A new book examines India’s economic progress from Nehru to Modi

Independent India’s economy is completing a 75-year-long journey. It has been a remarkable one too. Agricultural production has grown considerably and stabilised. We have not faced food shortages for over half a century. From its import-dependent status, Indian industry has transformed itself into one with a highly diversified product mix. Services produced here no longer mean just an Ayurvedic massage or the rope trick but high-end software solutions delivered onsite to the leading corporations of the world by young Indian engineers. Clearly, the economy has modernised in some significant ways.

However, heart-warming as these achievements may be, after seventy-five years India’s economic journey must be gauged by the goal that was set at its beginning. I begin this book by arguing that the goal of Indian independence, as visualised by its founders, is best reflected in Nehru’s observation that India was embarking on a journey to end “poverty and ignorance and disease, and the inequality of opportunity”.

As these outcomes may be expected to be partly dependent on the economic progress made, this is how I have narrated the story of India’s economic journey over these nearly seventy-five years. I end this book with an evaluation of the extent to which political democracy, embraced wholeheartedly in 1947 and the procedures of which have been retained, has succeeded in delivering the goal envisaged for it.

The ending of colonialism and the adoption of political democracy did usher in an important freedom to Indians. They were no longer constrained by a foreign power and, at least in principle, were free of arbitrary rule. But surely the founders of India had more in mind for their compatriots. Actually, it is possible to argue that when Nehru spoke about ending poverty and ignorance and disease and the inequality of opportunity, he had in mind the need to endow Indians with the capability that would enable them to lead a full life.

For a comparative assessment of the progress India has made towards the ending of poverty and ignorance and disease, we may turn to international data. This exercise would tell a definite story. In 2020 Indians had an income that was only one-third of the global average per capita income. Related to this, over a fifth of the population was in a state of what the World Bank terms “extreme poverty”. This is more than twice the global poverty rate.

There is also far greater undernourishment in the country and greater illiteracy. The only metric by which the Indian population is not far from the rest of the world is life expectancy. These data together imply that while Indians live almost as long as everyone else on the planet, a sizeable section of them lead a life of deprivation.

In a significant contrast, poverty, illiteracy and undernourishment have been almost eliminated in China. On every one of the indicators in the table, China does better than the world and India does worse than China. In terms of the most basic indicators of development, India has very far to go to reach the global standard.

The point of comparisons such as the one just made is to assess the gap that may exist between countries on the indicators of interest. This does involve the assumption that the benchmark used is attainable by all the countries included in the exercise.

A good reason for comparing India’s achievements with those of China is that they were more or less on the same level economically and had a similar social structure in 1947. Our comparison shows India well behind China. However, it is often asserted that comparing India and China is not valid as one of them is an authoritarian state and other is a democracy.

This is a flawed understanding of the reasons for India’s condition. Her relatively poor performance on standard human development indicators can be understood by reference to public policy. In my discussion of the mortality from Covid-19, I have pointed out that the death rate across India can be explained in terms of the varying investment in a public health system, measured by the share of GDP that is devoted to public expenditure on health.

As health is a state subject in India, the analysis is based on the expenditures of state governments. This shows some of them spending less on health than they do on the police. The state of Maharashtra stands out as one that spends less than 0.5 per cent of its GDP on a public health system. During the first wave of Covid-19 it was the site of the worst form of the health crisis in India, with overflowing hospitals, limited health personnel, shortage of ventilators and oxygen – and with the highest death rate among the states of India at that stage of the pandemic. No more evidence is needed to confirm the close relation between health outcomes and public policy.

As evidence on the connection between health outcomes and public policy appears in this book, I will here confine myself to the case of education. We can see the level of public spending on education in India and its consequences. Public expenditure on education as a share of GDP is lower in India than in every other regional grouping of the world. Commensurately, the outcomes in terms of literacy and schooling are, mostly, worse.

As spending here is lower than even that in sub-Saharan Africa, a region of the world with lower per capita income, it cannot be said that low spending on education reflects the capacity to spend. For India, it appears to have been a matter of priorities in public policy. Its consequence has been persisting illiteracy.

Interestingly, we find that public expenditure on education is much higher in the United States, a country committed to free market capitalism, while India’s Constitution declares the country a socialist republic. As seen in the table, the former socialist republics of Europe and Central Asia spend substantially more on health and education than India does, and this is reflected in the superior human development indicators in these countries.

In the case of India, a further bias can be seen within the already low level of spending on education; notice that the tertiary or university sector here receives a higher share of the public spending on education than in any other major regional grouping, higher than even North America. India spends relatively more on higher education than the rest of the world while the number of pupils per teacher in its primary schools is higher and enrolment in secondary schooling is lower by comparison.

It is difficult not to conclude that there is a class bias in this pattern of expenditure as public education is availed of only by the poorer classes. Whatever the underlying reason, it could not have been without wider-ranging consequences for the country. India’s children may not be receiving the attention they need at the time when they need it most – that is, while at school. In any case, India’s poor performance on health and education can be understood in terms of the meagre public outlays on these foundational inputs into the capability of a population. It is the nature of its public policy alone that accounts for India’s disappointing human development record.

Excerpted with permission from India’s Economy From Nehru To Modi: A Brief History, Pulapre Balakrishnan, Permanent Black in collaboration with Ashoka University.