Twenty Years of Indian Transformation

By Sagar Rijal

For a daylong conference entitled “Twenty Years of Transformation in South Asia,” the panels were predictably dominated by the concerns of the largest South Asian state, India. Hosted by the Carnegie Endowment for International Peace on Thursday, January 31, the broad themes of the gathering could be divided into “the economic issues facing India” and “the security context of the Indian sub-continent.” I will present a follow-up column devoted to the security issues. Here I consider a panel discussion on some aspects of the Indian economy.

Since the economic liberalization policies of 1991-1992, India has averaged unprecedented GDP growth rates of more than 6% per year. Observers and boosters view India’s growth as corresponding to that of the much steeper and longer trajectory experienced by China. If there is a concern, it is that of continuity of reforms and growth. Where is Indian economy headed? The panel looked for answers in a few interesting directions.

Dr. Devesh Kapur from University of Pennsylvania presented data about mass education, the demand for which has skyrocketed in the past two decades. Since human resource is the one resource that India has in abundance, Dr. Kapur argued that the quality of its educational system would strongly determine the trajectory of its economy. However, the data he presented is not very sanguine. There is a lack of adequate supply of higher education opportunities as well as concerns about the quality of education. He reported that 3700 new colleges opened in India in a recent five-year period – a rate of more than ten new colleges every single day, raising questions about quality. The massive explosion in enrollment in higher education has left many institutions with an acute shortage of trained faculty.

After such pessimistic picture on education, Dr. Milan Vaishnav aroused hope in the most unlikely issue: corruption. The conventional wisdom is that corruption is rampant and impossible to solve in India. However, Dr. Vaishnav argued that there is a “great cleansing” taking place right now due to voter movements and Right to Information laws. He attributed the recent spate of high-profile corruption cases to increased transparency, which has only led to more exposure of corruption, especially amid a booming economy that expanded the corruption frontier.

Vikram Nehru, a former World Bank analyst, drew attention to the external angle, to and area of immense opportunity for the Indian economy. He argued that strengthening the trade and investment relationship with the nations of East and Southeast Asia would provide unparalleled opportunities for Indian economy to keep its growth trajectory. The ASEAN nations already seek an economic hedge against China, which India could successfully leverage into long-term growth. 

However, Mr. Nehru offered wise caution. India’s constraints are not external but mostly internal, meeting the challenges of human capital development, getting a handle on corruption, reforming the labor laws and achieving a modicum of political accountability. A fine list to keep India busy for another twenty-year transformation.

~Sagar Rijal, ABD, is spending the final semester of his graduate assistantship doing research for his dissertation in Washington, D.C. Every week he will attend meetings, seminars, or presentations at think tanks and develop a column for the Bulletin community.