On August 15, 2007, when India turned 60, everyone was predictably euphoric about the country’s economic growth rate in recent years. The last couple of years have seen the economy of India surge at an unprecedented 8.5 per cent, with projections of more than 9 per cent growth rate for the ongoing financial year. At this juncture, it is essential that one looks at the danger signals that are staring in our faces, but likely to be ignored in all this ecstasy.

There are many fundamental weaknesses in our society and, therefore, in our economy. The most glaring weakness is that we have rather poor leadership. People of tainted and doubtful character abound in our legislatures, ministries and political parties. We suffer from poor quality of leadership in civil administration, in academics, and even in sports and corruption pervades all walks of life in our country.

Despite all the brouhaha about liberalisation, India continues to be governed by a bureaucracy that is archaic, obsolete, and visionless and propped up by politicians for their own ends. Politicians and bureaucrats are in a symbiotic relationship.

As a manifestation of corruption defined in a broad sense, we have continued to lack in our productivity and quality of work. Work ethic has remained poor, as always. We have a serious lack of productive and skilled persons. For our economy, our USP or unique selling proposition, so far, has been the wide disparity in the value of US Dollar and our Rupee and our large population - giving rise to cheap labour. How long can we rely on this USP? Already our famed IT industry is facing the problem of a stronger rupee and a spectre of rapidly increasing international competition.

We have relied almost exclusively on just one sector – the Information Technology sector. The IT and related ITES sectors have brought us the hard foreign exchange and have so far served as an engine of demand for related goods and infrastructure. As the IT sector grew, foreign money poured in. The manufacturing sector – lacking in productivity, quality, design skills and new technology – got a shot in the arm. So did the real estate and retail sectors, cashing in on the inflated cash flows to the personnel in the IT sector.

The imminent danger is that once the IT sector slows down, the entire economy will cool down substantially. It is a bad policy to bank on one sector to pull the economy.

The main flaw with our economy is that we have poor quality of education. Firstly, primary education is not available for a large percentage of population. Then, the education we impart upto the degree level is of just passable quality; it is largely devoid of social content, social skills and leadership qualities. There may be a few exceptions like the IITs, AIIMS or similar technical institutions. The quality of our education in humanities, commerce and pure sciences is pathetic. The less said about post-graduate education the better would it be; the quality is much worse than that of the first-degree level education.

Would there be excellence in the research and development sector if the graduate and post-graduate education system is sub-standard? Some institutions have trained their own scientists and engineers, like the institutions of the Atomic Energy Commission and ISRO. But this cannot be the solution all around. Not all industries, not all endeavours that need substantial R&D skills can internally generate these. As said earlier, globally there is a “niche” market for low priced lower quality goods and services. But, retaining a place in such a market is quite difficult.

To these woes besetting us, we may add a serious long-term malady of the poor growth in our agriculture sector. Green revolution did wonders; but that was a few decades ago. Now the same Green revolution is haunting us with increasing salinities, enhanced soil and water pollution and dropping agricultural productivities.
The growth in this sector has been at about 1 per cent, much less than the growth in our population. This is going to put a huge damper on our economy. The problems of migration to the cities and growing urban poverty are a result of this failure in our agriculture.

Our other weakness is our neglect of the environment. Land, water and air are all polluted. Forest wealth is being systematically plundered; biodiversity is being senselessly destroyed.

Our energy resources are meagre – unless we develop and harness nuclear, solar and wind energies without wasting time. But, all these require much input of technology that we neither have nor have the immediate capability of developing and putting into use, because our research and development efforts and skills in these areas are zilch.

Short term gains and growth are one thing, but long term growth needs a different scenario than what India presents at this point in time. With global warming, river Ganga will dry up soon; but with hotting international competition and weak socio-economic fundamentals, India’s economic growth is likely to dry up sooner. In the 61st year of Independence let us begin taking the necessary corrective actions rather than gloating over temporary successes.

(The writer is former Professor, Indian Institute of Management, Bangalore.)