Atanu Dey On India's Development

In Spite of the Gods

A NY Times book review (Hat tip: Pankaj Narula) begins with a classic gambit: “All eyes are on China as it races to become the world’s next great power. Smart bettors would be wise to put some money on India to get there first, and Edward Luce explains why in “In Spite of the Gods: The Strange Rise of Modern India,” his highly informative, wide-ranging survey.”

It appears to me that to make a mark, you have to write a book which sort of turns conventional wisdom on its head. The hare is faster? Tell a story that ends with the tortoise winning against all odds. Yet at the same time, use the usual stereotypes. The title of Luce’s book immediately appeals to the prejudice that somehow Hindus (the majority of Indians are Hindus, although it may not appear so) with their mindless worshipping of millions of idols are somehow congenitally incapable of economic prosperity, and implies that that incapacity has something to do with the fact that they worship idols.

India has suffered economically from socialist policies promoted by people who were anything but polytheistic heathens. The socialism that was forced (and continues to be thrust down India’s throat) was decidedly atheistic. Yet Hindus and Hinduism is tarred with a wide brush and India’s dismal economic performance is labeled the “Hindu rate of growth.” The neighboring countries’ even worse economic performances are never referred to as the “Muslim rate of growth.”

I confess that I have not read the book by Luce, only the review. Perhaps Luce’s point is different from what the reviewer summarized. But for the moment let’s assume that the reviewer is accurate in his reporting. He writes: “India’s dizzying economic ascent began in 1991, when the government abruptly dismantled the “license raj,” a system of tight controls and permits in place since independence in 1947.” The last bit is inaccurate, to put it mildly.

The “license raj” was not born on Aug 15th, 1947 any more than all the Indians living in India then were born on that day. Like the people of the independent India, the license raj was born way before independence. The British had created that regime for their own purposes. The purpose was to control every aspect of the economy so that they could extract and exploit the economy as much as they could. After all, colonial powers are motivated not by altruism but by the simple desire to extract wealth.

A charitable NGO the British were not. So they put together a superb bureaucratic machinery with the express purpose of denying economic freedom to the natives they ruled over. The tranfer of political leadership in August of 1947 did not in any way alter the basic structure of the administrative mechanism. The incentives remained the same and the goals were therefore unaltered. Change of name hardly imposes any requirement that the basic character change, both in the case of an individual or an institution.

The reviewer continues: “Unlike China, India has not undergone an industrial revolution. Its economy is powered not by manufacturing but by its service industries.” If Luce has demonstrated that the service industries power the Indian economy, it is a remarkable feat indeed. It would take a much longer article (later, perhaps) to expose that bit of economic nonsense.

I am wildly conjecturing here, of course, but perhaps Luce has read and believed too many media reports. Take, for instance, this bit from the review: “Its excellent engineering schools turn out a million graduates each year, 10 times the number for the United States and Europe combined, yet 35 percent of the country remains illiterate.”

Excellent engineering schools, did you say? And the definition of “excellence” is? Does it mean that only about a quarter of the graduates are employable? If that is what it means, then I can decode what the reviewer means when he writes: “Despite its robust democracy and honest elections, India faces the future saddled with one of the most corrupt government bureaucracies on earth.” I understand. What “robust democracy” means is “a circus where a large number of ill-informed people vote based on which party is able to most convincingly promise them goodies based on caste and religious lines.”

“Honest elections” means . . . Don’t know but I guess it has something to do with the fact that the elected have a much higher percentage of criminals (murderers, rapists, scam artists, blackmailers) among them than the general population.

I have to admit that I take a dim view of any author who regurgitates mindless economic half-truths. I pass it off as mere ignorance. But when someone talks of the “alarming rise of Hindu nationalism,” I am not as charitable. I think it is naked bigotry and prejudice against Hindus. According to them, Hindus are supposed to be passive residents of a land and should not become uppity and talk about national pride or pride in their culture or ethos. Everyone has a claim–a first claim even–to resources but Hindus should take a back seat.

I kind of suspect that there are enough juicy bits in the book to make it into a best seller. People like to read about strange and exotic stuff that idol worshipping heathens do. And then exclaim, “In spite of the gods, India is moving forward. Imagine if they were like us, monotheists, how prosperous they would have been?”

I am out of here; I have to write my best-seller “The Software Programmer and the Snake Charmer.”

  • M

    Very well written riposte. It galls me too when I read articles, opinions by various newspapers, authors, bloggers(eg. huffington) about the rise of hindu nationalism. It’s been the bloody communists and congress that caused so much harm to India and its economy prior to 1990. And people foist blame on idol worshipping hindus.

  • http://discombobulatedeconomist.blogspot.com Mohit Mehra

    Atanu,
    I find it a little unfair of you to pick on “Rise of Hinduism” and reject the argument based on this. Yes I agree that some of the statistics are incomplete and misleading if not completely wrong. However, the motivation of the argument is rock solid. The analogy of a “large swamp of bees” is anything but false and so is the analogy of an autopilot. My take on this book is nonchalant not because of the fallacies identified by you (some of which are correct and some I don’t agree with) but rather the ineptitude of author to stir the already turbulent waters. Unfortunately, the audience of this book will remain a minute percentage of our society and the message of this book will remain muffled in the very shadows of the ills it tries to expose.

    Regards,

  • http://sudiptachatterjee.blogspot.com Sudipta Chatterjee

    Haven’t read that book yet, but your take on the book really intrigues me. I also remember the different ways I saw common India being portrayed in the BBC some months back. Like the rest of the story ceases to exist!!

