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India the Superpower? Think again

India should put aside pride about its growing economy and concentrate on improving the lives of average citizens, argues Fortune's Cait Murphy.

By Cait Murphy, Fortune assistant managing editor
February 9 2007: 12:29 PM EST

NEW YORK (Fortune) -- Plug in the words "India" and "superpower" into an Internet search engine and it's happy to oblige - with 1.3 million hits. I confess that I did not check each one, but I suspect that almost all of these entries date from the last couple of years.

This is understandable. For the first time ever, India has posted four straight years of 8 percent growth; since it cracked open its economy in 1991, it has averaged growth of 6 percent a year - not in the same league as China, but twice the derisory "Hindu rate of growth" that had marked the first 45 years of independence.

India has gone nuclear, and even gotten the United States to accept that status. Its movies are crossing over to become international hits. The recent $11.3 billion takeover of Corus by Mumbai-based Tata Steel was the biggest acquisition ever by an Indian firm.

No wonder the idea of India as the next superpower is fast becoming conventional wisdom. "Our Time is Now," asserts The Times of India. And in an October survey by the Chicago Council on World Affairs, Indians said they saw their country as the second most influential in the world.

Sorry: India is not a superpower, and in fact, that is probably the wrong ambition for it, anyway. Why? Let me answer in the form of some statistics.

* 47 percent of Indian children under the age of five are either malnourished or stunted.
* The adult literacy rate is 61 percent (behind Rwanda and barely ahead of Sudan). Even this is probably overstated, as people are deemed literate who can do little more than sign their name.
* Only 10 percent of the entire Indian labor force works in the formal economy; of these fewer than half are in the private sector.
* The enrollment of six-to-15-year-olds in school has actually declined in the last year. About 40 million children who are supposed to be in school are not.
* About a fifth of the population is chronically hungry; about half of the world's hungry live in India.
* More than a quarter of the India population lives on less than a dollar a day.
* India has more people with HIV than any other country.

(Sources: UNDP, Unicef, World Food Program; Edward Luce)
You get the idea.

The 2006 UN Human Development Report, which ranks countries according to a variety of measures of human health and welfare, placed India 126th out of 177 countries. India was only a few places ahead of rival Pakistan (134th) and hapless Cambodia (129) and behind such not-about-to-be-superpowers as Equatorial Guinea (120), and Tajikistan (122).

As these and other numbers suggest, Indian triumphalism (a notable 126,000 hits on Google) is not only premature, it is misguided. Yes, growth has been brisk, and of course growth is necessary to make a dent in poverty. But as Edward Luce, author of the excellent, "In Spite of the Gods: The Strange Rise of Modern India," noted in a recent talk, poverty in India is not falling nearly as fast as its brisk rate of growth might anticipate.

The reason for this is that Indian growth has been capital-intensive, driven by the growth in high-value services such as IT. This is a good thing, but what it does not do is create stable and reasonably paid employment for not particularly skilled people - and this matters a lot, considering eight to 10 million Indians enter the labor force every year. Luce estimates that there are 7 million Indians working in the formal manufacturing sector in India - and 100 million in China.

To look at it another way, the 1 million Indians working in IT account for less than one-half of one percent of the entire working population. This helps build reserves (and national confidence, and tax revenues) but is not the poverty buster that labor-intensive development is. As Prime Minister Singh told Luce, "Our biggest single problem is the lack of jobs for ordinary people."

The problem with India's self-proclaimed (and wildly premature) declaration of superpower status is that it reflects a complacency about both its present - which for many people is dire - and its future. Eight percent growth for four years is wonderful, but as the saying goes, past performance is no guarantee of future results. And India is not doing what it needs to in order to sustain this momentum.

Consider the postwar history of East and Southeast Asia. The comparison is appropriate because India started at about the same point, and has watched just about every country in the region get ahead of it on the economic curve. All these places developed by being relatively open to trade; by investing in primary and secondary education; and by building pretty decent infrastructure (not only roads and ports, but health clinics and water supplies). India has begun to embrace one leg of this triangle - freer trade.

Even here, though, many of the worst features of the swadeshi ("self-reliance") era remain intact, including an unreformed state banking sector; labor regulations that actively discourage hiring; abstruse land laws (and consequent lack of land titles); misshapen subsidies that hurt the poor; and corruption that is broad, deep and ubiquitous. Nothing useful is being done about any of this.

