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India: After the blackout

As India’s growth rates hit the buffers, the poor are sinking beneath a tide of seeming government indifference to their plight as politicians focus on looking after their cronies. Is it goodbye to the Asian tiger?

Early last summer I went trekking in the Hima­layas high above Dharamsala. I had just finished a book and wanted to get away from the heat of the plains and clear my head in the clean air and crystal silence of the mountains.

Within a day, I had walked beyond the last metalled road. Along with the tarmac, I left both the telephones and the electricity grid far behind me. Soon I was heading into an apparently premodern world: up in the hill villages, the harvest was being cut by hand with sickles and bound in sheaves, stacked one by one into stooks. Oxen ploughed the narrow terraces with wooden ploughs. In the villages, stone houses with wooden fretwork balconies like those in Mughal miniatures tumbled down steep mountainsides, slate roofs alternating with roof terraces where the women were drying apricots and stacking kindling for the winter. You could almost taste the woody resin-scent of the deodars and the warm peach-brandy aroma of the drying fruit. One of the goatherds who wandered past our camp the second evening said he was on his way to consult the local oracle, a shaman who channelled a Pahari deity and was celebrated for the accuracy of his prophecies. It was trekking as time travel: I seemed to have walked up into a Jack-and-the-Beanstalk world about as far as I could imagine from the noise and pollution of New Delhi.

It was therefore something of a surprise the following morning to be woken by the sound of passing schoolchildren. Looking out of the tent, I saw a party of 20 immaculately dressed children with beautifully laundered uniforms – white trousers and white shirts for the boys and white salvars for the girls – heading down the hill on their way to the new private school that had, they said, just opened up in the valley below. Not one of their parents had had any education and the older generation in the village was entirely illiterate, but this school would teach them until fifth grade. After their 13th birthdays, they said, they hoped to continue their schooling up to the age of 18 in the senior schools of Dharamsala.

Later that morning, at the top of the pass, I stopped in at the village they came from, Shakti Dehra, and fell into conversation with the head­man. Within minutes, Joginder Raj­put had whipped out a cellphone and begun talking to his younger brother who needed him to send down some bullocks for the ploughing. The government telephone network had failed to get landlines up to the village yet, he explained, but there was a good signal from one of the private cellphone companies and about half the households in the village now had mobiles. Two or three also had Tata Sky satellite television, he added. The government had not provided electricity – something that is still true in about one-third of India’s villages – but the villagers had pooled their resources and bought a diesel generator and now they could gather to watch the Indian Premier League cricket matches. On winter evenings when they were snowed in, they could pass the time with old Bollywood movies.

None of the basic services that the villagers needed – roads, sanitation, education, health, electricity or telephones – had been provided by the state, yet the villagers had found a way around most of their problems. Despite the government inaction, they were determined to educate their kids and inch forward. They were not going to allow themselves to be left behind.


How far Shakti Dehra was typical of a much wider scenario in India became clear this August after the country suffered what the international media soon christened “the largest power blackout in human history”. India’s creaking electricity grid had finally collapsed in the middle of the hot summer, due to the load of supporting hundreds of thousands of air-conditioners, and had supposedly plunged 700 million people across 21 of India’s 28 states into darkness.

In reality, however, bar worse-than-usual traffic chaos, thousands of stranded commuters and a coal mine full of trapped miners in Bengal, India carried on much as it usually did: it muddled through. It was able to do this as the government provision of power is always so inadequate that the rich all have their own generators or “inverters” – a sort of giant rechargeable battery that can keep the fans going until power returns – while most of the poor get so little electricity anyway that its disappearance was barely noticed: of the 700 million people allegedly left powerless, in reality only 320 million had electricity in the first place. The situation varies from state to state, but in some of the more backward areas the provision of power is quite amazingly hopeless. In Uttar Pradesh, the largest state of all, 125 million people – 63 per cent of households – still have no power at all.

