The Hi-Tech Sub-Sahara

It is easy these days to walk into a bookstore and pick up any number of books on India. The same level of interest is evident in newspapers and current affairs magazines as well. Why this heightened attention, and why now? A good answer can be found in Daniel Lak’s India Express: The Future of a New Superpower. Lak begins with this initial observation: “That India is a giant is indisputable. That its growth to global influence will be of vast benefit to all is a point that needs to be proven.”

The intersection of India’s economic ascent and its geo-strategic relevance makes India a compelling country to study. Interestingly, India has eschewed other recent examples of ascent in the Asian hemisphere such as South Korea, Taiwan and now China, where economic liberalization preceded political liberalization. India, on the other hand, has been a democracy since its independence from the British in 1947 and, after four and half decades of mixed economy policies, introduced serious market-oriented economic reforms in 1991.

The combination of its democratic structures and this newer economic policy orientation has given rise to the current interest in India. Lak, a Canadian-born and trained journalist who worked for the BBC on the subcontinent for nearly 20 years, rightly observes that “democracy is one of India’s great accomplishments, perhaps still its greatest triumph as a nation.” Yet, for the longest time, as important as this was, it was all that India had—its economic growth was pedestrian and modest, especially compared to other Asian nations including China. In the late 1970s, China and India were comparable, but in the next two decades, China raced past India in economic growth and poverty alleviation. Lak does an excellent job in explaining the precursor to the famous 1991 economic reforms in India. He notes that domestic economic liberalization actually began in 1980 and allowed Indian companies to thrive.

But it was the balance-of- payments crisis in 1991 that resulted in the most significant set of policy initiatives—reduction in tariffs and other measures that de-emphasized import substitution and “self-reliance.” The year 1991 is momentous for other reasons as well. In May of that year, former prime minister Rajiv Gandhi was assassinated while campaigning. It was also the year of the first Iraq war, and India had adopted a more sympathetic and nuanced stance toward the American-led coalition forces (notably, it did not do the same in 2003 with the second Iraq war). Such a step in 1991 would have seemed inconceivable in the 1980s when India was a leader of the Non-Aligned Movement. The year 1991 was witness to a number of emergent policy shifts in both the economic and foreign policy arenas. Over the last 15 years, we have seen this shift have an impact in various ways perhaps best described by Raja Mohan in Foreign Affairs: “India is arriving on the world stage as the first large, economically powerful, culturally vibrant, multi-ethnic, multi-religious democracy outside of the geographic West.”

It is these various aspects of Indian polity and society that Lak takes on in his book. In providing the backdrop to India’s current economic narrative, he starts in the 1990s and more specifically with the latter years when decision makers were concerned with the pervasive impact of Y2K, the millennium bug. There was a sense that if not tackled, entire systems would collapse and chaos would reign: “In business and government circles, these dire predictions were widely believed. Suddenly people understood just how much they relied on computer networks for nearly every aspect of their daily lives, and they panicked.”

Lak explains how Indian companies were able to respond to this crisis, through their knowledge of the computer language COBOL. Lak avoids jargon and his examples nicely demonstrate the strength of Indian technical know-how and how they served as the origin of the outsourcing phenomenon. What began as a cost issue came to be increasingly recognized as one of quality as well. As Lak notes, “India had benefited hugely, not just from the initial wave of spending on Y2K ‘solutions,’ as they came to be known, but from the massively positive exposure that the phenomenon gave Indian computing.” Furthermore, a lack of government interest allowed the hi-tech sector to thrive relatively unfettered by bureaucratic regulation.

Perhaps nowhere was this transformation more evident than in Bangalore. Its standing as one of India’s pre-eminent scientific centres predated the technological boom of the 1990s. It was already home to India’s premier institutions such as the world-renowned Indian Institute of Science and others spanning the aeronautical, telephone and space organizations. As well, Bangalore’s geography was a geostrategic advantage. Located in India’s south, it was well away from both China and Pakistan, India’s difficult northern neighbours.

