It is 2013 and I still get emails about this post from February of 2009. It was an exceptionally harsh post on and about India. My main reason for writing it? I was sick and tired of all the bullshit in the Western press about the Indian economic miracle. I was also very sick of what Pankaj Mishra in this recent New York Review of Books essay calls, “day tripping columnists” from the West. This is clearly a jab at Tom “Flathead” Friedman, but could be a jab at many others too boot. I do wonder how many people have spent more than two weeks in India?
Stephen Roach of Morgan Stanley certainly did, and he called India right way back in 2007. On a visit to Bombay he noted that the infrastructure was horrid and would at some point become a serious bottleneck to economic growth to the country. How did he come up with such a fanciful economic prediction? Did he run a quantitative model on the country? Did he look at its current account deficit and extrapolate out? Did investment banking friends of his tell him that at some point they’d simply stopped lending to India because of some hidden fundamentals they’d uncovered and didn’t like?
None of those actually–and probably all of them at a later date. At the time he made this prediction, however, based on a lot of his own personal experience in the developing world and one critical observation he had while on the trip. He was on India’s sole north to south superhighway (only four lanes total at the time) and his car almost his a cow.
Here were are in late 2013 and his prediction has pretty much come true. Economic growth in India has been cut in half–actually more than half from its peak after the “reforms” of the 1990s. The main problem is that there is no manufacturing–and if there were, as I clearly said back in 2009 it couldn’t get to port because of India’s shitty infrastructure. Therefore, there is very little employment growth. Yet, the extraction economy continues and India, by some measures, has actually gotten worse.
Let’s recount just where India now stands in 2013:
All of the following stats were gleaned from and/or directly quoted from the above-linked Mishra story, so read it.
One hundred people in India are worth $300 billion, 25% of the nation’s GDP.
Brazil grew by only 1% between 1993 and 2005 but reduced poverty twice as quickly as India.
Bangladesh, which is half as rich as India on a per capita basis, has a longer life expectancy, better child mortality and immunization rates than India.
The 2011 census of India revealed that half of Indian households practiced open defecation. For those of you who are daft, this statistic means that one of every two people in the country takes a shit in public. I don’t like to euphemize. No toilets, so men just unzip their trousers or women hike up their saris, squat down and shit. In public.
Good enough visual for you?
“Almost half of Indian children are underweight,” compared to 25% in sub-Saharan Africa.
“Calorie and protein intake among the poor has actually dropped” in India since the so-called “Green Revolution” of the 60s.
Mishra writes: “The skies are polluted. The rivers are dead or dying. Waters tables are falling. Forests are disappearing.”
The man who very well may be the next Prime Minister of India—Narendra Modi—was barred from traveling in the United States for his alleged complicity in communal violence—also known as incitement to race or religion based mass murder—in Gujurat in 2002 that left 1,000 Muslims dead.
Overall, says Pankaj Mishra, “India’s economy grew at about 5% in the 80s, ran up to nearly 10% and recently has slowed to less than half that rate in recent months.”
Yes, there is a middle class in India with pent up consumer demand, which likes Western and global brands. They are gobbling up as much as they can. This middle class finds its incomes in real estate, IT, telecom and banking. When the offshoring play runs out IT and telecom will go bust. That will leave banking and real estate to pick up the slack, because there is little to no manufacturing in India. In fact, there is more in next door Bangladesh.
Then again, because of global warming Bangladesh will be underwater, so maybe India can help the Bangladeshis move their manufacturing base uphill.
Oh, and on my pet infrastructure project: the railways? Absolutely no money has been put into them to modernize them. Yes, you can buy a ticket online now, but tell me, how does a farmer who has to shit in public afford the internet?