Chuk De India: a Path to Prosperity

Chuk De India:

A Path to Prosperity

Bir Singh Gujral

&

Narinder Singh Jolly

Copyright © 2013 Bir Singh Gujral & Narinder Singh Jolly.

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ISBN: 978-1-4808-0212-4 (sc)

ISBN: 978-1-4808-0213-1 (hc)

ISBN: 978-1-4808-0214-8 (e)

Library of Congress Control Number: 2013915458

Archway Publishing rev. date: 8/30/2013

Contents

Acknowledgments

Chapter One       Chuk De India: A Path to Prosperity

Chapter Two       The Architect of Modern India

Chapter Three       A Distinctive Journey

Chapter Four       The Alleviation of License Raj

Chapter Five       Poverty to Prosperity

Chapter Six      Education

Chapter Seven       Corruption

Chapter Eight       Socio-Economic Disparities

Chapter Nine       Indo-US Nuclear Treaty

Chapter Ten       Partnership of Two Democracies

Chapter Eleven       Comparing India’s and China’s Economies

Chapter Twelve       Future Challenges

Appendix 1       Press Release: Dr. Singh State Visit to the US

Appendix 2       India-US Bilateral Relations

Appendix 3       Indo-US Nuclear Agreement (1, 2, 3 Agreement)

Appendix 4       Divergent Views CPM of India Repudiate the 123 Agreement

Bibliography

To

our beloved wives,

Manu Gujral and Billo Jolly, for

their patience and support

Acknowledgments

Our deepest thanks to the following:

Our parents and teachers, for their love and guidance

Global entrepreneurs, for spawning economic vitality

Distinguished leaders, for placing people first

Carmen Oquendo, for editing our work with tender care

Our publisher and distributor, for their cooperation and support

And above all,

the Almighty, for imparting the spirit of perpetual optimism, or Chardi Kala

Chapter One

Chuk De India: A Path to Prosperity

One can resist the invasion of an army, but one cannot resist the invasion of ideas … Greater than the tread of mighty armies is an idea whose time has come.

—Victor Hugo, The History of a Crime

The spirit of Hugo’s quote applies so aptly to the fundamental changes in India that commenced in 1991. It was time for India to shed its obsolete guiding principles, which were responsible for sluggish economic growth, and adopt progressive policies that would embark the country on an accelerated path to prosperity. The idea warranted an economic and social paradigm shift. The leaders of India prepared a roadmap for this challenging journey. They evaluated critical factors that would impact India’s economy and implemented radically reformed policies. Rajiv Gandhi, Narasimha Rao, Dr. Manmohan Singh, Atal Bihari Vajpayee, P. Chidambaram, Sonia Gandhi, and Pranab Mukherjee are among the visionaries of the paradigm shift and champions of change. Even though these individuals had different party affiliations with divergent ideologies, they all had one common vision: to transform India’s economic lethargy into vibrancy and vigor. No country can dream about bringing a fundamental change in policy without the support and participation of its citizens. The credit, therefore, goes to a billion-plus Indians for accepting and applauding the change.

Popular support for change prepared India for major fiscal reforms. The country needed a learned and able person to drive India’s economic engine and speed up the monetary growth. Dr. Manmohan Singh, an experienced and learned economist, was chosen to spearhead this drive. Dr. Singh, with a clear vision, purpose, and ambition, affirmed that his topmost priority was to deal with India’s massive social and economic problems so that chronic poverty, ignorance, and disease could be conquered in a reasonably short period.

Dr. Singh played a vital role in uplifting India, first as finance minister and then as prime minister. With the steering wheel of economy in Dr. Singh’s steady hands, India demolished the License Raj and adopted liberal and free-market-oriented reforms to engage in international trade. Along with these revolutionary reforms, India placed a strong focus on developing national infrastructure, such as the Golden Quadrilateral project championed during Prime Minister Atal Bihari Vajpayee’s administration. The country’s economic growth progressed at a rapid pace while allowing for large increases in the incomes of its people. India’s banking sector expanded its network of bank branches to make facilities available to most Indians. The banking economy of India is so robust that it remained largely unaffected by the global recession from 2007 to 2008, proving that the new path to prosperity was sustainable. India became a preferred destination for foreign direct investment (FDI) since liberalization. Industrial reforms have made the scenario more attractive, and the growing economy has made the population an asset. The whole world is lured by a consumer market of over a billion people and wants to increase its trade with India. India’s contribution to total global trade has increased to 5 percent after reforms. China, the United Kingdom, the United States, Japan, Russia, and the European Union are major trading partners of India. Both imports and exports have taken a leap by 20 percent on average.