Lak’s chapter on the technological boom is written well, but the reader may be familiar with its impact by virtue of the literature that already exists on the subject: The World Is Flat by Tom Friedman, Chindia by Peter Engardio and Bangalore Tiger by Steve Hamm. Our own national dailies, The Globe and Mail and the National Post, have regularly chronicled India’s emergent economic strengths. What is instructive in Lak’s book is his concentration on the dispersion of wealth and the psychological transformation emanating from India’s technological prowess. Lak chronicles both the ambitions of India’s lower classes to be part of this boom and the fact that ordinary Indians working in these companies (Infosys, Wipro, TCS) are experiencing upward economic mobility. For example, Lak describes a “presswalla” (somebody who irons clothes for a living) and the aspirations he has for his son to have an education and become an IT employee. It is worth noting that major global technology companies have made multi-billion dollar investments in the country: IBM, Microsoft, Dell and Cisco, to name a few.

Similarly, Lak’s exchange with India’s iconic former founder of Infosys, Narayana Murthy, is superb. Lak’s interview with Murthy gives us a glimpse of how the transformation of India is taking place. Murthy states that the person who was serving tea during the interview has “just bought himself a house worth four million rupees [about $90,000 at the time].”

To be sure, it would be simplistic to translate such examples to the broader challenges facing India, such as the fact that it still has 300 million people living below the poverty line. However, what they do reveal is the unmistakable shift that has taken place in the Indian psyche. A few years ago, in 2005, the International Herald Tribune noted that this attitudinal transformation “marks a reversal of fortunes for a country whose recent economic history has been dominated first by colonialism, built on foreign capital, and then by socialism, built on fear of that capital.”

Lak’s meetings with Indian social thinkers and practitioners are insightful and serve to balance the book. One of the phenomena these days is the international enthusiasm with India. It seems that for the last four decades the country’s rich and textured historic past, its democracy, pluralism and diversity were not given their due in the world’s media. To the extent it garnered attention, stories on India typically veered to the exotic, the mystic and the poverty stricken. Today, the pendulum has swung the other way. The coverage now is almost pervasively positive, especially in the business press. The growth of the Indian middle class, numbering more than 300 million, and the inward-bound foreign direct investment, as well as the acquisition of western companies by leading Indian conglomerates such as Tata, have signalled the arrival of India as a serious global economic player.

While India has made commendable strides, there are serious issues for it still to tackle. Economic growth rates of 9 percent mask the more modest 2.7 percent growth in the agricultural and rural sectors—where almost three fifths of Indians reside. As well, for all the technical prowess of India, according to the country’s National Knowledge Commission, there is a “quiet crisis” brewing in its post-secondary system. In the primary education system, it is even more serious. In a similar vein adult illiteracy is still high. The majority of India’s poor come from a cluster of states and this section by Lak is especially illuminating. How India deals with what Nobel laureate Amartya Sen has referred to as Silicon Valley coexisting with the sub-Sahara is the impending macro concern for India. On a visit to Toronto last year, the Indian commerce minister Kamal Nath observed that despite India being one of the world’s largest producers of fruits and vegetables, almost 40 percent is lost there due to spoilage, the inadequacy of proper storage and inefficient transportation systems to get the produce to market.

Lak is not inattentive to these issues. He uses compelling examples that give the reader a sense of the enormity of the challenges facing India as it tries to lift more of its population from the depths of abject poverty and subsistence living. The rat catcher whose livelihood is directly tied to the number he catches every night, or, the work of Indian non-government organizations in creating the most basic of bathing and toilet facilities for the masses come out of direct connections that Lak has made with individuals from government and NGOs.

