job. But to become a teacher, you need a certificate. Many local politicians use bribes to obtain a license to certify teachers. Students pay these politicians a lot of money to get the certificate, even though the quality of education is poor. These students become teachers who are happy with their jobs but have no real training or incentive to teach. Everyone benefits, only the students suffer.

Next year, Prime Minister Narendra Modi will have been in power for ten years. He came into office as an economic reformer - in his home state of Gujarat, he had ensured an economic upswing. How do you assess the years under Modi?

Narendra Modi was celebrated for the so-called Gujarat model. The problem was that there was little research on what this model actually brought. Gujarat had high economic growth because the sub-state subsidized large companies. So a lot of entrepreneurs were happy. But did this model create jobs on a large scale? Or improved education? None of the above. So is it surprising that we see the same deficits now at the national level?

And yet, India's economy is growing; according to the government, gross domestic product rose by more than nine percent last year. Commentators close to the government speak of historic growth figures.

India's GDP fell after the first covid wave, recovered, and then collapsed again after the second wave. The cited growth came after that slump. GDP is not growing, it is recovering.

How big is the growth actually?

Over the past three years, the economy has grown by an average of 3.5 percent per year - about the same as before Covid. The government derives medium-term growth figures based on the recovery phase, which is misleading. International agencies make the same mistake. There is similar blind optimism about digitalization in India, for example the Unified Payments Interface introduced by the government - almost everywhere in India you can now pay with your cell phone. That's good. But this success leads to the hope that technology will solve all problems: be it by means of e-learning for children or apps for health workers. But history shows that technology is never a substitute for human development. And we still don't have it. In the last national budget, the share of spending on health and education fell once again.

In your book, you write about India's first prime minister, Jawaharlal Nehru. He built dams and steel mills in the 1950s; he wanted to take India forward with a "big push." Today, Modi's government measures itself by airports and highways built. Are we seeing Modi's "big push" right now?

The "big push" is a very seductive economic strategy because it creates visible structures that a politician can celebrate as successes. But economic development happens at the deepest level, and its factors are harder to see. It needs norms of what is right and what is wrong in private and public life; willingness to cooperate and commitment. Let me give you an example: There are three huge garbage dumps here in Delhi, one of them in Ghazipur. The garbage burned there for the first time in 1992. So there is a mountain of garbage in this city that has been burning on and off for thirty years. The measures to solve the problem are known, but no one takes responsibility. Instead, we talk about possible semiconductor production in India.

Western diplomats and entrepreneurs often only want to see the one India: the one with rapid digitization.

Many Indians can now pay by smartphone, many work online, it all sounds very glamorous. But further down the income scale, it only plays a minimal role. For the vast majority of Indians, the reality is living with a burning landfill. Or with polluted, dying rivers. Digitization will not solve India's core problems.

Is the West too optimistic when it comes to India?

Much too optimistic. I think the world is fundamentally wrong here. Today, India is said to be geopolitically important. Perhaps that explains the glorified view of the West. But I'll make a prediction: Even in the metrics that the world can see and measure, the luster will peel off India in the next three years. And what about the metrics the world doesn't see? I fear India's problems will only get worse there.

You mention geopolitics: The West is moving away from China, and India wants to benefit. Is India becoming the new China?

Those who say so are mistaken. At least when it comes to the economy. I say it simply: China has many problems, but China has an excellent education system. China is ready for the 21st century, India is not. Some manufacturers are turning away from China, Apple producers Foxconn and Wistron are building new factories in India. But their share of total production is marginal. Most manufacturers are moving from China to Vietnam; American manufacturers are going to Mexico.

Can India close the gap with China?

Not while I'm alive. China and India are totally different countries: material progress in China is based on the provision of public goods. I keep coming back to my core message: If there is no progress in human development, there can be no sustainable economic growth. This gap is forgotten by politicians in India. Closing it will take time and a lot of effort, which I do not see at present.

In 1951, at the first census, India had 360 million people. Today, there are 1.4 billion. A recurring motif in Indian history is the "angry young man," the frustrated unemployed young man. How is the "angry young man" doing today?

Since the 1970s, the "angry young man" has existed in movies, but also in real life. In real life, the "angry young man" has learned that the state is very strong: when there were major protests, the state always cracked down with a very heavy hand. The "angry young man" also became a criminal - he saw no alternative and joined organized crime. And the "angry young man" became the foot soldier of Hindu nationalism, Hindutva.

The state did not provide jobs, but an ideology?

The Hindutva message is very powerful, it is very old, and it stirs up strong emotions. The German legal philosopher Carl Schmitt wrote in 1932 of the friend-enemy distinction in politics - us versus them. And what a powerful, unifying message that can be. That's what we're seeing again in India today.

India flirted with authoritarianism back in the 1970s, when Prime Minister Indira Gandhi declared a state of emergency. Now India again has a prime minister with authoritarian traits.

Indian elites have always hoped that an authoritarian figure would make their lives better. I think the Indian elite are afraid of the Indian masses. Where things go from here is hard to gauge. There remains hope for the wisdom of the Indian electorate, and that they will come out in favor of democracy. But the Hindutva forces are very strong at the moment. We should not close our eyes to that.

Are you actually optimistic about India?

I am not optimistic about India today. The living conditions of hundreds of millions of Indians are precarious. And I don't see anyone in politics addressing these problems. I read a lot, including in the international media, about how well India is doing at the moment. This gap between presentation and reality makes me even more pessimistic. Because it means the big problems are not being addressed.

In your book, you say that democracy has betrayed the Indian people. How?

It has not given them the opportunity to live honorable, decent lives. India's cities are among the most polluted in the world. Citizens wait years for a judge to hear their case.

They demand a new political culture.

Successful democracies have good institutionalized norms and accountability. Usually, these norms originated in small local communities - such a structure tends to create cooperation and trust. In our country, these norms have eroded. We need to rebuild them, in the villages and the districts, and hope that this political culture will be carried to higher levels of government. If we don't create a civil society consciousness and embed it in the politics and structures of the country - then all the problems we've been talking about will keep coming back.

Why has this civil society consciousness eroded since independence?

That's a good question; I don't know the exact answer. But I think part of the problem is that progress has always been understood as a centralized "big push," not a team effort of an entire society. Bad economic policy is just a mirror of bad political culture. The two are lapsed together.




Ashoka Mody
Economist grew up in India, where he also studied. He later worked for the World Bank and the International Monetary Fund (IMF). The 67-year-old is Visiting Professor of International Economic Policy at the elite U.S. university of Princeton and has since become an American citizen. His book "India Is Broken - A People Betrayed" was published at the beginning of the year.