too. Calorie intake is falling despite rising
income — poor people want to switch to
superior, tasty foods rather than get more
calories out of basic foods. Nutrition is a
bigger problem than hunger, so nutritional
education and fortification of food with
vitamins, iron, and iodine are on the
future agenda.
Skill shortage. Every sector in India
(including farming and construction)
complains today of a labor shortage, but
the biggest bottlenecks are in skilled
labor. The government school system is
deplorable, and millions leave school
functionally illiterate. Both government
and private colleges are highly unsatis-
factory in both quality and quantity.
India needs a huge improvement in
education and vocational training if it is
to fully harness its demographic divi-
dend. Voucher programs can give par-
ents the choice of sending kids to pri-
vate schools and colleges. The govern-
ment should allow for profit schools
(currently banned) as well as easy entry
of foreign universities into India.
Law, order, and justice. The police
and courts have a terrible record and
are seen as founts of corruption and
injustice. Cases drag on for decades,
and many criminals die of old age
before being convicted beyond all
appeals. India’s court case backlog
guarantees that many legal controver-
sies will never be settled at all. India has
14,576 judges as against approved and
budgeted posts of 17,641. This works
out to 10.5 judges per million popula-
tion, against the Indian Supreme
Court’s suggested norm of 50 per mil-
lion. India has less than one policeman
per thousand people against the UN
standard of 2.2.
Politicians misuse powers of arrest
and prosecution to protect wrongdoers
in their own ranks and to target opposi-
tion groups. Vast areas of rural India
have very few police, courts, or forms of
administrative redress, and poor people
complain that the few rural police are
bought off by richer landowners and
traders. This is one reason why Maoists
have come up in remote areas — they
hold courts and implement instant rough
justice, filling a void created by state
absence.
In enforcement of contract, India ranks a
shocking 182nd of 183 countries according
to the World Bank. It’s called a miracle
economy, but the real miracle is how it manages to grow fast despite such a flawed institutional base. A saving grace is that while
civil cases go on forever, Indian courts are
speedy and effective in checking arbitrary
actions by the government, and this is highly valued by all businesses including foreign
ones.
Corruption. This is the hottest political
topic in India today. After decades of
increasing criminality and corruption in
politics and the bureaucracy, public anger
over corruption has exploded. This is a
structural shift linked to the rise of an
assertive middle class, exemplified and
amplified by television channels. Politics is
widely seen as business, and politicians as
millionaires, and this is now affecting poli-
The Elephant that became a Tiger
tics where it hurts — in election results.
That is a hopeful sign.
Most surveys show that people think corruption is getting worse, with the biggest
culprits being politicians, the police, and
bureaucrats, in that order. However, it
seems possible that India is experiencing
more public outrage rather than more corruption, as suggested by the Corruption
Perception Index of Transparency
International. This ranks India 87th out of
178 countries, behind China (78th) but well
ahead of Bangladesh (134th) and Pakistan
(143rd).
India has actually improved its score
slightly over the years, from 2.7 out of 10 in
2002 to 3.3 in 2010. This may be because
corruption has been abolished by deregula-
tion in several areas (industrial licenses,
import licenses, monopolies clearance, for-
eign exchange permits), and this tends to
offset rising corruption in areas of political
allocations (natural resources, real estate,
and government contracts). However, rising
corruption in these three areas has been so
brazen as to make politicians richer and the
public angrier than ever before, stoking crit-
icism that liberalization amounts to a ploy
to enrich politicians and business cronies
alike. Not everyone recognizes the problem
Table 6: Fewer households report hunger in last 12 months
2004-05
2.5
as one of insufficient liberalization that
leaves too much space for political discre-
tion and favoritism.
Infrastructure. A major barrier to
growth in the coming years will be insuffi-
cient infrastructure, and this is connected
with corruption. Roads, power, ports, rail-
ways, and telecom are all connected
with the three top areas of corruption
— natural resources, land, and govern-
ment contracts. Private coal mining is
still not permitted save for captive
industrial consumption. No agricul-
tural land can be converted into nona-
gricultural land for industry or servic-
es without government permission,
which provides huge kickback oppor-
tunities. India needs more open, trans-
parent procedures and the abolition of
political discretion in these areas, not
just to provide cleaner government but
to accelerate infrastructure provision,
too.
Criminals in politics. In the 2009
elections, 150 of 542 seats were won by
politicians with criminal records,
including cases of murder, rape, and
theft. This was up from 128 such
politicians in the 2004 elections. The
situation is about as bad in the state
legislatures. The inability of courts to
convict people beyond appeals means
thugs can use money and muscle with
impunity. This translates into a
deplorable form of political clout, and
so the thugs are wooed by political par-
ties and join politics to stall cases they
face. This deterioration of political
morality is intimately linked with the
rise of big-ticket corruption and of the
public anger against it. Possible
reforms include independent institu-
tions (like the proposed Lokpal, an
ombudsman with teeth) to investigate
corruption by ministers and top politi-
cians. Another proposal is to decree
legal seniority for all cases against
elected legislators. Once thugs find
that getting elected expedites rather
than stalls their criminal trials, they
will lose interest in joining politics,
which will automatically become
cleaner.
Governance reforms are key today
India’s unfinished reform agenda includes
two main areas: economic reform and governance reform. Of the two, governance
reform lags far behind and is thus more
important. After all, economic reform has
already been deep enough to produce 8.5
percent growth and give India a miracle
economy status, but the same cannot be
said for governance. Indeed, the real miracle is that India has grown so fast despite so
much misgovernance.
Whereas economic reform can improve
governance in key areas, good governance is
desirable in itself and it is an essential ingredient for faster economic growth. Free competition and a level playing field for business are not possible without decent governance. Reform of the police-judicial system
will not just improve crime detection and
redress of grievances, it will also improve
contract enforcement and protection of
property rights. If land, mineral licenses,
An employee works on the wiring section of a vehicle at an auto components manufacturer in Noida, Uttar Pradesh.
Every sector in India complains of a labor shortage, but the biggest bottlenecks are in skilled labor
ADNAN ABIDI/REU TERS
