Implosion: India’s Tryst with Reality Read online

  IMPLOSION

  India’s Tryst with Reality

  JOHN ELLIOTT

  HarperCollins Publishers India

  Contents

  Acknowledgements

  Introduction: The Risk of Implosion

  I JUGAAD/CHALTA HAI

  1. India’s Master Plan

  2. Fixes and Frugal Benefits

  3. Fault Lines

  4. Planning the Unplanned

  5. Getting Things Done and Who Can Do It

  II OPENING UP

  6. Clearing the Cobwebs

  7. Unlocking Opportunities

  8. Losing the Environment

  III SOCIAL CHANGE

  9. The Power of Protest

  10. The Plunder of Land

  11. Protests and Blockages

  IV DYNASTY

  12. Families Galore

  13. Nehru and the Gandhis

  14. The Sonia Years

  15. Waiting for Rahul

  V GOVERNANCE

  16. Illicit India

  17. Indefensible Defence

  18. Scam Andhra

  VI INDIA ABROAD

  19. Uncertain Convictions

  20. India and China: Himalayan Struggles

  21. Pakistan and the Neighbourhood: Few Friends

  22. India and the US: Sometimes Partners, Not Allies

  VII INDIA’S TRYST WITH REALITY

  Conclusions

  Index

  About the Author

  Copyright

  Acknowledgements

  I’ve wanted to write a book about India since the end of my Financial Times posting in Delhi in the 1980s, but there never seemed to be any time. Eventually my Riding the Elephant blog, which I have written since 2007, provided me with a platform to develop ideas and assemble material that I have gathered during twenty-four amazing and eventful years writing about a range of subjects in South Asia.

  None of this would have happened if Geoffrey Owen and Nico Colchester, then the editor and foreign editor of the FT, had not been willing to break with the convention that only foreign correspondents could be foreign correspondents and post me, then the paper’s industrial editor and formerly the labour editor, to India in 1983 to open the FT’s bureau. Many thanks to them for launching a family adventure – years later, the careers of my three sons, Mark, Nick and Charlie, have all been linked at various times in banking, advertising and construction, to India.

  Thanks next to Bill Emmott, editor of The Economist, for helping me to settle back in India by giving me part-time jobs on that great magazine (newspaper as they call it) in 1995 and again in the 2000s. Then to Rik Kirkman, who hired me for Fortune magazine, and especially to Robert Friedman, my patient and instructive international editor in the late 2000s, who asked me in 2007 to write Riding the Elephant, which Fortune had just created. Remembering Robert’s constructive editing, I turned to him to sort out a muddled draft of the introduction to this book. Thanks also to James Lamont of the FT for organising the blog, after Fortune had handed it over to me, onto the FT.com website, and to Andy Buncombe of The Independent who quickly arranged for it to move to his newspaper’s blog site after it left the FT. Now it also appears as articles on the Hong Kong-based Asia Sentinel.com news site, thanks to John Berthelsen, the editor.

  Ravi Singh, then at Penguin India, and Namita Gokhale, who writes novels and co-directs the Jaipur Literature Festival, first encouraged me to think about turning the blog into a book, and both of them have kept me focused over several years. She, and novelist and BBC journalist Humphrey Hawksley, have constantly given advice, reading and re-reading long drafts, with Humphrey in particular prodding me into conclusions that I was trying to duck. They both helped with the title, which could have been the name of the blog, though that would not have indicated the line I was taking. I was always tempted to include the words ‘Because of the Gods’ as a counter-point to FT journalist Ed Luce’s In Spite of the Gods: The Rise of Modern India (published eight years ago) to indicate that ‘the gods’ in the broadest sense of culture, customs, and habits are now slowing that rise down. But I’ve had IMPLOSION as a working title for a year or two, and that won through.

  Without Belinda Wright, this book may never have been completed because of the distractions of trying to work in Delhi. She lent me her tranquil forest home near her family’s ‘Treading Softly in the Jungle’ Kipling Camp on the edge of Kanha National Park in Madhya Pradesh on three occasions. With cheetal and monkeys, and the famous elephant Tara wandering by, and the prospect of tigers, leopards and bears not far away, I did a lot of writing over the twelve weeks I was there – well looked after by Babulal and all the staff. Thanks also to my old friends Diana and Horace Mitchell for letting me retreat to the quiet top ?oor of their home near Newbury to ?nish the chapters.

