India’s bold decision to stay out of the RECP until the needs of India’s small enterprises, farmers, and poorest citizens are properly addressed has dismayed many economists. The Indian government’s fear was that China’s exports to India would harm small producers and farmers just when the government must create more employment in the country and lift incomes. China and India, the two most populous countries in the world, embarked on new journeys to improve the well-being of their citizens around the same time, about seventy years ago. China has progressed much faster than India. By the early 1990s, its human development indicators (health and education) were already at levels that India has not yet reached. And, by the turn of this century, its GDP was five times larger.
The West has been hoping that when China becomes rich it will become democratic. Sometimes Indians lament that India should be less democratic so that it could grow its economy faster. When this question was posed to a senior Chinese thought leader fifteen years ago, his answer was that both China and India have the same vision: of prosperity for their citizens. To reach their vision, they must cross a turbulent stream by feeling the stones underfoot (following Deng Xiao Peng’s metaphor). However, India’s and China’s histories are different. They have entered the stream from different places. India’s government emerged from a non-violent, democratic movement; China’s with authoritarian leadership and ‘power that springs from a barrel of a gun’ (as Mao said). Now we are both mid-stream: there is no going back. We must learn to proceed faster along our own paths, he said.
Many authoritarian governments around the world have not improved the well-being of their citizens. Therefore, one must look deeper into how governments improve citizens’ well-being. This must be the purpose of all governments, whether democratic or authoritarian, as Tharman Shanmugaratnam, Senior Minister of Singapore’s government said recently. The first requirement for this is that citizens’ well-being, rather than growth of GDP, must be the objective against which all policies must be tested. The Chinese Communist Party demands that local officials address the local needs of citizens’ effectively, as does Singapore’s government. The Chinese government derives its legitimacy from citizens’ satisfaction with their well-being, not from a vote in an election, Shanmugaratnam explained.
India is blessed with diversity. Also, its constitutional structure enables its states to adopt different models of development. Thus, there is a Kerala model, a Gujarat model, and now a ‘common man’s model’ being implemented by the Aam Aadmi Party (AAP) in Delhi. Local, participative governance has been a distinction of Kerala’s model. Kerala has been well ahead of the rest of India and has matched China’s progress in improving human development indicators, in education, health, and women’s inclusion.
Delhi’s AAP government has adopted a people-centric model of government. It has established School Management Committees with parental involvement. Teacher training budgets have increased five-fold. The performance of Delhi’s government schools is not only higher than the national average, it is now exceeding the performance of private schools in Delhi. Public health expenditures have more than doubled. Mohalla clinics have been set up in poor colonies to provide accessible and affordable healthcare.
The numbers of poor colonies provided with piped water has increased by 67%, reducing the need for poor people to pay for expensive tanker-delivered water. Also, despite water price subsidies for the poor, the Delhi Jal Board’s income has increased. Electricity supply has expanded to 20% more consumers. Amongst Indian metros, Delhi provides the cheapest electricity. Yet, its distribution companies, all in the private sector, have improved their financial performance.
Growth must be bottom-up to be equitable and sustainable. India has climbed many rungs on the World Bank’s ‘ease of business’ rankings. Yet, investments to expand production ventures have not increased much. Because, consumer demand has slumped, even for basic items like packaged biscuits. The Delhi government has computed that its programs for improving the ‘ease of living’ of citizens by improving the quality and accessibility, and reducing costs, of a range of public services has increased savings per family by Rs. 4000 per month. The increase in disposable incomes has resulted in additional consumer-buying power, estimated at Rs. 24,000 crores per annum.
It seems odd that democratically elected governments in many countries, including India, who should be focused on citizens’ well-being, have become so focused on making it easy for global capital to do business in their countries. Therefore, citizens, even in the US and UK, are rising against the globalization paradigm promoted by an ‘Establishment’ of policy makers and economists in their countries. In trade-offs in trade policies, they want their governments to put jobs in their countries first, and to implement policies that increase incomes at the bottom of the pyramid rather than facilitating only further growth at the top.
Policy decisions invariably require compromises between competing interests. Gandhi’s talisman provides a good test. Think of the needs of the poorest citizens first. Reduced duties on imports benefits citizens as consumers. However, a citizen’s more fundamental need is for a good job and source of income to buy the imported goods. India desperately needs more bottom-up growth, and an employment and incomes policy to guide its industry and trade policies.