Developed Country? Develop citizens, institutions for that

Most developed countries are quite welcoming of foreigners and immigrant populations, respect human rights, and uphold the principle of equity

To mark the 75th anniversary of Independence, the Prime Minister gave a call to make India a developed nation by 2047. As the various arms of government gear up to meet this challenge, as a nation, we need to be aware of what we need to improve upon.

We need to understand what exactly is a ‘developed country’? One easy-to-recognise indicator is the relative wealth or prosperity of a country. The World Bank assigns the world’s economies to four income groups -- low, lower-middle, upper-middle, and high-income countries -- for ascertaining eligibility for their different loan programmes. The classifications are updated in July each year. High-income countries are defined as those that have a per person Gross National Income slightly above the global average level, which currently is about $13,000. India had a per capita income of about $2,200 last year, thus falling in the lower-middle income bracket. What are the prospects for India by 2047?

Post-liberalisation, Indian GDP has grown at about 7%. We are likely to continue at that level in the next 25 years, notwithstanding the global turbulence, unless something goes seriously awry. Also, India’s population growth is slowing. Since per capita income growth is a function of both GDP and population growth, India’s per capita income level could well hit the higher reaches of the middle-income category -- well inside the “upper-middle” in World Bank parlance by 2047, making us quite a prosperous nation, even if still not rich.

The Prime Minister, however, specifically differentiated ‘being merely rich’ from being ‘developed’ by explicitly stating that “being developed means more than just being rich.” Recall that China’s Deng Xiaoping had challenged China to become rich by stating that “Poverty is not socialism. To be rich is glorious.” We are aiming higher.

What differentiates a developed country from a merely rich country? The list of high-income countries in the WB list includes the Middle- Eastern oil and gas exporters which, although rich, are not ‘developed’. We thus need to have some broadly acceptable parameters of what makes a nation ‘developed’.

We would all agree that the list of developed countries would include the US, UK, Australia, Canada, New Zealand, and many EU countries, particularly the oil and gas exporters of northern Europe. The principal differentiator between the Middle-Eastern and North-European oil exporters is that the former have unsustainable economies – with their own populations often lacking the currently required skills and human capital -- while the latter, although similarly endowed, have high human capital and skill levels. We could therefore concur that one principal differentiator is the quantum of human capital a country has with the bandwidth to generate sustainable economic growth. This then leads to the question whether adequate human capital formation will occur in India if we continue with our spending on education and health -- the two principal components of human capital.

Next, all developed countries have good infrastructure, which is of two types -- ‘hard’ and ‘soft’. ‘Hard’ is usually defined as roads, ports, airports, railways, and also liveable cities. In India, there is already a strong focus on building roads, ports, railways, etc. However, there has so far been inadequate focus on urban development. Admittedly, the national and state capitals cannot claim neglect, though they are presently bursting at their seams! But with our population level touching 140 crore, we need more focused development efforts in at least 700-1,000 cities. The continuing neglect of our lower tier cities is unwise if we wish to be called a ‘developed’ nation within the next 25 years, because it is only sustainable cities and communities that, with their transactional efficiencies, can create a multifarious variety of jobs, livelihoods and occupational opportunities that sustain a stable developed society.

A country’s ‘soft’ infrastructure consists of institutions, attitudes, and culture. This aspect of the developed countries also deserves to be understood for use as a benchmarking guide. Most developed countries are quite welcoming of foreigners and immigrant populations, respect human rights, uphold the principle of equity, including gender equity, and have well-structured, institutionalised mechanisms to hold the State accountable. Alongside, they do not carry the baggage of feudalism or colonialism reflected in graduated distinctions between citizens, VIPs and VVIPs. To illustrate, while their Presidents and Monarchs may occasionally travel by car cavalcades that disrupt traffic, or jump airport queues, one never experiences a whole array of ministers, senators and judges, etc., indulging in such behaviour, unlike the daily experience of people in the developing world. In India, this is a common scene. We will thus need to benchmark ourselves against all parameters of ‘development’ and create both ‘budget-driven’ and ‘budget-independent’ lists of actions that need to be completed before we can call ourselves a ‘developed’ society.