The ongoing national election presents an opportunity to celebrate the vibrancy of Indian democracy as well as to question whether it is the most effective vehicle for enhancing the welfare of India’s citizens. After 670 million eligible voters have expressed their choice, we will still have what we have now: a multi-party coalition with major policy directives coming from the top. There will be no change in Indian politics, but what about policy?
Numerous analysts are skeptical of India’s ability to leverage its democracy for national development, arguing that special interests and inadequate per capita wealth make India still unsuitable terrain for true democracy. In The Future of Freedom, Newsweekeditor Fareed Zakaria writes, "What we need in politics today is not more democracy but less." Allowing politics to be guided by the principles of the market, he argues, will save democracy from itself, particularly in a billion person state where, as Arun Shourie sometimes complains, "everyone has a veto."
There is also the reverse argument, that India needs more democracy of the local, civic kind in order to break free of its notorious bureaucratic culture of red-tape and corruption. In a country as variegated as India, expanding individual freedoms and local empowerment are the keys to more equitable development. Particularly at low incomes, Amartya Sen famously argues in Development as Freedom, the intensity of economic needs requires the constructive involvement of target populations to both define and exercise their rights. Short of this, democracy is neither responsiveness nor a successful vehicle for delivery.
India today faces precisely this problem. A democracy in name alone is little to celebrate if it does not improve the quality of life of its citizens. Some who favor greater centralized control over economic management, assuming that is the solution to India’s inequality woes, frequently turn to the Chinese model. A friend recently traveling between India and China wrote, "After visiting China, I have lost any romantic view of India as a place where the inner beauty is worth all the hardships. The beauty is there, but life here is needlessly difficult despite the massive progress over the past decade." He neglected to mention, however, that with China’s full decade head-start in economic liberalization, its southern cities are even more polluted than India’s, with an expectedly adverse impact on quality of life.
Still, there is plenty to learn from China—which in some ways acts more democratically than India. Though China lacks federal electoral democracy, its institutions focus on delivering services to its people and foreign investors. By raising crop prices and upgrading transportation and electricity networks, extreme poverty has fallen to under ten percent of the population. Locals have been involved in the design and implementation of massive micro-credit schemes in rural China, and almost $1 billion is spent annually on alleviating urban poverty.
In many respects, India faces similar challenges. Ranked only 115 out of 162 countries in the UN Human Development Index, India’s per capita GDP still hovers under $600; its population growth of 1.7% reduces the impact of economic growth to about 4%. Malnutrition is estimated as high as 40% and real (as opposed to functional) literacy is well below the official 65% statistic. Both India and China face rapid urbanization—in India to 32% of the population—with energy and water demand as the greatest challenges. Both fear the spreading AIDS epidemic, which could "cost India a generation," in the words of Bill Gates. Like China, India’s bureaucracy either siphons or absorbs much of the meager expenditures on social development.
The difference, however, is that China focuses on the majority of its citizens, India does not.
Fifty percent of India’s economy is in services, with the other half split between industry and agriculture. Finance Minister Jaswanth Singh has claimed that India is entering a "golden age" on the backs of the software developers External Affairs minister Yashwant Sinha celebrates as "computer geeks." But dot.com employees constitute a mere sliver of the Indian population. Not even 2% of the Indian population is affected substantially by the IT boom, and their growing taste for Western products does little to aid struggling Indian manufacturers.
Agriculture still accounts for 25% of GDP and involves 80% of India’s population, meaning that the real engines of widespreadgrowth must remain in manufacturing and traditional sectors. But excessive bureaucracy and poor infrastructure have held back opportunities to engage the massively expanding labor force. The employment generation India needs to cope with being home to the world’s largest pool of young people would require hundreds of Bangalores and more than a handful of elite technical institutions to educate and train a productive workforce.
This presents the classic democratic dilemma of affluence/influence: those who can afford access to resources and benefit from privatization are less likely to be interested in supporting public efforts to benefit society. The BPO economy can neither solve India’s broader governance crisis nor fund the solutions. The sprouting of Silicon Valley style campuses will not solve the water shortage which forces poor people to pay up to 15 times more for bottled water than the potable drinking water to which they have no access. These are challenges that the outsourcing of jobs to India simply cannot solve.
None of this implies that less democracy is the solution to India’s woes. What it instead means is that greater accountability and transparency will allow citizens to insist on implementation of government promises, and provide the opportunities for citizens to take control of their economic future. Thus there is no contradiction between greater democracy and greater economic liberalization and openness—the two must go hand in hand.
The answer to the democratic dilemma is therefore both more and less democracy: A lot more local ownership and self-governance, with less special interest, bureaucratic and other distortions at the top.A recent study by the management firm McKinsey & Co. concurs that greater privatization, removal of restrictions on foreign investment and reform of land ownership laws could virtually double India’s GNP to over 10% per annum—and raise the real incomes of farming families by over 40%.Poor people must be empowered to literally make their own business plans, as successful micro-credit schemes have encouraged, and fiscal management must be decentralized.
The federal government must at the same time start a full-fledge campaign for the majority of its citizens, not those whose success is best assured by government non-interference. From pan-wallahs to CAT-scan imagery analysts, India has the largest number of small business owners and cottage industries in the world. Shouldn't the government stimulate this entrepreneurship wherever possible? As the saying goes, India does best at what it regulates least: producing Bollywood films, dot.coms and Miss Universe winners.
There is no contradiction between these two tracks of democratic adjustment. Indian states which promote literacy and health grow faster, but this can only benefit all of India if it is harnessed by a lean government focused on broad socio-economic development.
There is one more aspect to India’s democracy which provides a source for growth: its global diaspora, a true middle class and potential engine for development. The citizenship rights and other privileges millions of overseas Indians seek can stimulate the kind of lasting infrastructural investment necessary to allow the government to be effective.
The Asian Tiger success stories all involve capitalism preceding democracy, indicating an uphill climb for India which has taken matters "in reverse." But the Tigers learned an important lesson from their late 1990s financial crises: Illiberal democracies are conducive to economic development up to a point, but overly centralized regimes ultimately impede growth and prosperity. Empowering individuals to control and manage their resources, however, can propel social and economic development to the levels people have come to expect and demand. The mere fact of being the world’s largest democracy with an emerging global economic presence is not enough to claim India’s greatness. After the elections is when the real work begins.
Parag Khanna is Advisor on Global Issues, World Economic Forum, Global Governance Initiative, The Brookings Institution, Washington, DC, USA
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