An audacious new book about a “precocious” country

When he was the Indian government’s chief economist from 2014 to 2018, Arvind Subramanian made a surprising discovery. He drew an unexpectedly large audience for his annual “Economic Survey”, written on the eve of each year’s budget. As well as dry updates on tax revenues, inflation and grain production, his surveys included striking charts, provocative arguments and rhetorical flourishes. In 2016 he published a chart, bold in its simplicity, showing that democracy and development tended to go hand in hand. The big exceptions were China (too rich, given its lack of democracy) and India (not rich enough, given its “vibrant political institutions”). The chart indicated two ways in which India might converge to the global mean: fast growth or institutional decline.

Encouraged by the success of his surveys, Mr Subramanian has adopted the same approach (charts, arguments, catchy phrases) in an ambitious book, written with Devesh Kapur of Johns Hopkins University. It re-examines India’s growth record, social divisions and state apparatus over the past 75 years. “A Sixth of Humanity” is not short, spanning over 600 pages. But plenty of books about America require as many pages to cover a quarter as many people.

The authors’ accomplishment is all the more remarkable given India’s forbidding complexity. The sixth of humanity within its compass is not much easier to summarise than any other sixth scattered across national borders elsewhere. India has 325 languages, according to one study, and no fewer than 24 scripts.

India’s growth trajectory, like its population, is a bit of a jumble. It has pursued what the authors call a “precocious” model of development, doing things in a peculiar order. Its democracy outpaced its development and its skilled service industries outran its labour-intensive manufacturing. It prioritised universities before schools, hospitals before clinics, contraception before sanitation. The state ventured widely (and wastefully) into business before deigning to roll out much infrastructure. It has also dispensed cash transfers to citizens’ bank accounts before providing public amenities, like clean air or good schools for all.

The state machinery that holds India together is surprisingly small. The country has only half as many coppers per person as England and Wales. Its civil engineers were slow to bind the nation with roads, tunnels and bridges. London has over 50 ways to cross its defining river; Kolkata just five. The Indian state has also failed to properly title or tax the land under its writ. There was no full land survey in Bihar, one of India’s biggest states, from 1911 until the 2020s. By then few officers could read the nearly extinct script in which many old documents were written.

Land disputes have declined in recent years, the book notes. Economic growth has given the state more money to spend on compensating owners. The public investment enabled by less tortuous land purchases has in turn helped underpin growth.

But the “deep mystery” of Indian development is why industrialisation has not kept up. India’s manufacturing plants remain too small—“midgets making widgets”, as the authors put it—and employ too few of the country’s unskilled labourers. India has failed to emulate the tried-and-tested East Asian model of growth.

Instead it has muddled through with a miscellany of economic models. Progress in manufacturing has been largely confined to three coastal states—Gujarat, Maharashtra and Tamil Nadu—as well as Haryana, which benefited from an early joint venture with Suzuki, a Japanese vehicle-maker. There are also two examples of success via alternative routes. The unique, southern state of Kerala exported its people to the Gulf, while Bangalore, Hyderabad and other cities exported their brains through IT-enabled services. The successful parts of India, the book points out, defy Tolstoy’s quip about families: they are each happy in their own way.

Alongside these patterns of success are three “models” of failure. The populous, landlocked states of Bihar and Uttar Pradesh seem stuck in a “low-income trap”, reliant on fiscal transfers from elsewhere in India that blunt their internal incentive to reform. West Bengal, despite its scientific institutions and strong industrial base, was throttled by 34 years of uninterrupted communist rule. Between 2009 and 2013, the state accounted for 57% of all India’s man-days lost to labour strife.

Another reversal of fortune was visited on Punjab. It benefited more than any other state from the “green revolution” in agriculture. But the heavy farm subsidies it receives have conjured up a “resource curse”. Infusions of outside cash have bid up the price of land and labour and trapped the state into a water-intensive agricultural model that drains both aquifers and the exchequer.

The growing gap between these different Indias could strain the country’s fiscal federalism, the book argues. Its more successful states already hand over about 2.6% of their GDP to their less successful neighbours, including the Hindi-speaking heartland. If India’s next census helps its populous, poorer states gain more political clout, they may place even greater demands on the budget. Combined with the heartland’s increasingly chauvinistic, divisive politics, it is a recipe for “toxic” inter-state resentment.

In his survey ten years ago, Mr Subramanian seemed confident that India’s exceptionalism would disappear in a benign fashion. The country would rapidly converge to a GDP per person to befit its vibrant institutions. But its development has been slower than he hoped and its democracy less secure. The “consuming furies of nativism and illiberalism” mar its politics just as they torment the rest of the world. India now seems likely to combine growth with a dash of institutional decline. It will become less of a global outlier via a move up in development but down in democracy. India’s path out of precocity into normality will probably not be straight. ■