India, with the seventh-largest land base and second-largest population, stands currently as one of the most powerful and attractive world economies and it is recognized as an emerging superpower. In 2012, the gross domestic product (GDP) of India was recorded as $1.946 trillion, making it the tenth-largest economy of the world per nominal GDP and third-largest based on purchasing power parity (PPP). India’s service industry accounts for 62.5 percent of the GDP, while the industrial sector contributes 20 percent to the GDP.

The agricultural sector, which was the backbone of the Indian economy post-independence, took a backseat in the twenty-first century and contributed only 17.5 percent to the GDP. The Indian growth rate has averaged 7 percent since 1997 and has maintained a growth rate above 5 percent even in times of global recession. Though the agricultural sector employs 52 percent of the total workforce, it contributes only 17.5 percent to the GDP. Agriculture is still carried out using traditional methods, and farmers are heavily dependent on the monsoons. The Green Revolution and the White Revolution gave a boost to this sector, but it has yet to embrace advanced technology on a large scale and lacks innovation and investment. These traditional methods produce less per hectare of cultivated land as compared to global standards. The total area being farmed is also reduced due to growing industrialization and urbanization. India is challenged to strike a balance between industrial growth and agricultural growth.

The new economic model has been built to sustain. The business-friendly environment spawned millions of new jobs, reducing poverty. India’s rural poverty declined from 56 percent in 1973 to 27 percent in 1999, and its urban poverty dropped from 49 percent to 24 percent during the same period. India’s overall poverty rate dropped from 57 percent in 1990 to 30 percent in 2012. The declining poverty line of any country is a standard measure of its path to prosperity. Although still a laggard in matching the world’s standards of prosperity, India has crossed several milestones in that direction.

The Indian leadership has had the dream of a prosperous country with education for all and a job for everyone who wanted to work since its independence. Through emphasis on education, India’s literacy rate has been elevated from 52 percent in 1991 to 75 percent in 2012. This statistic seems encouraging, but merely increasing literacy cannot accelerate prosperity, as India’s literacy rate was only 12 percent in 1947. The literacy rate has improved more than four times from 1947 to 1991, but the average rate of growth has remained flat. A modern and relevant education is a critical ingredient for commanding higher income and contributing toward a higher GDP. Of course, the literacy of India is a good measure of its progress, but a quality education is more directly related to the fundamentals of prosperity. In an era of globalization, no country could compete according to world standards without a quality education. The opening of more education centers at the levels of Institutes of Technology (IIT) and Institutes of Management (IIM), which could compete and thrive in an interactive world, are the right steps taken by India to provide quality education.

Energy is a key component of the economic renaissance and of prosperity. Energy consumption and GDP are directly related to each other. Prime Minister Dr. Singh pushed for clinching the Indo-US nuclear treaty, even taking the continuation of the coalition government at risk. India signed a landmark nuclear treaty, known as a 123 Agreement, with the United States, taking India out of nuclear isolation. The treaty further strengthened the relationship between India and the United States, the world’s two largest democracies. The treaty has moved India in the right direction toward reducing the energy-production deficit—an energy-supply crisis built up over half a century. In signing the treaty, India also boosted its global influence and strengthened its trade ties with Western economies. The United States has since become India’s largest investment partner, with a 13 percent share. Indian entrepreneurs are participating in global opportunities without being held back by the restrictions of the License Raj. Indian exports have multiplied more than eight times from $1.99 billion in 1991 to $16.44 billion in 2011.

Corruption and socioeconomic disparities are other critical elements that India needs to control aggressively. These elements are hurting the rate of growth in India and are inversely related to prosperity. India took a series of steps to check these elements. Gold smuggling has been virtually halted through reformed import-export policies. Performance measures have been introduced for the public-sector enterprises, in addition to instituting transparency and accountability to address the complaints of corruption. Introduction of a value-added tax (VAT) is another positive step. VAT is a form of consumption tax to replace sales tax. It differs from the sales tax in that the latter is collected and remitted to the government only once, at the point of purchase by the end consumer.

In a global trading environment, pervasive corruption in India is an impediment to exploiting global resources. Dr. Singh has served as a role model of integrity and honesty and as a brand ambassador to attract foreign investment, but corruption and socioeconomic disparities find their places in the roots of this country. These evils hinder the path to prosperity.

China and India have been the two fastest growing economies in the world for many years because both countries undertook revolutionary reforms. India’s growth has been the second fastest, after China. India has always followed economically China since 1991, but it should not be conceived that China’s roadmap is in any way better than India’s. Better growth in China is because of social, political, and cultural differences between these two neighbors.

