THE Indian story has captured the imagination of people and nations across the globe. A melting pot of diverse ethnicities, a stable democracy and an emerging economic horsepower, the Indian saga is in many ways intriguing. As this nation of 1.2 billion people trudges ahead, speculation is rife on what the future might entail.

While there are many who acknowledge and compliment the distance we have travelled since the day the British left India, there are still some who paint a pessimistic scenario of societal schisms that might continue to hold us back. From Nehru’s poetic musings on India’s ‘tryst with destiny’, the nation has been witness to several triumphs and conflicts – periods of both hope and despair.

After the setbacks of the emergency in 1975 and later the economic crisis in 1991, India rediscovered itself and started anew. The economic growth that followed brought with it a sense of confidence and self-assurance like never before. However, the chequered story still continues – while we have succeeded in some aspects, we have failed in others – and the uncertainty over the future continues to linger.

Today, we are poised on the cusp of a potential ‘demographic dividend’ that could catapult us onto a new growth plane. Though the possibilities seem immense, concerns abound over the inability of the political system to deliver. The last few years have been especially damaging in terms of eroding faith in governance. The cynicism is no longer confined to politicians but extends to the idea of ‘democracy’ itself.

This has been fuelled by widespread corruption, favouritism and the inability of the political system to disperse the benefits of development. Even six decades after independence, we are still grappling with a significant level of poverty – 37% of our population continues to live below the abysmally low, officially recognized, poverty line. Such a high incidence of poverty, despite decades of poverty alleviation and public distribution programmes, is symptomatic of the inefficiencies in our governance systems. The problem is heightened in the Naxal belts where people harbour a deep sense of resentment at being neglected, marginalized and exploited.

 

There is an understandable discontent among many Indians today. Politicians have gained a widespread venal reputation, with hardly any role models that the public may look up to (quite unlike a generation or two ago). The political class has done this unto itself by failing to take bold and decisive steps in cases such as corruption. The recent series of scams and the ruling elite’s attitude towards the anti-corruption movement have eroded people’s belief in governance.

Despite these seemingly insurmountable problems, I argue that India will come through. The structural foundations of our democracy are sound and the political system is capable of responding to challenges. Ironically, the view of India through the eyes of outsiders is far more optimistic than the domestic headlines would indicate. It took sceptics half a century to fully accept that India’s democracy was not only real, but enduring. India is now globally celebrated as the world’s largest democracy, but also increasingly respected for its more recent improvement in economic performance. The challenges that face us today can also be tackled within the broader contours of our democratic structure.

There are startling parallels between today’s India and the US of a century ago. During the latter part of the 19th century, known as America’s Gilded Age, the US saw rapid growth of its economy as well as unprecedented levels of corruption, exactly like present-day India. Enormous fortunes were made by new billionaires, inequality increased and corruption became commonplace among elected officials.

Nevertheless, sustained economic growth transformed a nation of farmers into an industrial superpower and the size of the middle class kept growing rapidly. Their sensibilities, and outrage, led to what is called the Progressive Era in American history, in the early decades of the 20th century. The progressive activists pushed through many political reforms that tackled corruption and improved governance, transforming the US into the nation that we see today.

 

The similarities with today’s India are unmistakable and India is potentially at a major inflection point in matters of public probity, accountability and governance. The activism of the middle classes is now increasingly visible in cities and towns across the country, especially in matters of corruption. The recent agitation under the leadership of the septuagenarian Anna Hazare that forced Parliament to initiate legislation for an independent anti-corruption ombudsman, demonstrates the growing strength of the middle class in India.

The most important reason I feel secure about India’s future is its institutional structure. Today’s India is a country where democracy has been internalized. This implies that people consider their leaders answerable and their powers revocable. They have been armed with the most formidable weapon – the right to vote. This right coupled with institutional checks and balances gives India a very solid foundation, one that is our greatest success and is likely to serve us well in the decades that lie ahead.