Life went on as before; but what the power failure did was expose to international scrutiny the scandalous state of Indian infrastructure and the failure of the Indian state a full 65 years after independence to provide even the basic necessities for modern life across most of the country. It also highlighted the growing sus­picion that India’s dream of a rapid rise to the international top table might be just that – a dream. It didn’t help that the power minister insisted that “India has the world’s best and largest power grid”. When power returned, New Delhi Television aired a show entitled Powerless Superpower: Are India’s Superpower Dreams a Joke?. The Wall Street Journal pointed out that since 2006 China had added about six times more power to its grid annually than had India: an average of 84 gigawatts against 14 gigawatts for India.

To add to the growing sense of depression felt by India’s middle class, the power failure came at the time India had just produced its lamentable performance at the London Olym­pics where the nation of 1.2 billion won only four medals – two silver and four bronze. Even Grenada, with a population of 105,000, won a gold medal. India’s supposed rival China narrowly lost first place to the US, but still came home with 88 medals, 38 of them gold. For over a decade now, India has marketed itself as the coming superpower, placing itself in the same league as Europe and the United States, and hyphenated with China as the dominant force of the near future. Indian futurologists have projected that China will overtake the US in gross domestic product between 2030 and 2040, and that India will follow suit by roughly 2050, as measured in dollar terms. They have pointed out that, measuring by purchasing power parity, India has already overtaken Japan to become the third-largest economy in the world.

India’s aspirations have been endorsed not just by David Cameron, but more importantly by the United States. In 2009, Hillary Clinton told an audience in New Delhi: “I consider India not just a regional power, but a global power.” A year later when Barack Obama came to Delhi he announced his enthusiastic support for a permanent seat for India on the United Nations Security Council, declaring the US-India relationship “the defining partnership of the century ahead . . . India is not simply emerging,” he told the national parliament, “India has emerged.”

The statistics are impressive: India is said to train a million engineering graduates a year, against 100,000 in Europe and 70,000 in the US, and the country stands third in technical and scientific capacity – behind America and Japan but well ahead of China. In the course of the past decade, as the Indian economy trebled in size, India’s information technology sector alone has earned the vast sum of almost $50bn annually, mostly in export revenues. Some of the profits have been spent buying prestigious foreign businesses, as in the much-trumpeted acquisition of Jaguar and Land Rover by Tata Motors in 2008. Average incomes are projected to continue doubling every ten years. The number of cellphone users has jumped from three million in 2000 to 100 million in 2005 and 929 million by 2012. The number of television channels rose from one in 1991 to 150 by 2007 and more than 500 today. In 2006, 23 Indians appeared on the Forbes list of the world’s billionaires; last year the number had more than doubled to 55.

India’s remarkable growth figures have, however, successfully masked a far less appealing set of statistics which shows that, despite the success of India’s middle class, when you look at government delivery of basic services to the poor, India has been struggling against being hyphenated less with China than with its more desperate and impoverished neighbours – Nepal, Bangladesh, Pakistan – and by some indices has been failing to compete with the poorest in sub-Saharan Africa.

For, even at the height of India’s boom, amid talk of space missions to Mars and fleets of nuclear submarines, and as the country tripled its defence budget to become one of the world’s top ten military spenders, it has also been home to one-third of the world’s poor. A full quarter of its population – about 310 million people – live in poverty.

Sixty-nine per cent of Indians live on less than $2 a day, and roughly 35 per cent on less than $1 a day. India ranks 66th out of 88 vulnerable countries listed in the Global Hunger Index. India has the highest number of children dying anywhere in the world. Every year, 1.7 million children under the age of five die from easily preventable illnesses such as diarrhoea. Of those who do survive until the age of five, 48 per cent are stunted due to lack of nutrients: child malnutrition is sadly something for which India wins a gold medal every year, while Eritrea takes the silver.

Likewise, the most basic health measure that any government can provide for its people is to immunise very young children. In India, however, only 60 per cent of all infants are completely immunised, compared to 86 per cent in Bangladesh. Even in sub-Saharan Africa, only eight out of 25 countries have immunisation figures as bad as India’s. Its adult literacy is not quite the lowest in the world, but at 63 per cent India is lagging behind Malawi and Sudan. Adult literacy in China, by comparison, is 94 per cent.

