An Inclusive Development Strategy for India?

Stephen Roach visits India after a year and is very impressed by his current visit as opposed to the last one (See From Mumbai to Pune). Excerpts:

India’s transition to a 7% growth path in recent years is very much an outgrowth of the emerging consumerism of one of the world’s youngest populations.  The increased vigor of private consumption provides a powerful leverage to the Indian growth dynamic that is rarely found in the externally-dependent developing world.

Personally, it is not so clear to me whether the new consumer culture isn't really the Bomb under the World. There isn't a black or white answer to this question. Certainly, tremendous improvements in quality of life are due in India, but focus on consumption is worrisome. As Stephen found out, there is more to India's current development path than just rise of the Indian Consumer.

Dr. (Manmohan) Singh is the real thing when it comes to India’s reforms -- he led the charge in the opening up of the early 1990s.; Today’s political context is obviously quite different: As a majority party official he was able to drive the process far more forcefully back then than is the case today, with a delicate left-leaning coalition government.  Mindful of those constraints, the key code word in current coalition governance circles is “inclusive” -- emblematic of a development strategy that is being refocused to deal with the income-disadvantaged citizens of rural India; The Prime Minister is very philosophical when it comes to integrating his reform philosophy within the political imperatives of a broader base of Indian economic development.

I have heard reform with a human face line from the Prime Minister, but often times the human side shows up in the forms of short sighted populist measures rather than real improvements in infrastructure, education and health that matter most in the longer term.

Of all the trips I make around the world, India is by far the toughest. Poverty is everywhere -- not just in rural India but in the swanky neighborhoods of its vast urban centers of Mumbai, New Delhi, as well as in the pulsating new tech centers of Bangalore and Hyderabad And it is poverty and human tragedy on a scale unlike anything I have ever seen -- including that of rural China; An inclusive India seems utterly determined to meet this daunting challenge head on.  As far as I am concerned, there is nothing but upside to such efforts -- it’s just a question of degree.  But with that upside comes yet another new source of Indian consumption growth -- absolutely vital for India’s balanced economic growth dynamic. It’s not just the quality of the travel experience.
(emphasis added).

I am no so sure whether "inclusive India" is taking the challenge of poverty head on. My personal perception has been that highly educated people with an access to a wide range of opportunities (like me) have been doing extremely well, and responsible for the  growth of consumerism, while there are a number of those who still do not have access to the same set of opportunities. It is not a question of whether things have been getting better or worse, but as Roach said it is a matter of degree.

UPDATE (11/07): See Indian Economy blog's take on Roach's comments.
After completing his Asia-Pacific tour, Roach has some more thoughts on the possible convergence of China and India's growth strategy. More sobering are his thoughts on implications for US and Europe.

China and India are the two most important experiments in the laboratory of globalization. An extrapolation of their recent accomplishments poses the most profound question of all for the rich nations of the developed world: If India is to services as China is to manufacturing, what does the future hold for us?

Nobody really knows the answer to that question, but a lot of people are worrying about it.

Comments

[Susan Fan]

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[kanika bansal]

Dear Anup,

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Kanika Bansal

[Steve]

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