  I’ve been helped to explore and learn about India by many people over the years, and a lot of them appear in this book. I’m grateful to friends and contacts who have given me their time and advice, some also reading drafts, especially those listed here (roughly in the order of the chapters where they were most involved): Anand Mahindra, Sudarshan Maini and his family, Pavan Varma, Montek Singh Ahluwalia, Rakesh Mohan, S.L. Rao, Ashok Desai, Hugh Sandeman, Madhukar Khera, Lord (Nigel) Lawson, Shylashri Shankar, Vikram Singh Mehta, Ravi Kaimal, Sudeshna Chatterjee, Subrata Gupta, Ravinder Kaur, Dipankar Gupta, Nandan Nilekani, Biswajit Mohanty, Sachin Pilot, Mani Shankar Aiyar, Amitabha Pande, Nitin Bhayana, B.K. Synghal, Kalyan Bose, Arun Shourie, Anvar Alikhan, Ram Karan, V.K. Srinivasan, Manoj Joshi, Ajai Shukla, Rahul Chaudhry, Khutub Hai, Stephen P. Cohen, Sunil Dasgupta, Naresh Chandra, Tariq A. Karim, Shivshankar Menon, K. Shankar Bajpai, G. Parathasarathy, Kanwal Sibal, T.C.A. Rangachari, Navtej Sarna, Rob Young, Bob Blackwill, David Sloan and Arun Kapur.

  Keshav Choudhary, a young graduate, did some valuable research, and I’m grateful to Samir Saran and C. Raja Mohan at the Observer Research Foundation for hosting me at countless seminars and networking vegetarian lunches. At Harper Collins, thanks to Krishan Chopra, my editor Karthika V.K., and also to Shantanu Chaudhuri and all the staff.

  Going back in history, Abid Hussain, along with Tarun Das and others, helped me to begin to understand India in the 1980s, and encouraged me to return in 1995 when Abid gave me a visiting fellowship at the Rajiv Gandhi Institute of Contemporary Affairs, which he was then running. Later, he often gave ideas and encouragement but sadly died in June 2012, just as we were about to meet and talk, so could not advise me as much I had hoped on this book. Others I have also sadly missed include S.K. Singh, Hari Shankar Singhania, Vijay Shankardass and David Gore-Booth. The many other contacts and friends over the years are far too numerous to name but include Pran Chopra, Salman Haider, Vijay Kelkar, Bimal Jalaan, Peter Hassan, Bim Bissell, Gautam Thapar, Jamshyd Godrej, Rahul Bajaj, R.C. Bhargava, V. Krishnamurthy, Talmiz Ahmad, Arvind Singhal, Pradip Shah, Sanjoy Bhattacharyya, Jairam Ramesh, Mark Tully, Dinesh Trivedi, Sushil Premchand, Rejeev Gupta, Aditi Phadnis, Tony Jesudasan, Mike Knowles, Michael Carter, Marcus Winsley and William Knight.

  A tribute to Geoffrey Goodman, my old colleague, mentor and friend, to whom this book is dedicated, appears at the end of the Introduction.

  JOHN ELLIOTT

  January 2014

  Delhi

  Introduction

  The Risk of Implosion

  India punches below its weight, failing to achieve what it could and should be doing. It has the vast potential of a population of over a billion people, abundant natural resources and an ancient culture, yet it constantly disappoints admirers and validates the views of critics. Most recently, with declining economic performance, poor governance and endemic corruptio
n, people have begun to ask, ‘Why is India proving such a failure?’

  The purpose of this book is not so much to look at the most recent short-term failures, but at how and why more has not been achieved since independence in 1947. During these years, India has largely muddled through, turning confusion and adversity into varying degrees of success – initially building a new nation, and then a new economy after 1991, when the country took historic steps to open up internationally. This approach has worked, untidily, erratically, argumentatively, and corruptly, as far as it has gone, but an economy and society can no longer survive, let along thrive, with such lack of focus and drive in times of increasingly rapid change.