With India adding 18 million people – more than the population of Chile – to its total every year, the country needs to grow at roughly 6-7 per cent just to keep standing still and provide jobs for the hundreds of millions of young people who will be pouring on to the labour market in the next decade. It therefore matters very much when the same year that India suffered the power failure and the Olympic debacle, it saw its annual growth rate sink from a peak of 10.4 per cent in one quarter of 2010 to 5.5 per cent, slipping from the world’s second-fastest-growing economy to ninth place.

Other economic indicators are equally alarming. Public borrowing has quadrupled in the past five years, the national deficit is growing, inflation is high and the value of the rupee plummeted by 20 per cent in the course of the summer. In a few years India has gone from what seemed to be imminent domination of the world economy, the Maharajah of the Brics, to what the emerging-markets analyst and author of Breakout Nations, Ruchir Sharma, has called merely a “50-50 bet”.


The slowing of India’s economy is part of a global malaise, outside its control. According to Sharma, almost all the main emerging markets were growing at roughly 7 per cent between 2003 and 2008; only three contracted. India did well to have an average 8.9 per cent growth rate during these boom years, but it was hardly a huge surprise. Thanks to the global recession, growth rates are down across the board: this year China’s growth will fall to 7.5 per cent (down from 11 per cent in 2007) and Brazil’s to less than 2 per cent (from 6 per cent in 2007).

“The boom wasn’t made in India,” Sharma told me over the phone from New York, “and nor is the current recession. The global tailwinds are now acting strongly against it, and that is why the Indian economy is struggling to inch forward.”

The intense disappointment now being felt across India is partly due to unrealistic ex­pectations. According to the political analyst Pratap Bhanu Mehta, president of the New Delhi-based Centre for Policy Research, “Melancholy about India’s economic prospects is a result of miscalibrated expectations.” The political columnist Swapan Dasgupta puts it more bluntly: “We are just deluding ourselves if we ever thought we were a potential competitor to China. China is a world power, in comparison to which we are merely a glorified Rotary Club.”

Yet the inept way that India has handled its succession of crises, especially the novel move of promoting the power minister Sushilkumar Shinde to home minister within 24 hours of the summer blackout, has meant that domestically the finger of blame was pointed at the inept, Congress-led United Progressive Alliance coalition government. This now-floundering coalition is headed by the 80-year-old prime minister, Manmohan Singh, the man once credited with masterminding India’s liberalisation from 1991 onwards but who of late has turned into an exposed and vulnerable target. “He is increasingly becoming a sulky and embittered old man, angry with the world,” I was told by Arun Jaitley, the leader of the opposition in India’s upper house, the Rajya Sabha. “The bubble of his reputation has been punctured and he still doesn’t seem to understand where his government has gone wrong.”

More neutral observers are equally unimpressed: “He is a very weak prime minister,” says T N Ninan, chairman of Business Standard Ltd. “He is unable to impose his will either on his coalition allies or on his own ministers. The job of a prime minister is to persuade his team to follow his vision. Manmohan seems to have lost his way.”

A succession of corruption scandals has not helped the government’s reputation. The rot set in four years ago with the first hints of a telecommunications scandal, as it emerged that one of Manmohan Singh’s coalition ministers had been corruptly underselling the 2G telecom spectrum. The flawed auction may have cost the treasury as much as $40bn. This was followed by the crooked and wasteful mismanagement of the 2010 Commonwealth Games in New Delhi, when contracts to build stadiums were awarded to government cronies who built blatantly substandard facilities at inflated prices; several national teams declared on arrival that their accommodation, filled in some cases with rubbish, human faeces and even the odd snake, was “unfit for human habitation”. Since then a new scandal has emerged after it became clear that between 2004 and 2009 state-owned coal deposits were corruptly sold to friends of ministers for well below market price and without any attempt to have a competitive auction. This time, according to the comptroller and auditor general of India, the state watchdog investigating the allocations, the hard-pressed Indian treasury may have lost another $34bn.

Only one thing seems to keep the current coalition in power: the ineptitude of the main opposition, the right-wing Bharatiya Janata Party. Tragically, the only thing saving the present set of corrupt politicians is the equally abysmal performance of their rivals.


What happens in a bustling, ambitious, entrepreneurial country such as India when the government ceases to govern? When there is no delivery of public services but people continue to yearn for development and self-improvement?

