Can India realise its demographic dividend & outperform an ageing China?

In a world-historical shift, India is surpassing China to become the world's most populous country. But the question often heard in recent days - whether India can realize its demographic dividend?

By Pankaj Mishra

In a world-historical shift, India is surpassing China to become the world’s most populous country. But the question often heard in recent days — whether India can realize its so-called demographic dividend and outperform ageing China economically — does not go far enough. More attention is due to a fundamental and oddly neglected issue: whether India’s government has the technocratic capacity to transform the country into a major economic, scientific and technological power like China.
 

 

For more than half a century since Mao Zedong’s calamitously anti-intellectual Cultural Revolution, well-educated leaders have mapped China’s own trajectory to modernization. Mao arrogantly devised quack solutions for China’s challenge of rapid industrialization, such as making steel in family backyards. But Mao’s colleagues began to check his ideological excesses even while he was alive.

Since Deng Xiaoping’s momentous tenure, China has seemed continuously able to tap its available intellectual potential no matter who is in power in Beijing. Cheng Li, director of the John L. Thornton China Center at the Brookings Institution, argues in a forthcoming book that Chinese President Xi Jinping, widely considered more autocratic than his predecessors, has empowered a new generation of experts in information technology, aerospace, shipbuilding, 5G, robotics, and artificial intelligence. Many of these technocrats have accumulated decades of experience competing globally at China’s state-owned enterprises.

Observers of India will struggle to find any comparable consolidation of talent and experience at the highest levels of the country’s political and economic leadership. India’s civil service, unlike China’s, is a legacy of Britain’s centuries-long colonial rule. Originally meant to enforce law and order and to collect revenue, it now implements welfare schemes and development plans. Though increasingly socially diverse, this bureaucracy is not as well-equipped as China’s to tackle today’s complex economic and environmental challenges.

This is hardly because India lacks talent. A handful of educational institutions in India have produced what is arguably the most impressive global intelligentsia of any non-Western country. Indians today occupy senior positions across Western academic, financial, and corporate institutions. Indeed, the Chinese diaspora in the West, though longer established, cannot begin to match the strength, impact, and visibility of the Indian diaspora.

Yet it would be misleading to draw a picture of India’s intellectual capacity and potential by looking at Sundar Pichai of Alphabet Inc.’s Google and Microsoft Corp.’s Satya Nadella. Indeed, they are a reminder that most Indian talent today exists outside of India, or is eager to leave.

The occasional homecoming is rarely successful. Take, for instance, Raghuram Rajan, former chief economist at the International Monetary Fund. Invited in 2013 by former Prime Minister Manmohan Singh to head the Reserve Bank of India, Rajan returned to the US in 2016. His criticism of crony capitalism and ideological extremism in India clearly did not endear him to Singh’s successor, Prime Minister Narendra Modi.

 

Since Rajan’s departure, Modi’s own appointees have compromised the prestige and independence of India’s central bank. Other major institutions, from financial regulatory bodies to universities and security and intelligence agencies, are not faring much better, headed as they are by people valued more for their loyalty to Modi than for their competence.

Facts and data in India are increasingly fudged; political expediency appears even to have blocked a routine national census that would shed light on India’s burgeoning population. It’s questionable whether a system of government that hinges on personalized power of the kind Modi wields can help accelerate India’s modernization beyond a point, no matter how many infrastructure projects he inaugurates.

 

Nor can this essential task be left to the invisible hand of the market. China has powerfully demonstrated that nations that start belatedly on the task of economic modernization need long-term policy and coordinated action by a dedicated national elite consisting of bureaucrats and technocrats as well as political leaders.

Modi’s own educational credentials aren’t the issue. Nor is his Hindu nationalism an obstacle by itself. Pragmatic-minded nationalists can learn on the job.

 

But Modi has shown himself disturbingly prone to Mao-style, arbitrary decision-making, illustrated most pointedly by his economically devastating policy of demonetization. Worse, Modi seems to have prioritized his own cultural revolution against India’s previous, highly educated ruling class above all else. In permanent battle mode, he still presents himself, after nine years in power, as a humble citizen victimized by entrenched secular elites. Meanwhile, his followers assault what they see as bastions of social and educational privilege.

Rather than catching up with China, India seems to be replicating China’s past, when ideological fervor and indoctrination of the masses disastrously took priority over social stability, political cohesion, and economic growth. The world’s new largest country may need fresh leaders before it can realize its immense intellectual as well as demographic dividend.

Disclaimer: This is a Bloomberg Opinion piece, and these are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper