Winners must learn to relish change with the same enthusiasm and energy that they have resisted it in the past.

– Tom Peters

Accelerating rural development

The biggest challenge facing India is the gap between its rich and poor. Until innovation is a solution on the national agenda to fix anomalies in development, it will not attract due interest, focus and recognition. The innovation agenda thus needs to be tied to the nation’s development agenda.

The bureaucrats I interviewed for this book assured me that there has been an awakening within political ranks that a national development agenda needs to supersede short-term political interests. That awakening is not being driven from politicians but rather by the electorate, and politicians are responding to that trend. The 2004 Indian elections proved just that. The Indian electorate ousted the Bharatiya Janata Party,³ which had taken a lopsided view of India’s economic prosperity and largely ignored the rural masses. They did not consider rural India to be an asset. The biggest advantage for India, and what will become its ultimate strength, is that the Indian electorate is now not only clear on what they want but are expressing their resentment for the status quo through ballots. For a long time, they were told what their needs were.

One of India’s other biggest challenges is rapid urbanisation and rural migration. Unless rural employment and wealth-generation schemes are put in place, the influx into already congested cities will continue, to the detriment of further development. In a country with over 1 billion people, prosperity is soon weighed down by the massive under-privileged population. For 30–40 per cent of the population, the economic impacts of reform remain at a trickle. These agriculture-dependent masses, with limited access to education, technology or the free market, often depend on the monsoon rains for their livelihood. With every failed crop, rural migration is choking India’s cities. The only way to ease the pressure on India’s crumbling urban infrastructure is to address rural GDP.

The other lesson learned since 1991 is that the few who have benefited from financial reform and liberalisation of India’s domestic markets are not from its villages. The next development step must be a rural one. India cannot wait for a rude awakening of the magnitude of the balance of payment crisis of the late 1980s. India shouldn’t have to wait for its cities, with their crumbling roads and infrastructure, to be flooded with abused and disadvantaged villagers. The challenge will then not only be to provide the migrants with employment, sanitation, health and education, but to tackle crime, terrorism and insurgency as have been witnessed in rural Andra Pradesh and Karnataka with the Naxal movement, or the terrorism and drug-related crime as portrayed by Suketu Mehta for Mumbai in Maximum City: Bombay Lost and Found.

Balancing the portfolio

India’s diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries and a multitude of services. Today, services are the major source of economic growth, accounting for more than half of India’s output with less than one-third of its labour force. Slightly more than half of the work force is in agriculture, leading the government to envisage a rural economic development programme that includes creating basic infrastructure to improve the lives of the rural poor and boost economic performance. The government has reduced controls on foreign trade and investment, which is good. Higher limits on foreign direct investment have been permitted in a few key sectors, such as telecommunications. However, tariff spikes in sensitive categories, including agriculture, and incremental progress on economic reforms still hinder foreign access to India’s vast and growing market (some for good reason). Privatisation of government-owned industries remains stalled and continues to generate heat in political debates.

As with any developing country, certain successful sectors are thronged by wannabes, leaving other sectors neglected almost to the point of concern. Balancing the development portfolio has become a necessity. It is here that innovation tied to a portfolio of developmental areas can play a crucial role. Recognising the need for innovation in solving native, inherent and systemic problems unique to India is a starting point. Some of the crucial questions in this regard are addressed in the next two chapters.

The other challenge India faces is its chaotic growth. This is a good problem to have but as Newsweek’s Zakaria points out India is a quarrelsome democracy that keeps moving backward, forward and sideways. For every five steps it takes forward, it goes back three steps due to a lack of political will. The good thing is that two steps forward are retained. Some of the steps that have been taken are extraordinary but there need to be many more. For example, the National Rural Employment Guarantee Act (NREGA) and the National Rural Health Mission (NRHM) are classic examples of good initiatives vying for mainstream status.

Examples of rural engagement

Bureaucrats like Rita Teaotia can see the change as a slow but tangible process. Although not part of the original team that devised the NRHM, she perceives that although there was no clarity on how to execute many of the life-changing initiatives for the rural population, there is now a willingness to fix the fundamentals – health, education and poverty – that would impact the rural poor in a big way.