Just south of my farm outside Delhi lies the cyber-Gold Rush, shabby-glossy boom city of Gurgaon. The first time I lived in Delhi in the late 1980s, Gurgaon was a small, semi-rural Haryana market town with a single large Maruti car plant to one side; it was home to no more than 100,000 people. When I moved back to India eight years ago, from the end of my road you could just see a now much bigger Gurgaon in the distance, a mirage of gigantic cranes constructing rings of new estates full of call centres, software companies and apartment blocks.

Since then the cranes have galloped towards us at such a speed that Gurgaon now virtually abuts the edge of our house. What was farmland and a pool for water buffaloes when I moved in is now the largest mall in Asia, flanked by billboards advertising the latest iPhones and iPads. The pace of development is breathtaking to anyone used to the plodding growth rates of western Europe: the sort of construction that would take 25 years in Britain comes up here in five months. There are still no accurate figures but the city’s population has probably topped five million.

Here an increasingly wealthy middle class has precariously settled inside an aspirational bubble of fast-rising shopping malls (there are 26 up so far and more on the way), golf courses (seven at present), espresso bars, designer labels, restaurants and multiplexes. These new neighbourhoods, most of them still half built and ringed with scaffolding, are invariably given unrealistically enticing names – Beverly Hills, Windsor Court, West End Heights. “Come to Gurgaon,” read the adverts. “Come Live the Good Life.”

But as well as being a boom town with a growth rate equal to anything in China, Gurgaon is also a catastrophic mess. There is no working drainage system; pools of black sewage lie hidden behind the tower blocks advertised as millionaires’ dream homes. No one collects the rubbish and drifts of waste float through the rutted streets from the roadsides where they are dumped. There are no reliable supplies of water or electricity, barely the beginnings of a public transportation network and virtually no government housing, or health or education provision. Private electricity generators provide power, private borewells provide water, fleets of private buses provide transport and are directed by private security guards who act as traffic cops. It is, in short, a vast example of the same self-help spirit that has brought satellite television to the Himalayan fastness of Shakti Dehra, but on a monstrous, mega-city scale.

In one way, however, Gurgaon is not typical. Its failures are largely due to the failure of the state-level Haryana Urban Development Authority, which has simply been unable to keep up with the city’s hyper-growth; but in many places in India it is the different provincial governments that are managing to save their regions from the mess created by the paralysis of the floundering central government machinery. Ruchir Sharma certainly believes that “state-level governance is improving, and it is this that is saving many parts of the country from complete collapse. On my visits, the longer I stay in Delhi, the more depressed I get with the government.

“But the further I go from Delhi, the more optimistic I become. Many of the states once regarded as the most backward – Bihar, Orissa, Madhya Pradesh and Jharkhand – are the ones where governance is improving most strikingly, and where growth is now at its fastest.”

This is just as well, as strong central governments of the sort which ruled India from independence until the late 1980s are likely to be a thing of the past: since 1989, all Indian governments have been coalitions, and there has been a gradual waning of the popularity of the big national parties such as the Congress and the BJP. In their place there is a new patchwork of smaller regional parties that are perceived as being more reliable at guarding local interests. This means regional parties have become progressively more powerful and have taken over more and more of the administration of people’s lives. The best are doing very well indeed.

The state of Bihar, in the north of India, is a case in point. It was once regarded as the most dangerous place in India, with the most corrupt and violent politicians. Yet here, the government of Nitish Kumar is credited with turning the state around, building new roads, attracting large amounts of investment and transforming this former wasteland into the biggest engine of growth in eastern India.

Another state that has done much to attract investment and build infrastructure is Orissa, which like Bihar now has a 10 per cent growth rate. “Jay” Panda, one of Orissa’s most influential young MPs, is enthusiastic about how the basic infrastructure his state government has constructed has changed the lives of the people. “Building roads does far more for the poor than the kind of subsidies and handouts favoured by the Congress,” he says. “When I talk to my rural constituents they say that connecting their village to a good road network doubles their income as now they can get their produce to market when, before, half of it would rot before they could sell it.

