of globalisation in country
birthday celebrations this year led to some serious efforts
to examine our economy and society today. I had occasion to
participate in two such discussions. A couple of things struck
me in these discussions. In one, a politician said that part
of the reason for our underdevelopment vis a vis Southeast
Asian countries and China is that we are constrained by Democracy!
In the other, some participants talked of the evil impact
of globalization on our economy and culture! Let us examine
the facts and fiction on both these hypotheses.
Most of the SE Asian countries emerged as independent nations
just like India after the war. In 1950 China and India were
comparable on every conceivable social indicator and if anything,
India was slightly better off.
a modern economy the role of the state is to provide basic
education, healthcare, rule of law, infrastructure and natural
resource development and above all act as a facilitator in
enabling its citizens achieve their full potential. This was
well understood by China and the other SE Asian nations which
went about systematically in fulfilling that role in a responsible
manner - democracy or no democracy.
Let us look at India's record on this front. Our literacy
rate is dismal, public health is non existent, crumbling infrastructure
is inadequate and there is complete absence of rule of law.
India's public expenditure on education, healthcare and social
security is a grand 6% of GDP- compared to a whopping 45 %
in the OECD countries. Our public expenditure on healthcare
is 0.9 % of GDP (amounting to less than 20 % of the total
health expenditure). This miniscule share of government expenditure
in health is the lowest for any country in the world, excepting
5 other countries in the world which are all war ravaged and
where there is no semblance of state (like Afghanistan)! If
you think this is due to lack of resources, remember, our
governments at all levels put together spend Rs 1800 crores
Providing a classroom in every village for the 60 million
children out of schools, entails a one- time expenditure of
Rs 16,000 crores - which is hardly 9 days public expenditure.
Providing toilets for 70 % of the population with no access
to one, entails a one-time expenditure of Rs 35,000 crores
- and this is hardly 20 days public expenditure. Yet the nation
didn't find the political will to accomplish this in the past
50 years. Instead, it resorts to false alibis and foolish
explanations. One cannot understand how democracy prevented
the state from providing these basic amenities. Democracy
means liberty, equal opportunity and rule of law - it doesn't
mean anarchy, license, coercion or corruption. There is no
sensible policy that is not feasible in a democracy. If anything,
universal adult franchise should force politicians to make
education and healthcare accessible to the poor and disadvantaged.
Let us take the other hypothesis that globalization is evil.
All through history India has been a beacon and magnet for
traders and we have richly benefited from the interaction
with the rest of the world. 25 years ago it was quite common
for a person to hitchhike from east Europe to India - all
the way! Now, one can't even go from India to Afghanistan.
All through history India has been a global economy. Only
an insecure nation and civilization will fear interaction
with the outside world.
The reality is, the so-called globalization has bypassed India.
Our share of global trade is only 0.7 % now, as opposed to
2 % in 1950. There is hardly any foreign investment in India.
Our foreign debt has been stable at about $100 billion over
the past 10 years. It is the internal debt which is growing
rapidly. Where then is 'globalization' of our economy?
The march of technology and increasing global trade are inevitable.
There is no way we can shut ourselves off from the rest of
the world. Therefore the question should be how do we manage
the effects of globalization? The threats to our economy are
completely internal and not external. It is high time we gave
up the usual shibboleths and excuses and focused on setting
our house in order.