The hidden obstacles to becoming a ‘developed’ country

The dawn of the new year may be a good time to reflect upon the discordances, often hidden but equally often blatant, that plague our ecosystem. Illustratively, our stock market is testing historical highs, but so are the AQI (Air Quality Index) numbers of our principal cities. These are now at several multiples of the WHO benchmark. No less than 39 of our cities figures in the list of the world’s 50 most polluted cities. Our economy, as a whole, is growing faster than that of our competing peers as are our ‘Services’ exports and inward remittances; and our mobile phone exports are at a historical high. But our aggregate ‘Merchandise’ exports are stagnating ($278.80 billion during April-November 2023 versus $298.21 billion in 2022).

India is commonly considered a global leader in the digital world, a highly technical and precise space, requiring adherence to high standards of quality. Even a single misplaced syllable, speck of dust, drop of water, or momentary loss of connectivity create problems, disrupting continued functioning. These high levels of quality control are managed responsibly by our own citizenry. Yet, in the non-digital spaces of our lives, we seem to excel in the opposite direction. It is not uncommon to see not only two-wheelers but also luxury cars driving on the wrong side of the road, even in the national capital! This blatancy goes unchecked, notwithstanding that we have one of the highest numbers of road accident-related deaths globally.

Then again, reports that a serious oil spill went unchecked for several days in the industrial suburbs of Chennai or that less than 20% of factories in the industrial cluster around Pune comply with fire safety laws or that deaths that occurred from industrial accidents even in our more conscious states, are not uncommon. Neither are reports that our export of substandard/toxic medicines cause deaths. The list can go on and on. If we aspire to make our country a ‘developed’ nation within a stipulated timeframe, these disjunctions in our ecosystem merit serious attention.

If we start asking ourselves why our ecosystem allows such aberrations to continue, despite the equally frequently announced official intent to rectify them, two aspects initiated at the dawn of the planning era, and continuing undisturbed thereafter, come into focus. The first was export pessimism. A conviction was formed that India could not use exports to achieve economic growth and high per capita income and must instead seek to become self-reliant. A near-autarkic environment was created so that ‘sensible planning’ could facilitate all-round equitable growth.

Adapting globally accepted technical and quality standards was also thus rejected as these were expensive and also akin to neo-colonisation. The concept of developing more ‘affordable’ ‘Indian’ standards came into being, along with an intricate, but at times somewhat ambiguous, web of laws that were poorly understood and implemented.

Our manufacturing companies thus needed to have the equivalent of a bi-polar disorder if they wished to succeed in both the price-sensitive Indian market and in the quality-conscious global markets. Some succeeded, but these were only the exceptions. The rest complain bitterly about non-tariff barriers, to which might now get added, in UK/EU, the recently unveiled ‘carbon taxes’ on energy inefficient production processes.

Secondly, plan implementation imperatives had led to centralised bureaucracies, housed in the national and state capitals, to ‘manage’ and ‘oversee’ sensible, equitable growth. This denuded the hinterland of senior administrators working ‘in situ’. The elite cities of the colonial era, where they are now assembled, thus initially started resembling oases of modernity, while the rest of our large sub-continent became the periphery.

Economic liberalisation happened because of a national realisation of the failures of past policies. We should have also re-structured governance teams and re-deployed our governance assets back to the districts and tehsils, duly empowered to assist or lead locally inspired development initiatives. This did not happen.

Also, new city creation enormously lagged population growth, which has quadrupled from about 350 million to 1,400 million! Further, a city needs USPs if it is to attract citizenry and grow in size. This needs de-centralisation of budgets and decision-making, which has not happened. Individuals migrating to take advantage of the post-liberalisation boom thus mainly went to this handful of oases. These, in turn, experienced explosive and mostly unanticipated growth and, with large unofficial outgrowths, have started to resemble what are often called ‘slums’ elsewhere. Dependence on bottled drinking water is already commonplace; bottled air may follow.

Global development institutions have often commented about our ‘messy urbanisation’. Our official urbanisation index is in the mid-30s but the ‘messy’ urban index may well be in the 60s. Hard-pressed individuals living in this environment are forced to adopt survival skills, including trying a variety of shortcuts in all walks of life, confident that the very complexity of our laws and top-heavy governance relaxes the attitudes to enforcement of the ‘rule of law’ in the system.

To be effective, governance systems, just like quality control systems, need empowerment up and down the chain, to reject and penalise. An over-centralised system usually degenerates after a while. However, decentralisation needs an unambiguously transparent and manageable list of do’s and don’ts and a non-negotiable, well-understood list of penalties, but also strict accountability. Empowerment, unaccompanied by effective accountability of the executives of the system, is a recipe for disaster as the rich and the powerful and the well-connected always try to ‘game’ the system.

These two aspects may be the source of most of our ills. Admittedly, changing course now is a herculean challenge. But if we succeed, the rewards will be equally attractive.