The question that bothers us Indians from time to time is “who are we?”

Posted: August 21, 2013 in Harvard University, India, Lew Kuan Yew School of Public Policy, Mohan Guruswamy, Observer Research Foundation
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By Mohan Guruswamy

My proposed talk in Singapore at the Lew Kuan Yew School of Public Policy at the “Asia Competitiveness Institute (ACI) Review Seminar on Competitiveness Ranking, Simulation Analysis and Development Strategies for 35 States and Federal Territories of India”

The question that bothers us Indians from time to time is “who are we?” Modern anthropologists classify us Indians as belonging to one of four ethno-racial groups, Caucasoid, Australoid, Mongoloid and Negrito. Geneticists say that the modern Indian population derived from two ancestral populations – ancestral north Indians (ANI’s) and ancestral south Indians (ASI’s). ANI’s are related to the West Eurasians and the ASi’s are distinctly related to the indigenous groups like the Andaman Islanders. We are now an admixture of these two groups. Modern India now has over two thousand ethnic groups.

Modern Indian languages have evolved from all the world’s four language families. Indo-European, Dravidian, Austro-Asiatic and Tibeto-Burman. We also have a language that belongs to neither of them – Nihali, spoken in parts of Maharashtra. India has 1652 individual mother tongues. The 2001 Census tells us that 30 languages are spoken by over a million each, and 122 by over 10,000 each.

India has almost 1.2 billion people, and the Union of India consists of 31 States and Union Territories, with some more being currently midwifed. The biggest of these is Uttar Pradesh with a population of 199.6 million or 16.49% of India’s. It is as big as Brazil. The smallest political unit is Lakshadweep which has just 64,000 (0.01%). Quite clearly the omnibus term India, incidentally derived from the name of a river that hardly flows through it, masks a diversity of nations.

In late 2012 India became the world’s third largest economy in PPP terms and has grown at an average rate of over 7% since 2000. Between 208-11 it grew at more than 9%. In consonance with global trends India’s growth also has tapered off these past two years. Nevertheless overall the trends have never been like this before and there is optimism about the long term, despite recent troubles. In a country where many state GDP’s are bigger than many large countries. For instance the biggest regional economy in India, Maharashtra at $233 billion is bigger than South Korea and would rank number nine in the world. The next biggest, Andhra Pradesh is as big as Switzerland in GDP terms. Many Indian cities too have large economies. Last year Mumbai’s GDP in PPP terms was $209 billion and it would rank ahead of Denmark.

This overall performance however masks a diversity of performances. The HDI of Kerala is India’s highest 0.790 while the other end of the spectrum is Chhattisgarh with 0.358, which would place it just alongside Chad, one of the world’s poorest and most backward countries. At 0.790 Kerala would find a place in the high HDI list of nations.

While in 2011-12 India grew at 6.88%, large states like Uttar Pradesh (6.23%) and Andhra Pradesh (6.44%) grew at less than the national rate. States like Gujarat excelled with 20.79%, while India’s most prosperous state, Punjab, languished with 5.79%.

The incidence of poverty is always a contentious matter in India. While the government tries to downplay the numbers by having a somewhat self serving index (now 22%), other measures such as the UNDP’s $1.25 a day suggest that almost 37.5% of Indians live in dire poverty. Others have a very different tale. India’s abysmal track record at ensuring basic levels of nutrition is the greatest contributor to its poverty as measured by the new international Multi-dimensional Poverty Index (MPI). About 645 million people or 55% of India’s population is poor as measured by this composite indicator made up of ten markers of education, health and standard of living achievement levels.

The new data also shows that even in states generally perceived as prosperous such as Haryana, Gujarat and Karnataka, more than 40% of the population is poor by the new composite measure, while Kerala is the only state in which the poor constitute less than 20%. The MPI measures both the incidence of poverty and its intensity. A person is defined as poor if he or she is deprived on at least 3 of the 10 indicators. By this definition, 55% of India was poor, close to double India’s much-criticized official poverty figure. Almost 20% of Indians are deprived on 6 of the 10 indicators.

But even more a matter of concern is the growth regional disparities. Eastern India has been languishing and has the densest concentration of poverty. While the northern and southern states have showed very good performances on this front. India’s west has its main industrial centers and naturally overall figures tend to be good here. But if the big cities are removed, here also we get a bit of a dismal picture. Clearly the southern and northern states seem to be doing better. I will not get into more details. I am sure the studies we will see presented here today will cover this and much more.

But I would like to leave this seminar with a question? In a global system having almost two hundred independent states at various states and stages of development, we can have a wide disparity, as each one of these economies represents a sovereign entity, bounded by a border. But in a system that in bound by its constitution, its history and its civilization as one, as is India, can we afford to risk too much diversity in economic well- being? One immediate problem is a feeling of deprivation to the benefit of others. The credit /deposit ratios only fuel this. The southern states have an average C/D ratio of 92.25, with Andhra Pradesh leading with 105.14. The northeast lags well behind with 34.42, while eastern India has 50.30. The big state of Bihar just has 28.61 in comparison Tamil Nadu has the highest with 112.65. Clearly something is going on here. And there will be consequences.

Some of these are in evidence already. The population growths are very varied now. While southern India will stop growing before this decade ends, the major northern states of Bihar, UP, Rajasthan and MP will keep growing till well past 2060. It also means the South will age faster, and already we see noticeable migrations. What frictions this will cause are a matter for discussion, as is the composition of India’s Parliament where the constituencies are related to population.

Finally, it is clear that there can be no growth without pain, often to others. But without growth there will be all round pain. The challenge for India is to spread the growth more equitably and share the pain more evenly. I look forward to your deliberations and hope to gain much from them.

Mohan Guruswamy studied Public Policy and Management at Harvard University, is Advisor at Ministry of Finance India, Non-Resident Senior Fellow at Atlantic Council of the United States and Distinguished Fellow at Observer Research Foundation, and, is a friend.

  1. C/D ratio holds for banks right . Am wondering how it is used in parlance of states. Does C/D means deficit in the budget ?

    Cato Institute recently released a report on Economic Freedom in Indian states and it rated Gujarat as first and Tamil Nadu in second. But what’s startling is that Gujarat has managed to increase it score from 0.41 to 0.64 in the span of 10 years and Tamil Nadu has been maintaining its score for that period. So what sort of development are we seeing in this states ?

    And as rightly put, Punjab has been showing a steady decline with regard to this Index.

    Wish to hear more from you regarding this and also about the Competitiveness ranking by ACI.


  2. Joe Fernandez says:

    India is much bigger than anything that can be thrown at it. Those who try to analyse India will invariably be proven wrong.

    Sent by DiGi from my BlackBerry® Smartphone


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