kalyan
What went wrong?
Paul BeckettDaniel Berehulak/Getty Images
Prime Minister Manmohan Singh.On the Prime Minister of India’s website, there is a section labeled “Interviews.” It is probably not viewed very often since there are only seven published there, less than one a year since Manmohan Singh took office in 2004. But there is one that makes for fascinating reading.
It was conducted in 2005 for the McKinsey Quarterly. The interviewer was Rajat K. Gupta, an international Indian success story for his rise to the perch of managing director at the global consulting firm.
At the time, Mr. Singh was seen as an Indian international success story, too, a newly-elected economic reformer who would transform India with a combination of humble political ego and economic smarts.
Emmanuel Dunand/Agence France-Presse/Getty ImagesRajat K. Gupta.Today, seven years on, Mr. Gupta has been disgraced. He is serving a two-year jail sentence in federal prison for leaking corporate secrets about Goldman Sachs GS -0.78%, where he was a director, to a hedge fund at the height of the global financial crisis.
And Mr. Singh? Well, he remains prime minister of India, most likely for one more year until scheduled national elections in 2014. But his speech Thursday to the National Development Council, which includes state chief ministers, shows how little of the ambitious agenda he laid out for Mr. Gupta has come to pass.
In the 2005 interview, the new prime minister declares that the “next five to 10 years are crucial” and India needs “a growth rate of about 7 to 8 percent per annum, sustained over a period of the next 10 to 15 years.”
On Thursday, rather than look at how much of his agenda has been achieved during seven of those “five to 10” crucial years, Mr. Singh simply moved the goalposts. In his speech, he said: “We need 20 years of rapid growth.” He didn’t specify when the clock started on that one. And the idea of 7% to 8% growth a year, which appeared so effortless a few years ago, has now become “an ambitious target,” he said. One way to view that is that the country is going backwards.
Of course, the global economic slowdown has played its part. Nobody thought in 2005 that the world economy would effectively grind to a halt for a few years, and India has suffered along with everyone else. Yet, in comparing the prime minister’s words now and seven years ago, it becomes clear just how many of India’s recurrent problems are homegrown and remain virtually untouched. And a few new ones have been added.
In 2005, Mr. Singh spoke to Mr. Gupta of the need to get workers out of agriculture. Fast forward seven years. “Agriculture is an area of critical concern,” Mr. Singh said in his speech Thursday. “We need to move people out of agriculture by giving them gainful employment in the non-agricultural sector.”
Where are those jobs? Manufacturing, which was an area of concern to Mr. Singh in 2005. “I feel we have to do a lot more on manufacturing because, ultimately, services respond to what’s happening in the production sector.” Or, as he put it in his speech on Thursday: “Growth in manufacturing should be at double digit levels, but this has yet to happen.”
Why not? In Thursday’s speech, Mr. Singh noted that “better infrastructure is the best guarantee for rapid growth of the economy.” Not too far away, then, from the sentiments he expressed in 2005, when he told Mr. Gupta: “We have a lot of backlog in improving our infrastructure.”
Back then, though, Mr. Singh spoke of the “substantial progress” that had been made. On Thursday, instead, he said that “the most immediate problems we need to tackle are the implementation problems affecting large projects.”
That, over the span of seven years, sounds like things went in reverse, certainly compared to what Mr. Singh was expected to achieve. As if to make this very point, the prime minister on Thursday added two more things that he described as “a major challenge for the economy.” They are energy (“our domestic energy resources are not sufficient to meet our country’s growing needs”) and water (“we are rapidly approaching the position where the total demand for water in the country simply cannot be met by available supply.”)
That’s not to say, of course, that nothing has been done in the past seven years. In 2005, Mr. Gupta asked Mr. Singh how he felt about foreign direct investment in retail. The answer: “I am convinced that we can work out a package that is fair, that entry of foreign enterprises into the retail trade will not hurt our small shopkeepers.”
In September, 85 months after he spoke with Mr. Gupta, Mr. Singh prevailed: The government passed an order permitting international supermarkets to set up joint ventures in India.
There are other important differences between then and now. But unfortunately they don’t amount to progress. In fact, quite the contrary.
Seven years ago, Mr. Singh spoke in aspirational tones about giving Indians the tools they need to succeed in a globalized world of fast-changing commerce. “I believe empowering our people means empowering by investing more in their education and health,” Mr. Singh told Mr. Gupta.
On Thursday, the prime minister was struggling to contain the fallout from widespread disgust over the gang rape of a young woman on a moving bus in New Delhi and the government’s perceived incompetence in protecting its citizens and handling protesters.
“Women and girls represent half the population and our society has not been fair to this half,” Mr. Singh told the National Development Council. “The emergence of women in public spaces, which is an absolutely essential part of social emancipation, is accompanied by growing threats to their safety and security.”
That, too, has the whiff of a nation going backward, one in which half of its citizens face growing “threats to their safety and security.” It is surely not the India story that Mr. Singh expected to be talking about seven years after he spoke to Mr. Gupta. But it is the reality, as Mr. Singh himself said, just a few hours ago.
–Paul Beckett is the WSJ’s bureau chief in New Delhi. Follow him on Twitter @paulwsj
http://blogs.wsj.com/indiarealtime/2012/12/27/what-went-wrong/