When it was started, the National Advisory Council⁴ was set up to interface with civil society and spawn initiatives to bring about grassroots changes. It had a core group and a policy group comprising academics, NGOs, researchers, and social action and advocacy groups that some critics labelled woolly-headed. But it did bring about some revolutionary initiatives such as the Right to Information Act, the National Rural Employment Guarantee Scheme and several other rural health and education initiatives. The National Advisory Council, whose term ended in 2008, led to at least two key initiatives, namely the National Rural Employment Guarantee Scheme (NREGS) and the NRHM.

The NREGS is a well-designed programme that guarantees employment of 100 days to the poorest villagers. Passed in Parliament on 23 August 2004 and authorised by the President of India on 5 September 2005, the NREGA has been hailed as a major initiative in the government’s commitment to providing an economic safety net to India’s rural poor. NREGA is thought of as the policy to boost rural income, stabilise agricultural production and reduce the population pressure on urban areas and it appears to be working. More than 50 million families in rural India are already part of the scheme, which is designed to work on a one person, one job card and one bank account model. The right to work has enhanced bargaining power, and raised minimum wages. Enrolment by women has increased from 40 per cent in the first year of implementation to 50 per cent at present. It provides an important entry point for participation in the economy and society and formalisation of a work culture in rural settings. The government is enhancing the implementation of NREGS by linking it to the National ID project, which aims to give workers increased mobility and sense of identity.

Among the provisions of the Act are the following. (1) Every household in rural India has the right to at least 100 days of guaranteed employment every year for at least one adult member, with casual manual labour at the rate of Rs 60 per day. (2) Only productive works shall be taken up under the programme. The State Council shall prepare a list of permissible works as well as a list of ‘preferred works’. The identification of preferred works shall be based on the economic, social and environmental benefits of different types of works, their contribution to social equity, and their ability to create permanent assets. (3) The programme may also provide, as far as possible, for the training and upgrading of the skills of unskilled labourers. (4) Wages may be paid in cash or in kind or both, taking into account the guidelines and recommendations of the State Council on this matter as far as possible. (5) Employment will be provided within a radius of 5 km of the village where the applicant resides at the time of applying. In cases where employment is provided outside such a radius, it must be provided within the block (a level of local government in India where population exceeds 2 million, under the panchayati raj system) and transport allowances and daily living allowances shall be paid in accordance with Programme Rules. (6) In cases where at least 20 women are employed on a worksite, a provision shall be made for one of them to be deputed to look after any children under the age of six who may be brought to the worksite, if the need arises. The person deputed for child-minding shall be paid the statutory minimum wage. (7) A proportion of the wages, not exceeding 5 per cent, may be deducted as a contribution to welfare schemes organised for the benefit of labourers employed under the programme, such as health insurance, accident insurance, survivor benefits, maternity benefits and social security schemes.

NREGA ensures that village administration must provide work, usually manual unskilled labour, that leads to creation of assets for the village such as roads, culverts or check-dams. To stem corruption, it also ensures that there are job cards for every eligible labourer and wages cannot be paid in cash but paid into a bank account or a post office account. There is a system of social audit where the administration must present the work to the villagers in every gram sabha (local governments at the village or small town level). There is a reporting system being put in place that is transparent and this system is computerised and online. NREGS is slowly taking roots. It may represent the silver bullet for kicking off wealth creation measures for the masses that would otherwise depend on seasonal agriculture.

Lessons from NREGS

Tracking the implementation, opportunities and challenges of implementing a programme such as NREGS demonstrates the complexity, challenges and issues India faces today at the rural level. Disha is an organisation based in Gujarat that was started with the aim of altering societal power relationships in favour of the poor to produce social change. In 2007 it ran a survey⁵ covering five districts in Gujarat, two in Madhya Pradesh, two in Rajastan and one in Maharastra. These were the states that were chosen for the first stage of NREGA implementation. The objective of the survey was to look at NREGA’s implications for the rural economy, exploring if the bargaining power of the rural workforce had changed. It also looked at the effectiveness in implementation of the scheme.

On the process side, a common problem cited in the survey was a lack of the right information. In some cases no job card was made or temporary job cards were issued. There were also issues with the job cards. Some didn’t have photographs or the correct names. Those who had job cards received an average period of employment of about 39 days instead of the statutory 100 days. In the three districts implementation of the scheme has been poor. Only 5, 11 and 20 days of employment were provided in Madhya Pradesh, Rajastan and Maharastra, respectively. The highest recorded period was 67 days in Udaipur. The types of jobs included creation of new ponds or deepening or cleaning of existing ones, canal maintenance and mud-work (digging and carrying). Road construction and maintenance and work related to check-dams formed the majority of the cases. The respondents indicated that there is a clear emphasis on creation of assets which form a part of the basic infrastructure for the community.

In other states such as Andhra Pradesh, there have been delays of up to 3 months in payments to workers. Underpayment was also reported. Interestingly, as funds can be pulled from NREGA budgets only on the basis of job cards and jobs dispensed, corruption has focused on the creation of job cards and the allocation of jobs.

Specifically, underestimating the number of jobs executed by those overseeing projects have come to light. There have been many instances of local landlords, politicians and middle men teaming up to misrepresent jobs executed, showing favouritism, and in some cases even employing labourers in their own private ventures. Many advocates of NREGA believe that it empowers job aspirants to demand transparency in the process. This they believe is the power of democracy. Such ideals formed a part of the design of the programme, but implementation has largely been dependent on the literacy of the job applicant and his or her ability to assert their rights.

Much of the success of the programme has relied on the interests and motivation of the sarpanch⁶ or the village heads. First, he is not involved in the payment of wages and he has no access to NREGA funds. Funds can be taken from the system only on the basis of a job card. This is very different from existing practices and is taking a long time for elected village heads to come to terms with. NREGA is therefore a powerful idea, bypassing every form of government and bureaucracy, going directly to the people perhaps for the first time in Indian history, and it is enshrined in an act. If work is demanded, it must be given. If it is not given, unemployment allowances must be paid instead. Receipts must be issued for demand for work and there are independent auditors who report on malpractices. In some states, NREGA has begun to raise the minimum wages. Schemes like NREGA will coach younger politicians to make a vital shift from a focus on monetary benefits and power wagering to a political career that is based on sustained development agendas.

Even with such a well-design programme, new challenges emerge. For example, what if people are not aware of their rights? What if the auditors are in cahoots with the administrators in the transactions? What if certain privileged castes and classes are corrupt? What happens if there is a lack of political will in funding development projects?

The implementation of NREGA showed that although it was designed to cut out middle men and provide direct access to the last leg of the governance chain, the process did become muddied. In the vast majority of cases the selection of workers is done by the Panchayat (22 per cent), followed by the talati (20 per cent), contractor (17 per cent) and sarpanch (13 per cent). What is clear is that NREGA prohibits the use of contractors. The Disha survey, however, found that they were still used. Despite job cards being exclusively issued for the purpose, selection was on the basis of age (64 per cent), ration cards (24 per cent) and job cards (12 per cent). This indicates that some authorities insisted on multiple documents for verifying the legitimacy of the applications.

Paradox in the trenches

India has several issues currently affecting health agenda initiatives. First, the size and scale of the initiative required to create the right level of impact are vast. Secondly, reaching the right people is a huge task as it is easy to get lost as one gets into the heart of India – its 650,000 villages. Thirdly, there is lack of an ecosystem to support initiatives. For example, villages will need medically trained people. Where will they come from? Who will train them? Finally, the terrain is complex, the state of development is variable and there are infrastructural constraints. For example, there are issues related to access to roads and electricity to store vaccines, and the level of literacy and education to run campaigns vary widely.

The NRHM differed from all other initiatives the government has rolled out. The goal of the mission was simple: to improve the availability of and access to quality health care, especially for those residing in rural areas, the poor, women and children. Rita explains that this was an untied programme. India had previously designed health programmes with strict strings tied to every aspect of its implementation. Everything was pre-structured and pre-planned. There were allocations of funds and resources for medicines, doctors, healthcare workers and strict measures on how these should be spent. The programmes were designed far removed from where they would actually be implemented and so it failed. There was no flexibility or autonomy at the last mile.

When you reach the last-mile administration of the healthcare system there are several local challenges that bureaucrats designing the programme are unaware of. First, you don’t get the same level of trained administrators in all villages. A village is lucky if it has a doctor, and usually the same person – doctor, nurse, midwife or compounder (someone who dispenses medicines locally) – administers the health care and also runs the health-dispensing unit.

The NRHM, according to Rita, is not a vertically integrated siloed system but an umbrella under which all health programmes fall. The greatest advantage for something like this is that the people on the ground have flexibility to buy medicines at the local level that may be needed for local circumstances. There is a certain authority and empowerment offered at the point of application. There is trust and some untied cash available at each level, starting from the village, in such a way that the village health and sanitation committee gets Rs 10,000 untied every year for discretionary spend. The subcentre receives Rs 25,000 untied, and incrementally larger amounts of untied funds or maintenance funds are provided at the panchayat, district level, etc.

With this model, there is empowerment and there is a local mechanism to administer health care. But the point is that many of these initiatives take an awful lot of time to put in place and for positive reinforcement of the change to take place. In the initial years of the programme, money that was provided for equipment, such as weighing scales for babies, was unspent. Part of the reason, it was found, was fear of breaking an old government procedure even when there was a new process in place. Others felt maintenance and providing for extraordinary services was not part of their job. NRHM is slowly gaining ground. Bureaucrats believe that change will happen eventually but the administration has to continue backing the scheme even if some of the funds are misspent because empowering healthcare workers is the right thing to do.

The other role NRHM plays is in providing funds and a process for hiring services needed at the grassroots level. It is an open secret that one of the greatest public sector weaknesses is with recruitment. The coverage and penetration of these initiatives require people at the last mile. There is a perennial shortage of doctors and nurses. And the hiring process has been so complex for so long that even trained people cannot be inducted into the system in a timely manner. NHRM allows administrators to circumvent normal recruitment through an ad-hoc process. Many local administrations are now able to hire thousands of nurses, and conduct walk-in interviews for doctors to man NHRM health centres.

The hiring process followed is otherwise via the state public service commissions. These commissions source thousands of eligible candidates for examination from the public, the candidates are graded and interviews are conducted, but it can take up to three years for them to be available at health centres. The state staff selection boards are themselves understaffed.

It is the same people on these boards who are responsible for recruiting for education, health, the public works department and so on.

Government administrators have been unable to eliminate these bottlenecks for years. The personnel and human resource departments in the states have been so bound by rules and conservative that even ad-hoc programmes have to comply. For example, those hired through ad-hoc systems need to meet the same requirements stipulated in a public service commission process; they are hired on the same salary scales and once the UPSC⁷ exam takes place each of the employees must clear the exams.

Challenges of a noisy democracy

Rural India faces other challenges such as wealthy landlords and class lords keeping the rural poor isolated from reform and developmental initiatives for their own self interest. Far removed from the cosmopolitan outlook of India’s urbanites, class, caste and tribal wars are not uncommon even for something as generic as water. Wealthier upper caste landlords can trigger mass migration from villages. A failed crop could mean insurmountable debts for poorer farmers who lease land from wealthier counterparts banking on something as unpredictable as the rain. Suicides amongst farmers are not uncommon.

In essence, democracy in India often does not mean the will of the majority but the will of organised minorities – landowners, the ruling classes (and castes), wealthy farmers, government unions and local thugs. (At one time nearly one-fifth of the members of the Indian Parliament had been accused of crimes, including embezzlement, rape and murder.) These groups are usually richer than most of their countrymen, and they plunder the state’s coffers to stay that way. It is ironic, for example, that India’s moderate Communist Party does not campaign for growth to lift the very poor but rather works to maintain the relatively privileged conditions of unionised workers. Extreme communism on the other hand has taken the form of agitation and violence against the ruling class and is posing a threat to national security and civil unrest. As these problems are ongoing, the interests of the great majority – of those 750 million who earn less than $5 a day – often fall through the cracks. Democracy also has its own way of rebalancing irrespective of how votes swing. The wave of Hindu nationalism that swept through the country in the 1990s is now on the wane at least publicly, and a secular government is in power. But the use of political and public infrastructure for personal gain is rampant in Indian society.

So the issues are complex. The solutions lie within the system, within democratic institutions that have relatively greater influence on the masses, be they local, state or central government. I believe that there is a change amongst policy-makers and people in these areas.

By end of the 10th five-year plan, the bedrock of the national economy was founded on reform, liberalisation and privatisation. Economic reform has come to stay as an irreversible national agenda. India’s imminent challenge from thereon stresses the need for undivided focus on rural development, alleviating poverty and reversing rural migration while focusing on national growth. The challenge is to make these fundamental to the political process, transcending partisan politics. Given that raising the profile of deregulation and liberalisation within the political system as a federal future-defining agenda for India was not a simple task, focusing on improving rural GDP is not going to be any easier. In the multi-party democracy, a few political careers will have to be sacrificed. A few political parties will bear the scars.

Many people laud the Chinese model, where foreign direct investment into Shanghai, Beijing or Guangzhou in turn funded investments into rural China where the government literally built walls to prevent rural migration during the years of transition. This is not impossible in a democracy but difficult to sustain in India. China succeeded in reducing poverty by half using a stick rather than a carrot. Author of China Inc, Ted Fishman⁸ points out that Chinese trade barriers come and go without warning. Fishman says that the Chinese government is constantly rebalancing domestic farm taxes and subsidies while also trying to give Chinese farmers access to world markets when prices are good and protection from market forces when they are unfavourable.

For a long time in India the development agenda had eluded the political attention despite the fact that more than 70 per cent of the voters are rural and poor. This seems to be changing. The most recent elections of May 2009 showed that the Indian electorate seem to be getting into bed with the developmental need much more than they did 10 years ago. Thanks in part to showcases of development India has achieved in the last 20 years, sections of the population have witnessed what economic development can bring. Be it via a software engineer from Guntur returning from an overseas assignment or a villager taking a trek through Bangalore’s Forum mall or the migrant worker in Noida or Powai engaged in the construction of residential and commercial extravagance set in pristine landscapes, they now see the difference of that otherwise widening gulf.

Finally, the rural poor are beginning to exercise their greatest power: the power to vote, which has been a birth right of every Indian. Since 1993, democracy has been broadened to give villages greater voice in their affairs. Most importantly, village councils now must reserve 33 per cent of their seats for women. As a result there are 1 million elected women in villages across the country. They will now have a platform from which to demand better education and health care. If the rural poor in India can vote a pro-development UPA (United Progressive Alliance)-led coalition into power in 2004, and give the UPA government a clearer mandate in 2009, they clearly are in control and can change their destiny – a lever many of the world’s poor do not have.

However, given over 240 years⁹ of gross neglect, one of the issues of being a democracy and the short-lived nature of each government tenure is that the complexity of the issues have often left the governments in power wondering where to begin. Because of the tenure of political careers within India’s democracy, a focus on developmental issues that transcend beyond the next election is often bypassed. In the end, shortterm, often divisive agendas appear with no sustained interest for incremental or long-term development. This needs to change.

India’s chaotic and often corrupt democratic system is often derided for its incapacity to provide leaders for the 21st century. The very same system has yielded as its head of government, twice in a row, a man of immense intelligence, unimpeachable integrity and deep experience. Manmohan Singh, an Oxford PhD from the minority Sikh community, has already run the country’s central bank, planning commission and the finance ministry that oversaw economic reform in 1991. His breadth and depth of experience and decency are unmatched by any Indian Prime Minister since Nehru. Many Indians believe that this has raised the bar for politicians, too. The combination of reform with sound leadership proved to be the magic ingredient for India’s future growth. At one point recently, the Indian leadership team displayed democracy at its best when it had a Muslim President, a Sikh Prime Minister and an Italian-born leader of the ruling party. Currently, India has a woman President.

Manmohan Singh, who led a fragile coalition until his second term in office in 2009, is not himself a powerful politician and has depended on Sonia Gandhi and the Gandhi legacy. But his quiet determination to keep moving forward – on economics, politics and foreign policy – has been underestimated. Sonia Gandhi herself is an example. In an act of great wisdom, restraint and perhaps elusive statesmanship, Sonia Gandhi, who led a fragmented coalition to victory in the 2009 polls, chose to appoint Singh, a brilliant economist and thinker, as the Prime Minister rather than take the job herself – unprecedented in modern Indian politics. (Culturally, Indian politicians love power without accountability.) Singh has also surrounded himself with a team of some of India’s most well read and brilliant bureaucrats, economists and technocrats with varying political experience. His economic ministers are all reformers. Some of his new cabinet ministers are India’s crème de la crème of highly educated and experienced politicians. They work within political limits, but and are committed to economic reform. At the time of writing, Infosys co-founder, and co- chairman, Nandan Nilekani was drafted into Singh’s team as an officer of Cabinet rank, to lead an ambitious multimillion dollar national identity project, where every citizen will have a unique biometric-based ID implemented on a network of smart technologies.

