Nick Kristof Is Optimistic About India

Nick Kristof made his way to India a decade after I had spent two years driving around the the vast country with poor roads for two years. It hadn't changed much in the interim. I've been back half a dozen times since and I'll be there again in a few weeks. He's there now and his reporting on child prostitution in Kolkata-- Calcutta when each of us first visited-- has been riveting. Yesterday he tackled a far broader topic-- Is India catching up with China's development, something we've looked at before through the work of Robyn Meredith, author of the NY Times best seller The Elephant and the Dragon, the definitive book on Indian and Chinese economic development.

In yesterday's column, Slums Into Malls, Kristof is far more optimistic about India than I've ever been (and I love the place). If you give a garden variety American money manager a bunch of your cash to put to work for you across a while range of investments, inevitably some of it winds up in Indiana and Chinese companies. I've been ruthless with my money managers that I don't want any investments-- regardless of sometimes spectacular short term returns-- invested in either country under any circumstances. It's been an on-going battle for 2 decades. I've been there; my financial advisors haven't been. This twitter exchange from last week was based on a Times business section feature by Floyd Norris, The Audacity of Chinese Frauds:


A friend of mine works as an inspector for American retailers having their products manufactured in China. My friend, who is Chinese, goes from factory to factory inspecting the shoddy-- even dangerous-- work that the Chinese try to get away with. It's a constant, never-ending battle. Norris' story isn't in the realm of badly made ballbearings that could wreck a motorbike but about Chinese practices in the banking and investment field... that could wreck an economy. Norris' story is why I refuse to allow my financial advisors to invest any money in countries like China... or India. In his column yesterday, Kristof may think he sees something different happening in India. For sure India is steadily, inexorably changing, superficially-- at least for a part of the population. "China," writes Kristof, "would be transformed every year or two, while Kolkata was always the same: a decrepit city where barefoot men pulled rickshaws beside fetid canals." Embarrassing, he points out because India is democratic and China is authoritarian, and not just authoritarian-- so very admired in the American business community-- but, God forbid, Communist. And, as Kristof points out, "The Communist Party in China did a much better job fighting poverty than democratically elected Indian governments. India tolerated dissent, but it also tolerated inefficiency, disease and illiteracy."

But after my trips to India and China this year, I think all that may be changing. Despite the global economic slowdown, India’s economy is now hurtling along at more than 8 percent per year. Yep, India is now a “tiger economy.”

The technology zones around Bangalore in southern India have been booming for years, but what is changing is that the rise is gaining traction across the country-- even here in Kolkata. It’s stunning to see the new high-rise towers in Kolkata, new air-conditioned shopping malls, new infrastructure projects, new businesses.

In elections this month, the longtime Communist Party government here in the state of West Bengal was ousted, and the new chief minister is a woman and a dynamo, Mamata Banerjee. After the latest elections, she’s part of a broader trend of charismatic female politicians: one-third of India’s people are now ruled by chief ministers who are women.

The northern state of Bihar used to be even more of an embarrassment. For many years, gangsters played a major role in government there, and nothing worked. I once visited a health clinic in Bihar where employees dumped medicines in a pit in the ground, so they wouldn’t have to dispense them. I visited a school in Bihar where teachers never bothered to show up. I visited villages where gangsters raped, robbed and ruled at their pleasure. Businesses fled, kidnapping became rampant, and Bihar seemed hopeless.

Yet Bihar has, wondrously, turned around since 2005, when a reformer named Nitish Kumar took over as chief minister. There are still enormous inefficiencies, but crime has been suppressed, corruption has diminished, and the local economy is booming at double-digit rates. And if Bihar can turn around, any Indian region can.

Look, India still lags far behind China, it faces risks of Pakistani extremism, it needs further economic reforms, and it too readily accepts inefficiency as the natural order of the universe. India’s education and health system is a disgrace, especially in rural areas; Bangladesh does a much better job, despite being poorer. But change is in the air in India. Infant mortality is dropping, voters are pushing for better governance, and I think India has three advantages over China in their economic rivalry in the coming decades.

First, India’s independent news media and grass-roots civic organizations-- sectors that barely exist in China-- are becoming watchdogs against corruption and inefficiency. My hunch is that kleptocracy reached its apogee and is now waning in India, while in China it continues to get worse. I’ve written scathingly about India’s human trafficking and oppression of women, but it’s also true that civil society is addressing these issues.

Second, China’s economy may be slowed by the aging of its population, while India’s younger population will lead to a “demographic dividend” in coming decades. (Indian overpopulation is still a problem, but the average woman now has 2.6 children, and the figure is dropping.) Likewise, China already reaped the economic advantages of empowering its women, while India is just beginning to usher the female half of its population into the formal labor force.

Third, India has managed religious and ethnic tensions pretty well, aside from the disgraceful anti-Muslim pogroms in Gujarat in 2002. The Sikh challenge in the Punjab has dissipated. Muslims have been president of India three times, and are prominent in business and the movie industry; perhaps as a result, India has the world’s third-largest Muslim population (after Indonesia and Pakistan) but few jihadis. And while India has sometimes behaved brutally in Kashmir, civil society watchdogs are pressing for better behavior there. In China, by contrast, tensions with ethnic Tibetans and Uighurs are worsening.

China’s autocrats are extraordinarily competent, in a way that India’s democrats are not. But traveling in India these days is a heartening experience: my hunch is that the world’s largest democracy increasingly will be a source not of embarrassment but of pride.

What can I say? Kristof's been hitting a bong? Or maybe he's seeing a century into the future. Optimistically, that's how long it will take to bring India up to the "standards" of China. Four years ago after spending some time in Delhi again I wrote that "wherever I went on the streets there were always clusters of small, very dark, very skinny people. They're everywhere, but no one seems to notice. There are hundreds of millions of them-- more of them in India than the entire population of the United States! And no one seems to notice them. They don't own anything but the rags on their backs and I've never been able to figure out how they exist. The begging can't possibly support them, even if every tourist and every trendy call center-walla gives (far from the case; no one notices them). I didn't cry the whole time I was in India. It was simply too horrible to fathom. Families laying in the filth and dust with stray dogs night after night, wrapped in their rags, bundled around a little fire burning garbage. Delhi's cold. I've been seeing it since I started coming to India in 1969. It's just unfathomable. Has anyone cared about these millions and millions of people since a right-wing religious fanatic assassinated their champion, Mahatma Gandhi 60 years ago?" And walking right through their clusters were taller, well-fed, often lighter-skinned, well-dressed modern men talking on cell phones... not noticing.