Dispelling the myth of India's Economic Growth.

There is an erroneous perception that Economic growth in India began in 1992 and the architect of the economic growth is Narasimha Rao and Manmohan Singh. This has almost become a myth, largely pedaled by media and market missionaries. If you look at the facts and figures, the economic growth in India began in the 1980s and not in 1992, as the myth goes.

In 1991/ 1992, India faced a balance of payment crisis . This was partly due to a cumulative balance of payment ( due to less foreign exchange reserve ) issues that began toward the second half of 1980s and was partly due to Kuwait war and sudden reduction in remittance. Investors took back their money and international credits dried up. The devaluation of Indian currency further deepened the balance of payment crisis. India then had to borrow from IMF and it is those IMF conditionality that forced Liberalization , Privatization and Globalization in India and in many countries . This would have happened whoever was the PM or FM at that time.

What we have seen in 1990s is a global policy shift and India was rather forced to shift and such neo-liberal shift happened across the world. This shift would have happened due to multiple compulsion of global policy shift and shifting of trade regime. This was called Washington consensus that created similar shifts all over the world leading to liberalization , privatization and globalization.
In fact the global neo-liberal economic framework imposed on many countries backfired eventually. It has increased inequalities in unprecedented way all over the world. This has also eventually led to the global economic crisis due to the unbridled rise of speculative finance capitalism that burst the bubble. Now the very same countries( US and EU) who promoted globalization of the market are too much worried with the competition from Asian countries that they are going back to the old 'protectionist' policies contrary to that they preached in the 1990s.

Multiple reasons for the economic growth of India.

To begin with ecomic growth of India began in 1980s. The average rate GDP growth​ in the decade of 1980s is an in impressive 5.8 percent . The average GDP growth from 1991 to 2004 is less than that of 1980s at an average rate of 5.6 percent. This clearly expose the myth propounded by many that the story of India's economic growth began in 1992 with Rao and Singh.( For a detailed analysis of this please read two excellent research papers of Atul Kohili in the EPW with all detailed facts and figures)

In Kerala, the significant jump in economic growth began in 1987. This economic growth was directly proportional to the increase in remittance from the Gulf. Because, the increase in remittance has been the major driver of economic growth in Kerala.

There are so many reasons why China and India and many SE Asian countries began to grow in the 1980s. All these countries achieved threshold capacities to compete globally in the 1980s.

One of the most important reasons for economic growth in the 1980s is the cumulative investment in human and infrastructure capability prior to that . This was due to cumulative investment in public education, health and infrastructure .

India simply did not have threshold level of capability to compete globally in 1950. In 1950, India did not have adequate capacity of the state, public institutions, industry and basic infrastructure to compete globally. From scratch all these things needed to be built up. Hence Nehru rightly invested in building the capacity of the state, public institutions, public sector, basic infrastructure and human capability. Such an investment is what made India a Sustainable state with capacity, a democratic polity and a growing Economy in the world. So it is not a fairy tale that began one fine morning in 1992.

It took thirty years of cumulative investment to build the overall capacity of the country. Most of the present day companies ( Reliance, TCS, Infosys, Wipro and many others) grew in the 1980s and they became globally competent that resulted in economic growth as well.
It is those IT firms emerged in the 1980s that brought high export income from the 1990s. It is those class of professionals emerged in the early 1980s that became globally competent professionals.

Almost all IT firms were created by those who studied in Indian Universities and IITs conceived drung the time of Nehru. And Sasthry, Indira Gandhi and Moraraji Desai too continued the same policy​ framework. Narayana Murthy, Nandan Nilakani and almost all those who emerged in the 1980s are a product of the vision of Nehru and continued later by other leaders..Manmohan Singh, Amartya Sen and many others are a product of this time. All those global Indians or Indians excelled in science, technology or business are the products of India. This highly competent and professional Indians did not emerge from vacuum. They emerged as there was an enabling conditions that created them,They were all benefited from the government investment in education.

I am a complete Desi product; studied in ordinary government Malayalam medium schools, colleges and Universities and a product of seventies and eighties. My parents did not spend much money for my education as it was more or less free, with very little fees But in the 1990 I have become a professional working at the international and global level. There are millions of professionals working like me sending their remittance back to India. They are benefited from India's investment in Education, health and higher education. This has also accelerated economic growth in India. So what we witness now is also due to the investment for many years prior to 1990s.

People from Kerala went to Gulf and globally as Kerala had better access to public and professional education and it has nothing to do with Rao or Manmohan. This was due to the fact people of Kerala had better access to health and education that increased the human capability and professional training and capacity. But it has also something to do with oil price boom that resulted the unprecedented economic growth of gulf countries from 1980s. And the major reason for economic growth of Kerala is that it's 1/3 of SDP come from remittance.

And we are a product of the Nehru Vision of investing in public and high quality higher education. And reducing the political economy shifts at global level to few leaders who happened to rule India in the early 1990s is reductionist and contrary to facts and figures of the Indian Economy.

The point is that India achieved this threshold capability only after thirty years of investment in education, health and infrastructure by 1980s, that created an educated and pan Indian middle class capable to compete globally.

Dismantling of the Narasimha Rao Myth.

Narasimha Rao was an average PM and he went with the flow and after him Congress lost the ground. In fact, many remembers 1992 not for the beginning economic growth, but due to the demolition of Babri Masjid that changed the Indian political landscape for ever. He was a PM of compromises and not someone who came across either as a visionary or a Statesman with courage of conviction. He presided over the degeneration of politics and the Congress Party in number of ways. He paved the way for the rise of BJP and crony capitalism in India. He ran a minority government through skillful political manipulation.He emerged from a backroom boy of Indira Gandhi to and cynical political leader. He was a largely a skillful maintance manager of the government.

Manmohan Singh has always been an excellent and non corrupt civil servant. He has always been an officer and a gentleman, As he has excellent domain knowledge and practical experience, he was chosen for FM and like a good civil servant he did a good job of borrowing money and agreeing to the conditionalities imposed by IMF as per the Washington consensus. This would have happened in any way as India did not have an option than borrowing from IMF and sign up on their conditionality .

Deapite number of political blunders ( one among them was the lateral recruitment of massless urban skilful managers in Congress), Rajiv Gandhi had a real dream. He was the youngest of the PMs in the history of India.. He had a sense of idealism and it resulted in many policy shifts in the 1980s. One of them is building the telecommunication and IT infrastructure in India that resulted in the higher economic growth in India. Rajive Gandhi's policy shifs( panchayati Raj, promoting IT, women's reservation in LSG) that resulted in many of the shifts in 1990s.

Despite my political difference, I consider Atal Bihari Vajapay as a better PM than Rao or Modi. The problem with the present PM is that he is very high on rhetoric as well as political marketing and low on substantive policy shift. In fact what the present government doing is the mere recycling of the policy frame work of UPA II with a political spin. So far he is one of the best spin master and his advantage is that he organically emerged from the ground. This also helps him to sell his rhetoric better as he knows how to pitch and spin politics on the ground. But he is yet to prove that he is a statesman or a leader of substantive policy vision. In comparison Vajpay was far better .