The Indian state has been a resounding success on one front. India’s democracy is a wonder. For a developing country, it has sustained democratic government for almost 60 years. And this is surely one of the country’s greatest strengths as compared with many other developing countries. ‘What will India look like politically in 40 years?’ India will be a democracy, probably with a coalition government. With this comes populism, pandering and delays. But it also makes for long-term stability.

Rural development and the political process

Bureaucrats engaged in rural development advise me never to underestimate the importance of the right political process. Political power works wonders in rural empowerment when engaged appropriately. The short-lived tenure of a politician is both a blessing and a bane. A blessing in that every politician in a constituency can be made accountable if the electorate so desires. Pressure from elected representatives who raise questions in the Vidyan Sabha,¹⁰ some of them planted by civil servants, does work wonders. It can become a bane as it can encourage cronyism, suppressing the role of the electorate in an elected government.

Cynicism of the political process is not uncommon in democracies. Democracy is a messy affair and India has many levels of it. It cannot be a fast system and it cannot be uniform. Solutions therefore have to come from innovative ways of working within the system. Change can be brought about with political will. Unlike China, power is in the hands of the people, and if they use this as they did in the 2009 elections, India will progress. But Rita tells me getting the people to use the political system to do the right things in the long-term interest of the country remains a challenge.

In India, development is from the bottom up, with society pushing the state. Built during the British Raj, India’s administrative ranks massively expanded in its socialist era, filling up with bureaucrats in love with their powers and privileges. For example, districts even today are administered by ‘district collectors’, the very term representative of tax collectors of the British regime. They are joined by politicians who enjoy the power of patronage. And there are some journalists and intellectuals who still hold on to some romantic idea of third-world socialism. There are many in India’s ruling class who remain uncomfortable with the idea of a modern and open society built on economic freedom, because economic freedom and independence liberates the under-privileged masses.

Rita states that unless the civil servants work with politicians bureaucrats will not be able to deliver. It is also important for civil servants to be professional, update their skills, knowledge and quality of professional advice, and have genuine integrity. Those in the civil service come from the same society, some are good, some are bad and some are mediocre. Unless the process ensures that the right people for right job can be picked there is very little the bureaucracy can do to aid development.

The state fills a vital role. For example, within 100 days of the new government being signed in, reform agendas in almost every sector were demanded and rolled out. Two significant appointments of cabinet rank were made – one to spearhead innovation, infrastructure and knowledge and the other to spearhead the prestigious $2 billion national ID project. This is the very same governmental machinery that initiated the move toward free enterprise. Consider India’s private companies. They flourish because of a well-regulated stock market and financial system that has transparency, adjudication and enforcement. These are all government functions. Or consider the booming telecommunications industry, which was created by intelligent government deregulation and re-regulation. Or the Indian institutes of technology – among the world’s best – all government-run or -funded. But that’s just a start. The private sector cannot solve India’s infrastructural issues, its AIDS crisis, its rural education shortfalls or its environmental problems. If India’s governance does not improve, the country will never achieve its full potential.

India also requires platforms for its people to find their own solutions. Panchayati Raj Institutions – the grassroots units of self-government – were designed for socio-economic transformation in rural India. Effective and meaningful functioning of these bodies depend on the active involvement, contribution and participation of its citizens. The aim of every village to be a republic and Panchayats having powers has been translated into reality with the introduction of the three-tier Panchayati Raj system to enlist people’s participation in rural reconstruction. Members of the Legislative Assemblies hate the Panchayati Raj system because the Sarpanch controls the village, and that’s where the government is now trying to reach directly.