As for the other two legs of this development triangle - education and infrastructure - these are still badly broken. About a third of teachers fail to show up on any given day (and, of course, are unsackable); the supply of both water and power is expensive and unreliable.

These facts of life too often go unremarked in the current euphoria about the state of the nation. "We no longer discuss the future of India," Commerce Minister Kamal Nath told the Financial Times in a typical comment. "The future is India."

Hubris, of course, is the stuff of politics everywhere. But the future will not belong to India unless it takes action to embrace it, and that means more than high-profile vanity projects like putting a man on the moon or building the world¹s tallest tower. It means showing that the world's largest democracy can deliver real progress to the hundreds of millions who have never used the phone, much less the Internet. And in important ways, that just isn't happening.

India has many reasons to be proud, but considering it remains a world leader in hunger, stunting and HIV, its waxing self-satisfaction seems sadly beside the point.

http://money.cnn.com/2007/02/08/news/inter...sion=2007020912

Yeah there is another CNN headline that they're spending 12 billion USD to buy a UK steel mill junk.

If it happened in China, people would riot for sure.

First, if Corus is just a steel mill, Microsoft is a cybercafe.

Second, a PRIVATE Indian corporation is buying it. Not the Govt. of India. China doesn't riot when Hutchison buys other companies for billions of dollars.


Little knowledge is dangerous thing.

Indeed I have to agree with the above a great deal of what India is doing is clouded in hype by the media who are all too happy to take in like a sponge anything that is thrown at them by Indian sources. However organisations that are not lost in the fog of ignorance and concentrate on ground realties show another side as well. India’s performance in many social indicators as shown by the UNICEF state of the world’s children report and the World Bank report via their indicators was dreadful by any standards and was the worst in South Asia with Pakistan and Sri Lanka doing far, far better. India has done well particularly in the last few years but has much, much more to do. Also it is pathetic to say the least to see them ranting on about Pakistan calling it a “failed state”, poverty ridden and a terrorist haven in their stupid media where Pakistan is doing far more better on many fronts.

Guys, I read this forum everyday. I am interested in learing things about Pakistan only.
this is a Pakistani forum NOT AN INDIAN FORUM. Please do not create threads about India.
thanks

From the report itself "The 2006 UN Human Development Report, which ranks countries according to a variety of measures of human health and welfare, placed India 126th out of 177 countries. India was only a few places ahead of rival Pakistan (134th) and hapless Cambodia (129) and behind such not-about-to-be-superpowers as Equatorial Guinea (120), and Tajikistan (122)."

Pakistan too has a long way to go. Ya, but you are right that growth in India is lopsided.

Wait, wait, how does Pakistan has to do with anything here? This report is about india, why are you bringing in Pakistan into this?

The report is nothing but saying "glass is half empty". There are lots of editorials which talks about the "glass is half full" part. Only difference in these reports are the reference point from which the author is talking about. People who are saying "half empty" are referencing India to 1947 and 2007. In this comparison they are seeing all the countries who started of almost at the same state as India and are comparing India to those countries. It is absolutely valid.

But the "glass is Half full" people are referencing their comparison from may be 1990-2007. In this last 2 decades they have seen tremendous improvements in lots of sphere and seeing growth everywhere. Their points are valid too.

I can base it with my own experience, when I came out of my engineering college in '95. 3 out of 60 students got placed right out of college. And the highest salary paid was Rs8000/a month, today the same college almost 60% of the class is placed in a job right out of college. and AVERAGE salary is about Rs20,000/ a month. Now you can say 40% of the class is not getting placed in the job when they are coming out. It depends on which group you belong. Half full ? or Half empty?


And in 1990, the college itself was not there.

No look at these then compare

http://www.unicef.org/sowc06/pdfs/sowc06_fullreport.pdf [UNICEF]

Some stats from the UNICEF report


% of infants born with low birth rate 1994-2004

Pakistan 19%
India 30 %

% of population living on less than $1 day [extreme poverty]

Pakistan 13%
India 35%


http://devdata.worldbank.org/wdi2006/contents/cover.htm [World Bank]


These are by far some of the more important of the studies that are conducted on the state of a nation and take a whole host of other things into account. The HDI ranking relies heavily on education that is why Pakistan is slightly lower because of our poor literary rate but the above reports take everything into account and we do far better in most fields.