  At the heart of this national approach is what is known as jugaad (sometimes spelt jugaar), which means making do and innovating with what is available, and chalta hai, which means ‘anything goes’ and hoping for the best. The private sector generally works on more positive lines, driven by increasing competition since 1991, but jugaad and chalta hai fit with a culture where public debate is more important than the conclusion, where ‘introspection’ (a much loved word) is celebrated more than any outcome, and where it is easier to argue than to listen. Being seen to know something is more important than turning that information into coordinated analysis and action. Decisions – especially those that are conveniently ‘holistic’ (another favourite) – are an end in themselves, without concern for implementation.

  Maybe some of that stems from the Indian caste system’s brahminical approach to learning rather than action, but it also fits with politicians and others who want the glory and tamasha of laying foundation stones, metaphorically and actually, without caring about what, if anything, is then implemented or achieved. Jugaad is a brilliant patchwork solution for a deprived and underdeveloped society, but it is not enough for a country in India’s state of development because it deters efficiency and innovation and destroys institutional structures. In the past few years, India’s pace of events has overwhelmed jugaad, making it impossible for the country to cope with basic services, projects and development – and that is now leading to the risk of implosion.

  Every country has a similar approach to a greater or lesser degree, and many other countries have failed to face up to endemic problems. Brazil has a word, jeitinho, from the Portuguese, which is an improvised fix to a problem (sometimes illegal),1 and vai dar, which means something like ‘it will work out all right’. But these traits are so deeply ingrained into how India’s people and institutions function that performance crumbles. Individuals can, of course, do well, as they demonstrate in their own endeavours and as part of many successful Indian companies. This is also evident in the way they thrive abroad as traders and businessmen in Africa, shopkeepers and bankers in the UK, and software entrepreneurs and space scientists in the US. But the country as a whole is failing and, in so doing, has lost the drive of fast economic growth that it enjoyed in the first decade of this century.

  A sense of preordained karma, where one’s path is laid out, coupled with deep religious traditions and beliefs in the power of the gods, contributes to the fatalism and inevitability of chalta hai. People pray regularly for a variety of things, not least success at work. The owner of a shop in my local market stands outside in the morning bustle, praying for several minutes before entering and starting work. A bureaucrat who used to be in charge of a chaotic public office that I sometimes have to visit in Delhi, stood at his desk when he arrived in the morning and prayed, hands clasped, a personal island of serenity amid the impatience and frustrations around him. Big tycoons and politicians seek success by donating large sums of money and other valuables to temples, such as the majestic Lord Venkateswara temple in Tirupati in Andhra Pradesh. Vijay Mallya, a flamboyant businessman, donated three kilograms of gold there in December 2012 when his Kingfisher Airways was floundering – it did not recover.2

  Antonio Armellini, a former Italian ambassador in Delhi, has written that ‘no other country has India’s capacity to project the future into the present’.3 This was a neat way of saying that India enthusiastically takes forecasts and projections for granted, projecting them as instant reality, while largely ignoring the need to work and make them come about. The best and most serious example of this is how India has revelled for the past few years in its ‘demographic dividend’, with about half the population (560m people) being under the age of 25, including 225m between 10 and 19. But little has been done to harness the potential with good education, adequate skills training and suitable job opportunities, especially in the underperforming manufacturing industry. The dividend now risks becoming a demographic disaster with the number of unemployed semi-educated youth climbing rapidly. ‘If we get it right, India becomes the workhorse of the world. If we get it wrong, there is nothing worse than unemployable, frustrated youth,’ says Shashi Tharoor, a central government minister with responsibilities for education, and also a writer and former senior United Nations official.4

  It is difficult to live in India for long without becoming deeply sceptical and even cynical about the future of the country, and its leaders and society. I travelled to a jungle camp near Kanha National Park in the middle of India, to write part of this book.5 As I was driven from Jabalpur, an old city that has been an important military and regional centre since before independence, I wondered whether the great rolling countryside would change my basic views and moderate my criticisms. I needn’t have worried. Over the next few days, the local newspaper, The Hitavada, kept me on track. One day, a senior forestry official’s residence had been raided and ‘disproportionate property’ worth over Rs 40 crore had been discovered.6 Two days later, police wielding lathis charged at a crowd in the state’s capital city, beating people who were protesting against the killing and alleged rape of an eight-year-old girl.