“Cold storage and better roads – these things may not sound sexy, but they are the simple things that actually change the lives of the rural poor,” Panda says.

When even the state governments fail to step in and save those abandoned by the para­lysis in central government, the losers remain. And it is always the poorest who are most vulnerable: poverty remains India’s most pressing problem.

One of the saddest and most depressing features of India’s rise has been the way inequalities have grown almost as fast as the economy as a whole. According to a recent report by the Organisation for Economic Co-operation and Development (OECD), inequalities in earnings have doubled in India over the past two decades. In 1990 the top 10 per cent of earners made six times as much as the bottom 10 per cent. Now those in the top 10 per cent earn 12 times as much.

In many places the state doesn’t provide for the poor at all, and almost everywhere access to water, health care and sanitation remains woefully inadequate. India is the only country in the world where as much as 80 per cent of health spending is in the private sector. As the state does not provide essential medical facilities for most of its citizens, a bad health episode can finish a poor family; if the wage earner becomes ill or needs expensive treatment, the rest of his dependants will quickly sink below the poverty line.

It is a similar story with education. A World Bank survey in 2003 indicated that among primary school teachers in the government sector there was an absentee rate of 26 per cent and about a third of those in attendance were not engaged in teaching; so, nationwide, less than half of the teachers in the state sector were present and engaged in teaching. Only 16 per cent of Indians with children in government schools were satisfied with the reliability of their child’s teacher, and in some states, such as Rajasthan, 6 per cent were satisfied. The poor, in other words, are left by the government to fend for themselves.

One of the most revealing recent microstudies of Indian poverty is Behind the Beautiful Forevers: Life, Death and Hope in a Mumbai Slum by Katherine Boo, the New Yorker writer and Pulitzer prizewinner. In her book, Boo examines the lives and dreams of the people of Annawadi, a single, tiny, suffocating “sumpy plug of slum” that squats between the glossy luxury hotels around Mumbai Airport and a fetid lake of raw sewage.

The shanty town was born in 1991, the year Manmohan Singh kick-started India’s economic liberalisation, when a group of migrant Tamil labourers reclaimed the land from a snake-infested bog on the edge of the airport. Boo sets out to study what she calls “the in­frastructure of opportunity” that allows these most economically marginalised of India’s dreamers – the rag-pickers and migrant labourers who have been thrown off their land and sucked into Annawadi – to survive as Slumbai attempts to reinvent itself as a glamorous world city. Here, she writes, despite all the deprivation and injustice, and the absence of any helping hand from the state, “hope is not a fiction”. Her scavengers can succeed in flourishing against all the odds, like the fish that somehow continue to swim in the junk-rimmed, excrement-filled swamp-lake that frames the slum.

Boo’s Mumbai, like the dark streets of Dickens’s London, is a place of violent inequality and discrimination. A boy loses a hand in a shredder and stands there “with his blood-spurting stump”, apologising to the factory owner for making a mess; long-term residents find their lungs clogging up in the “spoon-it-up air”, heavy with sand and gravel blowing in from a nearby concrete plant. Most nights “the place was bedlam: people fighting, cooking, flirting, bathing, tending goats, playing cricket, waiting for water at the public tap, lining up outside the little brothel, or sleeping off the effects of the grave-digging liquor dispensed from a hut”.


Mumbai is, after all, a city where more than half of its citizenry live in makeshift housing. Yet it is also, like Gurgaon, a place of rapid expansion and unlimited opportunity, irrigated by rivers of new money. Boo’s book shows that liberalisation is indeed slowly lifting millions out of poverty, but she is equally interested in the moral questions: why don’t more of our unequal societies implode, she asks, and how do individuals keep their humanity in “undercities governed by corruption, where exhausted people vie on scant terrain for very little”? This is also a question that has preoccupied the novelist Arundhati Roy, who has become increasingly anxious about the tens of millions of Indians who have internalised the unrealistically high aspirations of “India Shining” propagan­da, first spun by the BJP in 2004.

“In order to create a large middle class a much larger underclass has been pushed down into poverty,” she told me. “You now have huge cities populated by migrant labour living on less than 20 rupees [25p] a day. Growth rates are not an indicator of well-being – during the period of highest growth our per-capita food grain intake, which was already lower than sub-Saharan Africa, actually went down. Meanwhile real power has fallen into the hands of a corporate, middle-class oligarchy.