  • http://valluvar.blogspot.com shiv

    Actually India has never been a socialist country in the classical definition of the term. It was (as atanu points out) carpet bagging neo-liberal in colonial times and remains so. The ‘world famous’ 1991 liberalization was a BOP driven move and all it did was reduce (not eliminate) the complexity in setting up a venture, liberating cash flows & increasing the ambit of Section 10A to include some of the tech industries. Indians have always been entrepreneurial due to the lack of employment opportunities, not due to some hidden gene that started expressing itself in 1991. This is true even today.70 % of the indian economy is informal. So how is this a socialist society ? Most continental european societies (rich ones) are socialistic. That means quality education, resonable scope for employment and social security. It also means universal health and medical care.In fact IMHO only rich countries with either a minute population or colonial loot can afford a socialistic society. I think people confuse oligarchic controls on the economy with socialistic policies. Please remember that birla funded the first elections of independent india and entrenched the system of crony capitalism. Just because the preamble to the constitution describes our country as socialist, it does not mean that it is !

    Atanu’s response: Don’t agree. Totally disagree. Will argue this point later.

  • http://apunkadesh.blogspot.com/ Apun Ka Desh

    Very well said Shiv (previous comment)!

  • http://gudem.blogspot.com Chandra

    “In spite of the gods, India is moving forward. Imagine if they were like us, monotheists, how prosperous they would have been?”

    Not even monotheism – Ed Luce is British – he is probably thinking atheism. If one can define you before you can define yourself – voila, you spend all your time defending your position. Hindu nationalism is dirty word – now we can spend all our time trying to reverse that label.

    So much for your new year resolution on not commenting on R&P while talking about economy! – I just saw that post :)

  • http://valluvar.blogspot.com shiv

    Looking forward to Atanu’s take on my point of view.It should be interesting to get a professional economist’s perspective on a widely shared perception.

  • http://www.lifeandsomething.blogspot.com Gaurav

    Shiv,

    Aren’t you conflating type of governance with type of economy.

    And India is democracy atleast for form.

  • http://valluvar.blogspot.com shiv

    The economy is a handy abstraction to undestand the underlying movement of resources and hence energy in a social system.It also measures the rate at which natural capital is being converted for consumption. As with most abstractions it is based on a model that is dynamic,incomplete ,non-linear & highly dependant on initial conditions and hence error prone. Further chaos injects its measure of non-linearity into the equation. The system of goveranace is merely another abstraction that arbitrates on this flow of energy in the system.All other functions of the government are subsumed by this role. By definition (in a nominal democracy or socialist system) these flows should reflect the needs within the system.As opposed to an oligarchy or carpet bagger state where the system is controlled by the people who own it. capital has a way of accumalating in a few hands and hence the eternal conflict. After all it was a chinese communist, not a capitalist who said ‘To be rich is glorious’. Capital in any political context is abstracted energy or the promise of it.It includes but is not limited to legal tender, Land, water resources, agri-produce and so on. With this model as a guide it is difficult to separate Governace from the economic system at any level as the economic system is a consequence of the kind of governance a populance enjoys.

  • http://valluvar.blogspot.com shiv

    Conversely, one can also say that the kind of government a populance will tolerate is one with policies that will create the kind of economic system the populance desires. Irrespective of the ideology that is brandished about by the ruling elite (yes there is a subtle aristocracy even in your parlimentary democracies) this is probably the basic maxim of political science.

  • anon

    In regards to 1991 liberation. Would India have liberalized if US had not invaded Iraq. Iraq was the
    main source of Oil for India. In fact, India had to
    beg Saudi Arabia to sell oil to India. Along with World bank and IMF machinations. Don’t forget it was US policy in the 80s to split India into little countries.

  • http://indiaunwired.blogspot.com/ Aravind

    A suggestion for the title of your book: How a software programmer turned into a snake charmer? or better one: ‘In spite of Snakes: The strange rise of modern programmers’. :-) The title and possibly, book, reeks of stereotypes and cliches. He is the BBC’s ‘expert’ on India, how ridiculous!

  • Sabarish Sasidharan

    >>What “robust democracy” means is “a circus where a large number of ill-informed people vote based on which party is able to most convincingly promise them goodies based on caste and religious lines.”

    Hahaha… Enjoyed that…

  • Chenoa

    I just finished the book that you admittedly seem to dislike in spite of not having read it. Suffice to say, it would be unfair to your sensibilities to not give it a go based solely on your perception of the review being biased in favor of a “foreigner’s” viewpoint of the country.
    It’s very unpatronising, and looks honestly at the options & chances India has of truly becoming the world power we, the Indian Intellectual Elite, claim that we are already well on our way towards (Never mind the 300 million people still in poverty, the 65% national literacy rate, and the growing socio-environmental concerns that threaten to creat potential stagnation of the growing economy). As mentioned in the book, “India never misses an opportunity to miss an opportunity.”
    And you might like to know that the author does extensivey delve, into many points you make in your piece, most notably: What “robust democracy” means is “a circus where a large number of ill-informed people vote based on which party is able to most convincingly promise them goodies based on caste and religious lines.” He says almost exactly this, without turing it into as appealing a soundbyte.
    To give more away would be to take away your potential enjoyment of what is indeed a well-written book, capable of being positively used in India’s favour – in regards to the main issues that need to be addressed in the here and now for the nation, in order for us to truly come closer to the ideal we envision for our future.