Not just a jugaad fix

India in the first decade of this century was everyone’s favourite. Well, why not, given growth rates that averaged 7.7 per cent a year between 2001-02 and 2010-11.

True, there were many others that had previously grown faster for longer periods. But they mostly did under formal single-party rule (China, Taiwan), de facto single-party regimes (Japan, Singapore, Mexico), or outright military dictatorships (South Korea).

India, by contrast, appeared to offer a unique growth story, of a full-fledged democracy that gave every adult citizen — Dalit, Muslim, transgender or upper-caste Hindu — the right to vote.

The last decade also saw Indian companies build a global reputation underlined by a spate of cross-border acquisitions: Tata Group’s of Corus and JLR, Aditya Birla’s of Novelis and Bharti’s of Zain Africa. If to these, the prospect of a ‘demographic dividend’ from a rising proportion of its population in the working-age group — which China had successfully exploited from the 1970s till recently — was added, the India Growth Story looked both compelling and durable.

Besides, everyone wanted India to succeed, not the least because its growth model seemed less threatening than China’s: buttressed by democracy, private entrepreneur-led, and not part of any grand national strategy aimed at securing Great Power status.

The last three years have, however, witnessed this optimism around a young, resurgent and aspirational nation give way to growing disappointment. Partly, it has to do with growth rates dropping below 5 per cent, in a scenario of nearly 10 million people joining the country’s workforce every year. In the event of their not finding reasonably paying jobs, the promised demographic ‘dividend’ could well turn a ‘nightmare’, threatening to overwhelm even its vibrant democracy.

These dismal forebodings are elegantly captured in the present book’s title: Implosion. The author, John Elliott, deserves to be taken seriously, being someone who has reported on India for the Financial Times, The Economist, Fortune and New Statesman for over three decades: “I was at the opening of the (Maruti) factory in Gurgaon when (Indira) Gandhi released the first cars to customers on 14 December 1983”.

You can, then, expect from him the perspective of the dispassionate outsider who knows India and also wants it to succeed.

The knowledge that comes from keenly observing a country where “virtually everything and its opposite are true” is evident from the range of topics covered.

The book has everything — the impact of liberalisation (whose origins the author traces to an unsigned ‘M’ document setting out a five-year reform roadmap that was apparently drafted in early-1990 by Montek Singh Ahluwalia, which the latter subsequently confirmed!), the unresolved problems of growth versus environment and land acquisition for large projects, dynasty politics, unplanned development of our cities, middle-class protests against graft and governance failures, businessman-politician nexus, India’s defence and foreign policies, and relations with China, Pakistan and the US.

While the breadth of detail and ability to weave together diverse strands of contemporary Indian reality make the book more than a useful read, where it falls short, though, is in offering a cogent central argument.

Take the contention about India’s record of chronic underachievement, which is ascribed to an entrenched culture of chalta hai (anything goes) and jugaad (quick-fix solutions). These traits are “so deeply ingrained into how India’s people and institutions function that performance crumbles”. They also contribute to a tolerance of venal politicians and self-serving government officials, and “a lack of interest in tackling problems”.

Now, I find this kind of analysis quite superficial at one level. If jugaad and the laidback chalta hai approach are the primary causes of the country’s backwardness, what explains the high growth rates through the last decade? That period was one where Indian entrepreneurs were consumed by John Maynard Keynes’ ‘animal spirits’. Their “spontaneous urge to action” — far from chalta hai — led them to expand aggressively and go on an investment binge significantly financed through large-scale borrowings.

It is the chickens of this excessive risk-taking by Indian Inc that have now come home to roost. The current recession is largely a result of forced de-leveraging. ‘Policy paralysis’ may have also played a part, though I wouldn’t attach too much importance to it. Nor is democracy to blame, unless it is construed as something that limits the ability of the State to acquire large swathes of land for corporates, imposing projects on unwilling locals or showing labour its place. There are many who would want such a State and even see this as key to a revival of sentiment.

The country’s chaotic democracy, according to journalist and author Elliott, creates an environment “where jugaad fixes are easy, and where the failures of the system in terms of poor governance and weakened institutions make the fatalism of chalta hai a welcome safe haven”. It also “blocks changes and acts as an excuse for what is not being achieved”.

I would argue the opposite. It is democracy that has been the single-largest agent for change in India. It helped destroy the back of zamindari feudalism in the ’60s and ’70s , pave the way for the rise of lower castes in national structures of power in the ’80s and ’90s , and is now driving the movements demanding accountability from our elected representatives and public servants. And that is neither jugaad nor chalta hai!