“A poor person can’t get a hearing, never mind justice. The frustrations which will come with the failed take-off are going to create strange and terrible kinds of violence. For a decade, the skies rained cellphones, TVs and cars, and now it has stopped. A whole variety of ancient enmities could rise to the surface. I think it’s coming to a stage where India could become ungovernable.”

Yet the same rising expectations that are to Roy a cause of apocalyptic anxieties are to other observers cause for optimism. Ninan hopes that the growth of the boom years has given glimpses of possibility to millions, and as a result people will no longer accept snail-like growth rates and inept governance. The tens of thousands mobilised by the anti-corruption campaigner Anna Hazare in 2011 showed the extent of middle-class frustration and anger at government graft and failures of governance. As a result, corruption is being exposed: Freedom of Information legislation introduced in 2009 allowed the 2G scam to be documented, and it was the comptroller and auditor general of India – the government’s own anti-graft tsar – who started the investigation into the coal scam and has pursued it and the audit into the Commonwealth Games deals with such vigour.

Just as the slowdown was due to wider forces outside India’s control, so at some point the world economy will turn the corner and high growth rates in the “breakout nations” will resume. At a recent New Delhi conference there was widespread agreement that an 8 per cent growth rate is still realistically achievable in the near future. “Once world financial instability settles down, India is well placed to be able to grow again,” announced Montek Singh Ahlu­walia, the deputy chairman of India’s planning commission and a close ally of Manmohan Singh in liberalising the Indian economy. “It may not be at Chinese levels of 11 per cent, but we believe we can return to at least 8.2 per cent.” Naina Lal Kidwai, the country head for HSBC, said that her economists had reached similar conclusions. If that happens, and the growth rate is maintained until the end of the decade, the Indian economy will more than double in size to $3.5trn by 2020.


In the meantime, the hope is that the mass frustration felt across the country about the barriers blocking the progress of India’s economy will bring the pressure that is needed to make major reforms at the centre. India urgently needs to begin creating better infrastructure – its road, electricity and transport systems all need huge investment. Anti-corruption measures need to be beefed up and the Central Bureau of Investigation needs to be removed from government control so that it can independently investigate the corrupt, whoever they are, right up to the office of the prime minister – an important demand by Hazare that Manmohan Singh has so far resisted. Bids for government contracts all need to be held by competitive auctions and governments should have less discretionary power to award contracts to their friends, allies and cronies.

If this happens, things can only get better. In the longer view of history, India has only recently come to be seen as a poor country. As early as Roman times there was a dramatic drain of western gold to India; during the reign of Nero, the Pandyan kings even sent an embassy to Rome to discuss the latter’s balance of payments problems. A thousand years later it was India’s extraordinary wealth that drew in the merchant adventurers of the East India Company. They came to India not as part of some Tudor aid project, but instead as part of a desperate effort to cash in on the riches of the Mughal empire, then one of the two wealthiest polities in the world. In Milton’s Paradise Lost, the Mughal city of Lahore is revealed to Adam after the Fall as a future wonder of God’s creation: by the 17th century, Lahore had grown richer than Constantinople, and with its two million inhabitants it dwarfed London and Paris combined. It was, in terms of rapid growth, prosperity and opportunities, the Gurgaon of its day.

What eastern Europeans are to modern Brit­ain – economic migrants in search of a better life – the Jacobeans were to Mughal India. It was only after the arrival of the various colonial powers that India came to be perceived as poor. What is happening today is merely India’s slow return to its natural place at the forefront of the world economy. History is on its side.

In the long run, if India can learn to reform its institutions and clean out its political stables, it should not find it difficult to revert to its rightful and natural place as a rich country and a major power. After all, India’s people thrive wherever else they go in the world. India has the talent; and it has the resources. All it lacks is the political will.

William Dalrymple’s new book, “Return of a King: the Battle for Afghanistan (1839-42)”, will be published by Bloomsbury in February


This article first appeared in the 15 October 2012 issue of the New Statesman, India special