With its growing economy, India has become a key actor on the global stage, and it has been rewarded with membership in the G20 and BRICS organizations. India is now playing a leading role on global issues such as climate change, nuclear nonproliferation, and food security. At a G20 meeting in Toronto, President Barack Obama applauded the vision and speech by Prime Minister Singh. Obama told reporters, Whenever the Indian Prime Minister speaks; the whole world listens to him. (PTI)

The achievements enumerated above, which were accomplished within a single generation, have sent a wave of optimism that is visible within India and the Indian diaspora. The economic renaissance that has taken root in India since 1991 is a source of joy and pride for Indians everywhere. More than three million Indians live in the United States. A vast majority of them came to the United States during the 1990s and 2000s. The explosion of information technology and a rising demand for English-speaking scientists, technicians, engineers, doctors, and other professionals attracted them. When Indian-Americans visit India, they take with them the values learned in the United States and attempt to apply them in their personal lives. They always maintain that India could achieve the same goals as those of the United States. The mindset of the Indian population needs to be further challenged. Indian-Americans are becoming a catalyst in bringing these two countries closer. The two authors of this book are part of these three million Indian-Americans, whose education, experience, and travels have enabled them to critically analyze the fundamental change that India has experienced since 1991. Bir and Narinder, although living away from their birthplace, have never stopped thinking about India. Whatever the reasons for their change of domicile, they remain emotionally attached to the land of their ancestors. They may be heard criticizing selected aspects of Indian culture and the political scene; such criticism is verbalized with a desire deeply situated in their hearts to see India do better. When international media talks about India as an emerging economy with an elevated global status instead of an impoverished country, the authors are enlivened. During their periodic visits to India, they perceive an air of optimism and a can-do attitude. They notice that the shortage of consumer commodities experienced during their teen years in India has changed into an appearance of abundance. Thus, they decided to explore their perception to determine if the transformation of India was measureable.

Dr. Bir Singh Gujral migrated to the United States with his family in 1993 as a visiting professor. He noticed a series of differences between the education standards and the life style in the United States and that of India and tried to analyze the critical factors responsible for them. In January 2003, he joined the Global MBA at the Fuqua School of Business at Duke University in North Carolina. This global MBA program requires students to travel around the world. In each country, arrangements are made to meet the finance minister or his equivalent to discuss the economy of the country versus the economy of the United States and the rest of world. While at Duke, Bir travelled to Germany, Hungary, Brazil, Argentina, China, and Thailand. He was able to learn about the various economic models used across the world. His economics professor gave him a dissertation, The Economic Model of New Economy in India and Comparing with the Economy in China. The dissertation became Dr. Gujral’s focus of study to search for what India had been doing since 1991.

Narinder Singh Jolly graduated as an architect from Delhi University in 1968. He left India on April 13, 1970, the day of Vaisakhi that usually exudes optimism and possibilities. After living four years in the cold but beautiful city of Boston, Narinder and his wife Billo decided to relocate to sub-tropical Miami in the Sunshine State of Florida. Narinder culminated his career as an architect with the completion of multi-billion dollar modernization of Miami International Airport. Because of his active participation in the American Institute of Architects (AIA) programs, Narinder was bestowed AIA Emeritus status and honored with the American Institute of Architects’ award for Governmental Leadership in Architecture. He has presented professional papers at international conferences in Cannes, Buenos Aires, Trinidad, and Miami. Narinder was appointed to the Miami-Dade County Asian American Advisory Board and served the community from 2003 to 2006. He also was an adjunct lecturer at the University of Miami and Florida International University.

In 2009 Dr. Gujral also moved to Miami from North Carolina. Destiny introduced these two Indian Americans, and their friendship flourished. What prompted them to migrate to the United States took center stage in their talks. Sharing their experiences and struggles in pursuing their American dreams, they compared notes about India of the bygone years and the India of today.

Their forensic evaluation provided evidence that India had indeed prospered and began its transformation into a flourishing democracy that could become a developed country. They perused through the reforms implemented since 1991 to identify policies that had accelerated a sluggish economy to become the world’s second fastest in growth. They examined the challenges that India must confront to gain its proper place under the sun. The authors decided to share their findings with those interested in India’s uplift. As they contemplated on what to name their book, Chuk De India: A Path to Prosperity came naturally. Chuk De is a popular Punjabi expression of exhilaration that lifts spirits with optimism and expectation—an expectation for India to prosper. The authors have attempted to capture the spirit of Indian awakening and enumerated challenges that India faces to become a developed country. The analytical observations, based on their life experiences in India and the United States, are but a yearning for improvement.

Four documents have been attached as appendices for readers wanting to examine the entire text of those references.

Bir Gujral and Narinder Jolly wish to express their sincere thanks to those whose work provided references, data, and supplementary material to complete this book. An honest effort has been made to acknowledge each person or entity in the bibliography. We regret any omissions and thank each person or entity we may have failed to recognize.

Chapter Two

The Architect of Modern India

India was left behind by many other Asian economies, including those countries that were as poor as India in the mid-twentieth century. Living standards in China and India were about the same at the time of India’s independence in 1947. By the mid-1990s, Chinese living standards had been elevated 100 percent. During these four decades,