India’s existential moment

It was symbolism over substance. American President Barack Obama massaged our collective national ego by describing India as a power that was not just rising but one that had already risen. Dutifully, we all felt very good that we were holding our head high in the comity of nations. After all, this was what was being declaimed by the most powerful person on the planet. But can we completely ignore the findings of the Human Development Report of the United Nations?
Despite Mr Obama’s effusive praise for all things Indian, even Prime Minister Manmohan Singh — whose passion for all things American is hardly a secret — felt constrained to strike a note of circumspection by stating that the foremost challenges before this country were eradication of poverty, ignorance and disease. Dr Singh was quick to add his favourite contention, namely, that India would not be able to tackle the problems of the poor, illiteracy and ill-health unless the country’s economy grew at an annual rate of between nine per cent and 10 per cent, for which the “help of the United States is of enormous significance”. There was predictably no talk of distributing the benefits of growth among all sections of society.
Yet the fact remains that economic growth in India has not been inclusive. One does not have to look very far to ascertain certain harsh facts. Barely a day before the US President landed in India, on Diwali, the United Nations Development Programme listed India in the 119th position in its latest report comparing the Human Development Indices of different countries. More on the report in a while.
As for the US President, despite his assiduous efforts to portray his India visit as one that was made to strengthen the “strategic partnership” between the world’s two largest democracies, Obama the Salesman just about triumphed over Obama the Statesman. He made the right noises, on Kashmir and on Pakistan. Having suffered a bruising mid-term electoral setback, he made no bones about the fact that he wanted to “advertise” the 50,000 jobs that would be created in America on account of the $10 billion worth of deals struck with companies here in order to counter those who were arguing that Indians were taking away American jobs.
Stung by the criticism that unlike the US President, our own Prime Minister was less concerned about creating employment opportunities at home, both Dr Singh and Mr Obama had to repeatedly emphasise that American technologies and equipment would indeed create jobs in India and that US investments would help develop our creaking infrastructure — the “biggest bottleneck to India’s growth”.
Though never explicitly stated, a distinct impression was conveyed that the two heads of state had worked out a common strategy for the forthcoming Group of Twenty (G-20) summit meeting. Both Mr Obama and Dr Singh argued that “rebalancing” growth between “deficit” countries and “surplus” countries would form an important part of the agenda during the G-20 meeting, without naming China as the surplus economy and the US as the country with the biggest trade and budgetary deficits. What is an indisputable fact is that economically, both the US and India have become increasingly dependent on China. Both have a love-hate relationship with the world’s most populous country simply because both the US and India have to simultaneously compete and collaborate with China.
For nearly six decades, America was India’s largest trading partner. That position now belongs to China with the United Arab Emirates in second place and the US ranked third. America is also the third-largest provider of foreign direct investment to India. As Mr Obama himself pointed out, the potential for strengthening trade relations between India and the US is huge because Indian exports to the US are only 10 per cent of this country’s total exports while exports to India comprise barely two per cent of total American exports — in fact, Netherlands, with a population lower than that of Mumbai, accounts for a higher share of US exports.
But the problem is not that simple. World trade shrunk by around 15 per cent during 2009, for the first time in more than seven decades, and is picking up rather slowly. Given the fragile state of the international economic environment, the revival from recession has been slow, gradual and uneven. The US fears a double-dip recession if the yuan-dollar currency war continues for long. Mr Obama surely wants Dr Singh to explain to the Chinese leadership why a stronger yuan would expedite the revival of the world economy and stall a possible W-shaped recovery. There is little doubt that the Indian Prime Minister would oblige his American counterpart in this regard when the two meet again in Seoul.
Now that the politically correct statements have been made, the hands warmly shaken, the body language perfected, let us remember that the reality on the ground remains unchanged. According to the UN Human Development Report, with over 420 million people living on less than $1.25 a day, India has more poor people than the combined total of the poorest nations of Africa. “Eight (Indian) states with poverty as acute as the 26 poorest African countries, are home to 421 million multi-dimensionally poor people, more than the 410 million people living in those African countries combined,” the report points out.
India has jumped one position in the Human Development Index (HDI) over the last five years. By way of contrast, China has moved up the HDI ladder by eight notches to occupy the 89th position over the last five years. China is now estimated to have 16 per cent of its population living below $1.25 a day, whereas the proportion in this country is around 40 per cent. Despite what Mr Obama says, we have to seriously introspect about our current status in the world.

n Paranjoy Guha Thakurta is an educator and commentator