India’s strange addiction to Switzerland

A love story based on scenery, souvenir T-shirts, watches and hope.

Come summer vacation, we’d pack our bags and head east into the impoverished, potholed interior of India to visit relatives. We would come home to embarrassing poverty: a mud hut, misshapen windows that looked out to a courtyard full of drying cow dung and happy naked mud-streaked children riding rodeo on billy goats. We would come bearing trinkets from the city: a carved stone Ganesha, a box of gulab jamuns and posters of Switzerland.

The bent, twisted and prematurely-aged uncle we stayed with would return home at sunset from his daily toil to his half-room, half-goat shed reeking of sweat and cheap tobacco. His cheeks hollowed, his chest bare and scrawny, eyes cataract-clouded and squinting in the kerosene-oil light, he would switch on All India Radio and rest his cracked soles on a stool. He would then spend an hour gazing at the poster of a steam engine winding through Interlaken in Switzerland. He didn’t talk much but collected posters: blooming tulips in Gstaad, ruminating cows in the Canton of Uri and the clear Lake Lucerne. He’d have a mouthful of rice, ghee, an onion and a pinch of salt for dinner, stare at the posters for an hour more and finally blow the lantern out and fall asleep.

Withered, tubercular and dying, he still continues to this day - asking those returning from Delhi to bring him “Swiss” posters.

Ever since Bollywood fled the Kashmir Valley bloodshed and started cavorting on the meadows of Interlaken, Indians have been flocking to Switzerland. For many others the prospect of visiting Switzerland remains a frustrating dream.

The cable car station at the snow-strewn summit of Jungfraujoch has a kitschy ice-cave with cut-outs of Bollywood superstar Shahrukh Khan. Swiss shopkeepers and restaurant owners have developed the uncanny ability to spot Bollywood producers on the streets. Vegetarian restaurants have sprung up in tiny alpine villages where pilgrims come to sup from Chennai and Mumbai. Meanwhile, the Swiss government has launched a new tourism drive to lure second-tier city dwellers in India, who have never been abroad.

At high school in India, I knew a chap who now works at CERN in Geneva. He was dirt-poor and only owned two pairs of trousers, one of which was for school uniform. After classes he, an “untouchable”, would stay behind to sweep the school corridor and mop the latrines. He kept a folded photo of a Bollywood actress in his wallet, preening herself on a green meadow with the Eiger looming behind. His ultimate driving force in life was a desire to live and work in Switzerland. Today, somewhere out there in Geneva, there is a badly-dressed Indian boy splitting atoms with a smile on his face.

There is perhaps a deeper reason for this fascination that the average Indian professes for Switzerland. A reputation for governance, cuckoo-clock punctuality and the incredibly spotless setting are a stark contrast with the bribery and squalor back home. It is a promised land, a land like no other; an infinitely better place representing the way things should be.

Consider Britain and India: lovers and haters, master and slave, a BDSM relationship befitting ropes and shackles, colonial fetishes, Salman Rushdie and VS Naipaul, Bend It Like Beckham, Mountbatten and Kipling; every conceivable story between the two has been played out. All permutations are exhausted. It is time India looked for new pastures and new stories, and what better way to start than “lights, camera, action!”

Just think of it. Two nations dissimilar in every way coming together. Indians yearn for the manufactured languor of the Swiss, the Teutonic forests and waterfalls, the sheer otherworldliness. The Swiss love the money the Indians bring in. It is one of the greatest love stories of our times: one based on scenery, souvenir T-shirts, watches and hope.

The Indian in his rural hinterland now knows of the yodelling on the meadows, the panoramic views from the Glacier Express and the impossibly green turf on the Grindelwald. The Swiss on the other hand... are just bemused.

So unlike India in every way, and yet the object of so much affection... Photograph: Getty Images

Ritwik Deo is currently working on his first novel, about an Indian butler in Britain.

Ralph Orlowski / Getty
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Labour's investment bank plan could help fix our damaging financial system

The UK should learn from the success of a similar project in Germany.

Labour’s election manifesto has proved controversial, with the Tories and the right-wing media claiming it would take us back to the 1970s. But it contains at least one excellent idea which is certainly not out-dated and which would in fact help to address a key problem in our post-financial-crisis world.

Even setting aside the damage wrought by the 2008 crash, it’s clear the UK’s financial sector is not serving the real economy. The New Economics Foundation recently revealed that fewer than 10% of the total stock of UK bank loans are to non-financial and non-real estate businesses. The majority of their lending goes to other financial sector firms, insurance and pension funds, consumer finance, and commercial real estate.

Labour’s proposed UK Investment Bank would be a welcome antidote to a financial system that is too often damaging or simply useless. There are many successful examples of public development banks in the world’s fastest-growing economies, such as China and Korea. However, the UK can look closer to home for a suitable model: the KfW in Germany (not exactly a country known for ‘disastrous socialist policies’). With assets of over 500bn, the KfW is the world’s largest state-owned development bank when its size is measured as a percentage of GDP, and it is an institution from which the UK can draw much-needed lessons if it wishes to create a financial system more beneficial to the real economy.

Where does the money come from? Although KfW’s initial paid-up capital stems purely from public sources, it currently funds itself mainly through borrowing cheaply on the international capital markets with a federal government guarantee,  AA+ rating, and safe haven status for its public securities. With its own high ratings, the UK could easily follow this model, allowing its bank to borrow very cheaply. These activities would not add to the long-run public debt either: by definition an investment bank would invest in projects that would stimulate growth.

Aside from the obviously countercyclical role KfW played during the financial crisis, ramping up total business volume by over 40 per cent between 2007 and 2011 while UK banks became risk averse and caused a credit crunch, it also plays an important part in financing key sectors of the real economy that would otherwise have trouble accessing funds. This includes investment in research and innovation, and special programs for SMEs. Thanks to KfW, as well as an extensive network of regional and savings banks, fewer German SMEs report access to finance as a major problem than in comparator Euro area countries.

The Conservatives have talked a great deal about the need to rebalance the UK economy towards manufacturing. However, a real industrial policy needs more than just empty rhetoric: it needs finance. The KfW has historically played an important role in promoting German manufacturing, both at home and abroad, and to this day continues to provide finance to encourage the export of high-value-added German products

KfW works by on-lending most of its funds through the private banking system. This means that far from being the equivalent of a nationalisation, a public development bank can coexist without competing with the rest of the financial system. Like the UK, Germany has its share of large investment banks, some of which have caused massive instabilities. It is important to note that the establishment of a public bank would not have a negative effect on existing private banks, because in the short term, the UK will remain heavily dependent on financial services.

The main problem with Labour’s proposal is therefore not that too much of the financial sector will be publicly owned, but too little. Its proposed lending volume of £250bn over 10 years is small compared to the KfW’s total financing commitments of  750 billion over the past 10 years. Although the proposal is better than nothing, in order to be effective a public development bank will need to have sufficient scale.

Finally, although Brexit might make it marginally easier to establish the UK Investment Bank, because the country would no longer be constrained by EU State Aid Rules or the Maastricht criteria, it is worth remembering that KfW’s sizeable range of activities is perfectly legal under current EU rules.

So Europe cannot be blamed for holding back UK financial sector reform to date - the problem is simply a lack of political will in the current government. And with even key architects of 1980s financial liberalisation, such as the IMF and the economist Jeffrey Sachs, rethinking the role of the financial sector, isn’t it time Britain did the same?

Dr Natalya Naqvi is a research fellow at University College and the Blavatnik School of Government, University of Oxford, where she focuses on the role of the state and the financial sector in economic development

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