No look at these then compare

http://www.unicef.org/sowc06/pdfs/sowc06_fullreport.pdf [UNICEF]

Some stats from the UNICEF report


% of infants born with low birth rate 1994-2004

Pakistan 19%
India 30 %

% of population living on less than $1 day [extreme poverty]

Pakistan 13%
India 35%

Yeah and still the Indians will claim as if India is Germany and Pakistan some poor African state .. The fact remains that in no major city of Pakistan there are Jhuparpati's like that found in India where families, office working people are staying since generations !

although ViV has a point:

it is the private companies that are doing multi billion dollar transactions, and it is the govt of india that are claiming superpower status, or are gunning for it at least. The government of india are also the ones responsible for the 35% of population living in extreme poverty.

I agree, with the stats you provided. We should not compare India with Pakistan. For that matter even China and India. Each country has unique set of (social or soft) assets and problems. So when discussing we may want to look at the strengths of other countries and try to understand how they got there and when we look at their weakness, we can make sure we don't have that or see how they are working inspite of that weakness.

When I talk to any friends from developing countries. I always say, we(developing world) have a v long way to go. And whatever we have achieved so far can be easily undone in a decade's time if there is a war or proper policies are not followed.

The CNN article just says in a 100 lap race people are calling India a winner in 10th lap.

Most of the people who call India a superpower are just some Indian intellectuals and news editors. These are the same people who like to bash China on the internet. I have to stop reading some media websites because too many Indians are bashing China there.


By the way, I think Cait Murphy is the same person who wrote "Why India, not China will be the next superpower" a few months ago. I sent her an email to point out the obvious error she made in that article. I don't know why did she change she mind so quickly.

Actually it was a pak that invented the HDI.

regarding the corus deal that has nothing to do with the indian govt apart from the fact that tata is based in india. you can't deny that hte indian market (a mrkt of a billion consumers) isn't somethnig that everyone wants a slice of. the whole poverty ka chakar though is nothnig but hte indian govt's fault and the blame there lies squarely with them.

By the way, I think Cait Murphy is the same person who wrote "Why India, not China will be the next superpower" a few months ago. I sent her an email to point out the obvious error she made in that article. I don't know why did she change she mind so quickly.

Very well done, actually it is the Indian media hype and Indian professionals working overseas who take the white mean for a train ride on how really super advance India is and how darconic China & Pakistan are ! whereas the actual fact is that India & Pakistan are literally in the same boat (population wise), otherwise there are millionaire Indians who have empires and are controlling lots of business world wide.

However, below all the multi-million defense spendings of Indian there are many poor hard working Indians who are below poverty rate of UN and are further being depreived of any basic help from the govt.

Bro,

I dont think it is an Indian Media hype, every third article on internet is about India being a superpower.

Infact it is west, they wanted a slice from Indian markets and they are getting it, generally speaking Indian's are delusional and west is cashing that delusion, they are opening walmarts, they are changing indian laws about piracy to have an access for their products, selling their weapons and so on.......... list is long.

The guys who get these benifits keep laughing all the way home for how they used idiots and cashed the delusion.

I have expressed here several times that the period west have set for India to become a superpower is much more then India can keep itsef as a state. The internal differences of india's union are much more and fatal then any other state on earth.

But you batter know, the "lobbyists" in Washington DC can do miricles for their corporate and they are doing what their corporate needs, the so called westren "thinktanks" and "analyists" are always in their pockets.

Hopefully you got my point.

well there are different ways of seeing the same thing,

India has so many poor to be taken care of, it faces almost all the possible problems that exist in the other parts of the world, despite that they are progressing.

regarding the stats- well, yes they indicate a lot , it clearly shows they need not boast India being a superpower cuz they are not. There are two INDIA'S

ONE THRIVING WITH CONFIDENCE- raring to go

ONE HOPELESSLY POOR- wondering whats going on.

though no denying the fact that they are doing a great deal of progress, afterall who might have expected in 1947, when a country like India with 90% population below poverty to rise to this level, though there are still 28% poor among the population but that 28% itself is hellalot.

India is no way near the status of a supwepower, as the status of a superpower is always determined by the people as a whole and not just a section of the society