 

Already the positive developments of the last sixty years are there for all to see. The most important development is the genuine enfranchisement of hundreds of millions of voters, many of whom had been excluded from the establishment for centuries on account of factors such as caste. The successes also include institutions such as an independent judiciary, Election Commission, Comptroller and Auditor General, not to mention a free and outspoken media taking roots. Civil society activism has led to the passage of the Right to Information Act, which is likely to become the single most empowering accountability mechanism for maintaining a check on the powers of the government. The civil society also has to its credit the enactment of the Right to Education Act which has made education a justiciable right.

Economic growth coupled with increasing calls for transparency has also led to the growth of independent regulatory authorities such as the Securities and Exchange Board of India (SEBI), Telecom Regulatory Authority of India (TRAI) and the Competition Commission of India (CCI). These regulators function independent of the government and hence their decision making is not marred by the whims and fancies of politicians. Recently, SEBI has dragged one of India’s biggest conglomerates to court for violation of norms laid down under the Companies Act and is strongly pushing for action against it. The autonomy of the regulators is an admirable development that the bureaucracy must also imbibe.

Today, there is increasing recognition of the need to make growth more inclusive and to disburse the benefits more equitably. States have become more assertive and are questioning diktats from the Centre like never before. All these changes are a direct result of the increasing assertiveness of the average voter. They reinforce my optimism about the future of India.

In comparing the two Asian giants, India and China, the argument often cited is that India’s democratic set-up is inimical to development. The fact that in India we currently face a government discredited by policy paralysis, administrative bottlenecks and infrastructure woes does not help the cause. Inaction on the policy front is often blamed on coalition governments at the Centre and in some states.

However, the fact remains that coalitions have made politics in the country more accountable to the coalition partners as well as to the masses. They have fostered greater internal democracy within political alignments. Although consensus building in a democracy is time consuming, it provides more lasting solutions, besides the fact that a democratic set-up provides an environment that is conducive to enterprise and innovation, and full realization of human potential.

 

Resurrecting people’s belief in a democratic system can only be done by way of reforming the system that we operate in. The first task is to complete the unfinished agenda of liberalization that India had taken up two decades ago. There is broad consensus among policy makers that economic reforms of the last two decades have pulled more people out of poverty than before; reforms have raised incomes, improved living conditions and made available opportunities and choices, earlier restricted to a few.

Not only have reforms lifted more than 200 million people out of poverty, they have created a burgeoning middle class, which is slowly but surely likely to affect the way politics works in the country. The middle class is not enchanted by populist policies and instead supports leaders based on their performance and governance. This has definite potential to alter India’s destiny.

 

In the next few decades, India is expected to experience a population bulge in the working age group, a potential ‘demographic dividend’ that could provide a significant boost to its economy. By 2050, India will have over 220 million more workers than China. It is expected that the ‘ageing’ phenomenon in several countries across the globe will create a skilled manpower shortage of about 57 million workers in the next decade. Combine this with the rising trend of outsourcing work globally and India has a unique opportunity not only to meet its own domestic demand of skilled manpower, but also cater to labour shortages in other countries. However, the growing population of youth in India needs to be nurtured appropriately if we wish to cash in on this opportunity. If tapped properly, this could provide the much needed impetus to our economy and lead to development across the country.

I believe that this demographic dividend can be well utilized in cities, which are centres of economic growth. It is widely accepted that in the coming decades urban expansion is going to happen at an unprecedented pace in India. Census 2011 figures reveal that for the first time in the history of independent India, the growth (in absolute numbers) in population in urban areas exceeded that in the rural areas. However, urbanization in India has largely been concentrated in a few large cities, putting an unsustainable strain on resources. (The latest figures from the 2011 Census, though provisional, indicate that the urban growth may be more widely dispersed.) On the other hand the ‘medium towns’, which are partly rural in character but urban in aspiration, have received scant attention from policy makers and are starved for resources. I believe that if we spur the growth of these new cities with vital infrastructure, it will set in motion a virtuous cycle of innovation, entrepreneurship, employment, prosperity and equitable development. More than just this, the growth of cities is also likely to bring about the much desired societal change that many freethinking lndians have been fighting for decades. Whereas in villages, caste and class divisions dominate and prevent equal access to opportunities, in cities these divisions blur.