  Inspiration in the ’80s

  India’s massive potential captured me when I first came to the country in 1982, writing articles on industry for the Financial Times. I had been reporting Britain’s industrial decline for 15 years and I was struck, as I travelled from Bengaluru northwards to Bombay, Pune and Delhi, by the contrast with India’s economy that was just beginning to open up, albeit extremely slowly.7 Black-and-white televisions were beginning to appear in rural villages, though urban markets sold video players, not recorders, because nothing was being broadcast that was worth recording. A government-owned company, Maruti Udyog, was looking for a foreign partner to make cars (it eventually linked up with Suzuki) to run on roads crowded with 30-year-old derivatives of British Morris Oxfords and Fiat 1100s alongside the bullock carts and auto-rickshaws. Japanese two-wheeler and light commercial vehicle companies were setting up joint ventures. Operation Flood was building a network of thousands of milk cooperatives that would make India self-sufficient in milk. Indira Gandhi, the prime minister, had just begun to decontrol cement prices, an arcane but seminal initiative.

  A couple of years later, after I had come to live in Delhi, there was a young prime minister who had dreams of opening people’s eyes to the potential of a new India. Rajiv Gandhi gave business a much needed sense of respectability and inspired interest among the young in the stock market. He started initiatives to loosen up industrial controls, introducing high technology and entrepreneurial drive into a government-dominated economy. Pepsi Cola was soon demonstrating how a foreign company could help agriculture by pulping and exporting tomatoes as well as selling its cola. Opponents of reform were regularly pushing Gandhi off course, but the foundations of new India were being prepared. The potential was already visible.

  Hopes were pinned on what were seen as India’s acclaimed advantages as an investment destination – notably its stable parliamentary democracy, deep-rooted cultural and social traditions in a free and open society, with established legal, accounting, and financial systems and institutions, and a respect for private property. One could also include a firmly based private sector, high quality technicians with good analytical brains, a strong base of c
ompetent managers, and English as the main language of business and government’.8 Together, that gave India a distinct edge over China though, even then, India was frequently regarded as a problem, and suffered internationally from “a bad image as an ‘unpredictable, unreliable, and even difficult place to do business’.

  The Financial Times posted me to Hong Kong in 1988 at the end of five years based in Delhi, so I did not report on the economic reforms introduced in 1991 that opened up the economy and sharpened the focus on developing a modern India. I returned in 1995, expecting to find an even greater sense of the enormous potential that I had felt in the 1980s. Instead, I found a society and a government that were unsure about the benefits and political viability of economic liberalization. Leaders at all levels had found new ways to milk the country of its riches, encouraged by greedy foreign as well as big Indian companies and banks that were only too willing to pay for out-of-turn contracts, mandates and licences.

  There was even a new willingness to gossip openly about corruption, which had not been evident in the 1980s. The names of top officials in some ministries (even the finance ministry, as I had heard in Hong Kong) were being attached to major projects and financial mandates. India was emerging into what it has now become – a place where many deals have an illicit price, and where politicians and bureaucrats link with businessmen to plunder the country’s wealth, deprive the poor of sustenance and aid, steal natural resources that range from land and coal to wildlife, and secure future wealth through layers of political dynasties.

  The March of Corruption

  Corruption plays a vital role in the country’s failings. It prevents central and state governments adequately addressing key issues, and leads both the public and private sector to assume that they can buy their way into contracts and out of problems. It oils the wheels for businessmen and politicians, and helped create a pre- 2011 economic boom by exploiting the country’s natural resources, while also greasing the wheels of inefficiency and poor performance. Until recently, society knew it was happening but did little to stop it. The fraud and extortion are now beginning to unravel though, partly because of India’s right to information (RTI) laws that are publicizing widespread corruption, and partly because of public anger and protest movements, aided by hyperactive and inquisitive television and the growing power of social media.