The UPA government not only spotted the trend, but began responding to it by fielding ministers who not only have credentials to hold ministerial portfolios but are also comfortable both in a dhoti and a suit alike. More importantly, tying their performance to measurable outcomes, public scrutiny and accountability followed. This is a good start. But that culture will take several years to percolate to the five layers of democracy of the Panchayati Raj system, which is the face and the last-mile access to governance for the villager. It’s not the political process that needs to be changed but the way the political process is used by a few to their own advantage.

The cost of change

There is some opposition but India’s pro-reform constituency has kept growing, but not without its own share of uniquely Indian problems. I was in Bangalore in December 2008. Amidst the terrorist attack on Mumbai, one of Bangalore’s privately funded, privately built and privately operated roads – connecting Hosur Road with Mysore Road – began charging a toll as per the terms of engagement. Three days later, a 150-man mob ransacked the toll booths, assaulted the booth operators and disrupted traffic. Their contention was that they were being charged to use a road built on land acquired from them. This sequence of events followed a predictable path. The violence and destruction of public property is sometimes used for political gain. The government, political parties and legal machinery kicks into action. The private operator takes a knee-jerk step and lowers the toll charges. The consumer benefits to some extent but not without mindless loss of property, and waste of public resources to restore the use of public infrastructure. India’s development comes at a cost. A dollar invested in India will in most cases not return the right dividend because of the problems associated with the socio-economic and political costs of sustaining such development – something private operators budget for from the beginning.

For a populous nation like India, industrial development is bound to be at loggerheads with its vastly rural agricultural population. At the time of writing some 200 proposed factories, railroads, highways and other projects involving an investment of over $100 billion were on hold.¹¹ Land disputes between the government wishing to acquire land for private firms and land owners, and farmers exercising their right to say no, sometimes by forceful occupation, contributed to the standoffs.

For example, the Tata Motors factory in Singur, West Bengal, would have required 8000 people to be shifted from their livelihoods and suitably compensated. The factory would have created fewer than 1000 jobs, requiring skills few farmers have. It is here that the population, which is a boon in terms of human capital, becomes a bane. As unattractive as the displacement to employment ratio looks, 8:1 in this case, in China the displacement to employment ratio would have been 3:1 given that India has a population density nearly three times that of China. In the US, the same situation would have resulted in a net increase of over 250 jobs at a population density of 31 people per square kilometre.

Conversations with people involved in rural development have taught me another important lesson. There is a significant difference between a democratic government and a totalitarian governance model. That is probably the key difference between India and China. Very few politicians entertain the idea of evicting voters. At the time of writing, at least 10 major corporations including ArcelorMittal, Posco, Tata Steel and Nissan have been waiting over a year for land to be acquired. The longevity of the government in power does have a significant impact in pushing the development agenda. In India the 5-year tenure of a democratically elected government has its ills in that even a proactive team of rural developers may not be able to sustain the momentum given the time it takes to effect change. That an average career of a successful politician does not span beyond 20 years also has a bearing on the development agenda.

When political systems are influenced by vested interests, the balance is often lost. For example, in the Saurashtra region of Gujarat a powerful private sector company, the Adani group, that runs India’s largest private port, the Mundra port, has proposed building a special economic zone on about 6000 acres of land. Those familiar with the scheme tell me that petitioners in the litigation around the land acquisition have argued that the livelihood of fishermen in the surrounding mangroves will be impacted. The counter arguments are that there is no agriculture, and that the mangroves support only temporary fishing. Historically this is true. It may even be documented. People who live there know that the land is fertile. People are returning and there is active life. There is a conflict. Irrespective of how this is resolved, there needs to be a equitable balance between national and rural development.

Mismanaged natural resources

The water crisis is another example of an imminent need that could be addressed by political will, innovation, planning and grassroots engagement. Drastic, extremely painful measures are required to bring order into the otherwise neglected and unsustainable management of this natural resource. A month after I met Rita, in the context of a failed monsoon in 2009 and that India will run out of water by 2050, the Economist ran an article on India’s water crisis.¹² Although the economy’s dependence on agriculture may have reduced to 18 per cent of GDP, some 450 million Indians still live off rain-fed agriculture. Monsoon rainfall between June and September provides 80 per cent of the water on which these livelihoods depend. A failed monsoon quickly throws rural economics out of gear, impacting more than half of India’s 604 districts.