The second half of the book traverses India’s journey from colonialism to independence, from its educational, societal and religious structures and pressures to foreign policy orientation. When India emerged independent from the British in 1947, its freedom represented the dawn of a new era in international relations. Over the next decade and a half, countries in Asia and Africa achieved independence, and leaders such as Nehru in India, Nasser in Egypt and Sukarno of Indonesia led the way in creating the Non-Aligned Movement. These countries sought to steer clear of the incipient East–West tensions of the Cold War.

This movement was met with antipathy in the West, principally because the policy of non-alignment was viewed as pro-USSR. A gap in perceptions and actions ensued over the Cold War period. Western decision makers found it hard to understand how a democratic country like India could tilt toward the Soviet Union. Not surprisingly, Indian policy makers had trouble comprehending the West’s appetite for military alliances with non-democratic regimes. The current context has seen a huge bridging ofthese concerns, except in one major area. There is still a view in western capitals that we need to be closer to India because it will help in containing China’s inexorable ascent. While it is true that China occupies a very prominent place in Indian strategic thinking and planning, it would be a mistake to view its concerns about China solely through a western lens: India has its own worries about China’s rise. China and India are collaborators and competitors at one and the same time. On one hand, two-way trade is increasing rapidly. On the other, China and India are competing in the same energy markets. In 1962, India lost a war to China and is therefore acutely aware of China’s power and growth.

Viewed from such a standpoint, the last chapter (“Becoming Asia’s America: The Next Liberal Superpower”) foreshadows what could go wrong in our relations with India. India is not a western country. While it has taken freely from the West in setting up its modern democratic structures (parliament, executive and judiciary) and uses the English language, its actions and orientations are rooted in the Asian experience. Its democratic system of village councils (panchayats), for example, has been in existence for many centuries.

Understanding the country and how it interprets its geopolitical strategic environment will be crucial in the evolution of the West’s relations with India. Calibrating our expectations is important. Right now, they are clearly on the upswing and this is a good thing. But confluence of interests is not the same as congruence.

The evolution of China-India relations will have global economic and political ramifications. While their two-way trade with each other is showing a sharp upward trajectory, so are their respective defence budgets. Plus the region has other political flash-points, notably Afghanistan, Iran, Pakistan, Nepal, Bangladesh, Burma and Sri Lanka. China and India have adopted different policy approaches and tactics in shaping their strategic objectives of containing each other’s influence in these countries. Lak could have shed more light on the implications of China-India relations and what it means to the West. Another area where first China, and now India, are becoming more active is in Africa. The continent will come to be a rich source for energy and both countries are making every effort to bolster their ties in key states such as Nigeria, Angola and South Africa. Both China and India are redoubling their efforts on foreign aid to many countries in Africa. We in the West have yet to take significant note of these policy developments.

Lak does a commendable job of charting India’s rise and, as his title indicates, he believes that Indian ascent as a liberal superpower can happen especially because it is a democracy. More importantly, as he notes, it is a tested democracy and has survived assassinations and wars maintaining its democratic structures. I share his excitement in the vibrancy and resilience of the country, plus the fact that it has close to $250 billion in its foreign exchange reserves.

Its people, many of whom have yet to see the fruits of India’s new-found wealth, represent both the strength and the challenge India faces. The strength will be represented at the ballot box as it was in the national elections of 2004, when it threw the incumbents out of power. At every major turning point, the country’s democratic traditions have not been sacrificed. When the government of the day tried to do it once in 1975, it lost the following election in 1977. This is the strength that makes us admire India. But it cannot mask the very challenges India faces, including basic health care, childhood malnutrition, the state of its physical infrastructure, the need for reforms in its education system—the list is long and real. Lak needed to make the connection between India’s strengths and its challenges more explicit.

Even allowing for the unbridled optimism evident in the title of his book, Daniel Lak provides an important perspective on why India will matter even more in the coming decades. Lak first went to India in 1989 and his subsequent trips and journeys have attuned him well to explaining this fascinating but complex country. This is a timely publication that will interest policy planners and decision makers and those who follow the rise and fall of the world’s superpowers