 

Another untapped opportunity can be availed by unshackling the tethers that bind the Indian economy. Excessive control and bureaucratic red tape currently prevent the economy from reaching its true potential. India was ranked 132 out of the 185 countries surveyed by the World Bank in the Ease of Doing Business Index of 2013. In order to tap the entrepreneurial potential of the country, there is a need to facilitate new businesses and to incentivize the growth of opportunities in the private space. The telecom sector has been witness to the benefits accruing from the operation of entrepreneurs in the sector. Learning from these examples, the government should primarily focus on regulation to help the markets flourish and ensure fair play. Unfortunately, despite two decades of liberalization, the tendency to provide non-core services and control private participation still persists. This is a serious fetter on the economy.

India currently invests 7% of its GDP on infrastructure. Though this is significantly higher than in earlier years, it pales in comparison to China’s investment of 11%. Infrastructure forms the backbone of any economic activity – there isn’t much that a business can do if it does not have access to adequate power, roads or railways. Therefore, it is critical that the government focus on investing heavily in infrastructure – a prerequisite to a sustained vibrant economy. The telecom sector is again another example where large investments in infrastructure aided the rapid transformation of the economy and helped us in maintaining a healthy growth rate.

 

A healthy growth rate is important – not as an end in itself, but as a means to an end. Growth is likely to provide more employment opportunities and also additional funds for anti-poverty interventions and redistributive efforts of the government. However, if we want growth to truly benefit the poor, we must ensure that benefits that are meant for the poor are not siphoned off. In the first instance, this requires building an effective delivery mechanism and fixing bureaucratic corruption and apathy. Fortunately, technology seems to hold the promise to such a solution. This is the one area where significant progress is being made, both by way of governmental initiatives like the UID programme, as well as the stupendous penetration of cellular phones. This has set the stage for universal banking access and the use of direct cash transfers for social welfare programmes. Put together, they make for a revolutionary combination: an inexpensive delivery mechanism and, critically, relatively easy beneficiaries’ audits.

The next decade is very crucial for India. If things go right, not only can India set its own house in order, it can even become more influential in the international arena. As a representative of the developing world, and as a nation that has a big stake in making the world more equitable, this can be a very positive development. Today, Indian foreign policy positions are often subjected to severe criticism by several commentators for being ‘on the fence’. However, I foresee that as the Indian economy gets even more integrated with the world economy, India will assume a greater role in multilateral forums and international organizations. On issues such as climate change, where India already takes a strong position, it will have more power to weigh in on the developed world. Being the largest and most successful ‘democratic experiment’ in the world, India can play a greater role in the democratization of international organizations, such as the United Nations, which continue to represent the power structure of an earlier era.

 

As a country that prides itself on its Gandhian legacy, India has the credentials to be a country that brokers peace agreements among nations and promotes global cooperation. In order to assume that role, India must work on building bridges with neighbours near and far, forge multiple coalitions and work on an interest based calculus to pursue its national interests while exercising its international responsibilities. This will serve the country well as it soars in global significance.

I believe that India can live up to the optimism that its people and the world at large share about its future. To deliver on this promise, however, there is need to hasten reforms, and not just economic, first at the structural level, to remove systemic hurdles in governance, and then at the policy level to tackle the core issues of concern. Undertaking them would provide the structure and means for more equitable opportunities for all Indians, for a better tomorrow.

 

* With research and assistance from Rohit Kumar, Yashita Jhurani and Iravati Damle.