What a waste
How India is throwing away the world’s biggest economic opportunity
IN THE past 35 years, hundreds of millions of Chinese have found productive, if often exhausting, work in the country’s growing cities. This extraordinary mobilisation of labour is the biggest economic event of the past half-century. The world has seen nothing on such scale before. Will it see anything like it again? The answer lies across the Himalayas in India.
India is an ancient civilisation but a youthful country. Its working-age population is rising by about 12m people a year, even as China’s shrank last year by 3m. Within a decade India will have the biggest potential workforce in the world.
Optimists look forward to a bumper “demographic dividend”, the result of more workers per dependant and more saving out of income. This combination accounted for perhaps a third of the East Asian miracle. India “has time on its side, literally,” boasted one prominent politician, Kamal Nath, in a 2008 book entitled “India’s Century”.
Reasons to be cheerless
But although India’s dreamers have faith in its youth, the country’s youngsters have growing reason to doubt India. The economy raised aspirations that it has subsequently failed to meet. From 2005 to 2007 it grew by about 9% a year. In 2010 it even grew faster than China (if the two economies are measured consistently). But growth has since halved. India’s impressive savings rate, the other side of the demographic dividend, has also slipped. Worryingly, a growing share of household saving is bypassing the financial system altogether, seeking refuge from inflation in gold, bricks and mortar.
The last time a Congress-led government liberalised the economy in earnest—in 1991—over 40% of today’s Indians had yet to be born. Their anxieties must seem remote to India’s elderly politicians. The average age of cabinet ministers is 65. The country has never had a prime minister born in independent India. One man who might buck that trend, Rahul Gandhi, is the son, grandson and great-grandson of former prime ministers. India is run by gerontocrats and epigones: grey hairs and groomed heirs. The apparent indifference of the police to the way young women in particular are treated has underlined the way that old India fails to protect new India.