The year is 2020. For nearly 12 years, India has seen an average annual GDP growth rate of over 12 percent more than quadrupling the per capita GDP from US$500 in 2008 to $2000, placing India in the league of middle-income economies. Stark poverty is a thing of the past. In much less than a generation, the population transitioned from being 70 percent rural to being less than 20 percent rural. Agricultural labor is only 15 percent of total labor participation, down from 60 percent in 2008. Farm incomes are six times what they used to be. The $3 trillion economy shows no signs of slowing down.
So how did this seemingly impossible transformation happen, I asked the man on the street.
“The cities. I am hazy about the details but it appears that there was a change of tack. Somehow they figured that they had to think different, think big. They had been stuck in a rut created by a poverty of imagination. The problem was that there was no compelling vision to light a fire in the bellies of the hundreds of millions of people. Then somehow inexplicably they got out of the rut.”
Can you be a bit more specific? What was the turning point? What did they specifically do? What made the difference? Who was responsible?
“I was coming to that. Like I said it was the cities. But that was just the instrument, just the visible part of the transformation. The creation of the cities was the equivalent of the challenge to land a man on the moon. Remember all that talk about an Indian manned mission to the moon? Well, how lunatic was that? Nothing new in attempting to do in 2012 what the Americans had done over 40 years ago. Not just that, with all their trillions of dollars, the Americans themselves thought it was a pointless waste of money to keep doing manned missions to the moon. And incredibly, impoverished India was willing to spend a few billion dollars repeating that. I ask you, how retarded is that?”
Why drag in all this talk about missions to the moon?
“Actually, think about it for a second. The challenge that JFK presented to the nation was the important bit. Recall his words. Quote: We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too. Unquote. You must read that speech to get a sense of what the articulation of a real vision is all about.
“The bit about doing something not because it is easy but because it is hard is important. And the bit about choosing. The operative word is “choosing” – you choose to do this as opposed to that. The Indian movers and shakers finally woke and decided to choose. It was a choice. They thought through what the options were and then made a choice to do what made the most sense. And the choice they made best organized their resources and their skills.”
But tell me, how did it all begin?
“I am coming to that.”
[Continue reading the next part.]
Flashback (Part 2)
“It began with a simple realization that no one is as smart as we are. That is, a collection of very smart people is smarter than any one person however smart. Experts and expertise matters, and therefore amateurs and novices cannot be as good in figuring out the choices that confronted them. The collective wisdom of a group of smart people articulated a vision and an associated roadmap.”
Who were they?
“The best. From every field such as industry and business, development, economic growth, urban planning, resource management, science, technology, governance, finance, etc, they got the best from around India and the world. They got the most successful entrepreneurs and business tycoons to add to the group of experts. They got the most respected academics. The challenge to this group was simple: what is the best way for a large economy to transform itself given the resources available? The expert committee took their time and in one year came up with a recommendation.”
How much did it cost, this bunch of experts? And why experts? Don’t we know that amateurs do make amazing contributions?
“That was the problem. India was stumbling around because every amateur and his brother was coming up with vision which with 2020 hindsight we can say was … how shall I put it … amateurish. It had become a cottage industry of sorts. Sit around, write a book, and there was the so-called vision. That changed when a few industry leaders said enough is enough. They got together and put in I think some paltry sum, I guess around $10 million to convene this panel of experts. And then they aggressively sold the goal to the country. Of course, they did not do it for altruistic reasons. They all became fabulously wealthy from the accompanying growth. But that is another story.”
Surely, $10 million is not paltry?
“Actually it is. If you consider that the spending was crucial in generating more than $10 trillion of wealth which would not have otherwise happened, that is what makes it paltry. Do the arithmetic.”
And the recommendation was?
“Like I said, cities. Transform India by building new cities designed and built using the best planning. Just by credibly committing to build these, it engaged every resource available. Recall that India was a very “young” country demographically. The people came from there. The capital came from everywhere. Businesses around the world realized that here was a market that the world had never seen. There was a mad rush to invest in India. On average, US$1 billion a day was the foreign direct investment for the last 10 years. India mopped up a significant part of the investment that used to flow into the US and China. So it was not just internal resources but global resources that flowed into India.”
But why didn’t that happen before?
“India was there at the right time. The demographics were right. But until the credible commitment to actual economic growth was made, there was no reason for investors to invest in India. So when that commitment was made, it galvanized everyone. See, the thing is that wealth is created by human action. But human action is goal directed. Setting a good goal requires deep thinking, not political amateurism. If the person doing the thinking for the country is an illiterate scamster, you are in trouble.
“But if skilled people put their minds together and set the agenda, then the goal is interesting enough, difficult enough, rewarding enough to channel all sorts of resources to its fulfillment. It creates it own dynamic, like a forest fire. The more it grows, the more resources it sucks out from the surrounding and grows even more. The wind feeds a forest fire while the same wind would snuff out a candle. To make use of the winds of change, we needed a forest fire, not a candle which we were protecting from the wind this far.”
So how does one start a forest fire?
[This has been parts eight and nine of a ten-part series. The previous part was Pune DeCi.]