Dams have worked as a solution, but India is obsessed with large dams to solve the water crisis. In the 1960s, gargantuan efforts like the Bhakra Nangal dam ushered in the green revolution that ensured that India has had a food surplus ever since. The water crisis needs new solutions, and these require innovation and good planning. Although states such as Kerala and several cities now insist on water conservation as a prerequisite to building approvals, the fundamentals at the heart of the problem – rural India – have not changed. The Economist article pointed out that large dams and irrigation schemes tend to be inefficient without expensive maintenance to prevent siltation in reservoirs and leakage from canals, as they are environmentally destructive. Each year India loses two-thirds of the new storage it builds to siltation. A holistic look at solving these problems has not been undertaken.

The grave concern is that India is the world’s largest user of groundwater with some 20 million bore wells providing for over 60 per cent of its irrigated area. Groundwater irrigation has proved to have worked better than canal-based irrigation systems. Most of Punjab and Haryana – India’s bread basket states – depend on groundwater irrigation. But with free or subsidised electricity provided to farmers, groundwater irrigation is proving to be unsustainable. Availability of low-cost highpower pumps and free electricity have proven to be a deadly combination for groundwater depletion. For example, the Economist reports that in Punjab between 1973 and the present, there has been at least a 20-m drop in groundwater level. One-quarter of India’s electricity is given free or subsidised to farmers. Farmers now need more powerful irrigation pumps that ultimately drain more electric power. Farmers don’t pay for power or for water so there is no incentive for farmers to change. On top of this, the government buys their produce at a minimum support price. Cutting farm subsidies are career-limiting moves for politicians. The net result is that nearly one-third of India’s groundwater blocks are defined as critical.

To fix India’s water scarcity, it will require daring politicians, bureaucrats and administrators who are accountable enough to take surgical measures. Corrupt, overstaffed irrigation departments have not delivered. One estimate puts the number of employees of Uttar Pradesh’s irrigation board at 100,000. In the last 10 years, many parts of the city of Bangalore have begun buying water as the city’s water source – bore wells – are drying up. Urban water boards and water sellers are in cahoots, exploiting rich and poor residents alike. In Chennai, for example, the city hadn’t considered its own water supply mechanism for over three decades because there is political patronage from the city’s water tanker operators. When politicians get involved things become even murkier. Illegal groundwater tapping goes unchecked. Water loss is unplugged. Water boards are ill equipped with scientific methods, technologies and tools to manage water demand and supply.

Infrastructure: elusive planning and missing accountability

Planning for programmes that have a life beyond government tenure has suffered, as goals that can be realised within a 5-year term receive priority. Infrastructure development is a classic example. Take the construction of express highways and roads in many parts of the country as an example. When the belt ways or ring roads were developed in Bangalore in 2002, the relief promised to commuters was meant to balance the gruelling six- year wait for the new roads that were already crushing citizens’ mobility. None of the arterial roads was improved or maintained in anticipation of the new roads. Everyone, including the planners, builders and financiers, knew that achieving completion on schedule is elusive. Yet the planning did not account for expected delays and it did not include alternative plans to reduce the hardship of the commuters in the interim. Accountability to the citizens was clearly missing.

A secondary impact of these delays was that by the time projects are completed, based on the demand at the time of planning, they need further upgrading. In Bangalore, the new ring roads became an even bigger bottleneck within 18 months of opening. Part of the reason can be attributed to private enterprise. First, realtors and businesses capitalise on the opportunities that any new infrastructure development opens up faster than the planners have anticipated. To the advantage of opportunists, planners often work in isolation. Road management authorities who are later handed the responsibility of traffic management suddenly have as many as half a million new residents and office commuters on the completed traffic corridors. Solutions to the above problems lie in collaborative planning and keeping end use and end users in mind. But this is seldom done. Sewerage and water authorities, housing boards, and city planners seldom talk to each other on these high-impact programmes. Coordination and collaboration is something people with vested interests have tried for years to keep apart.

Good planning can do wonders in India. When the current Silk Board Electronic City stretch of the Hosur highway in Bangalore was redeveloped, segments included a multi-lane flyover. Hopes were raised that the 13-km stretch of jam-packed traffic that took up to 1.5 hours each way to pass through would be eased to a respectable 20 minutes. This reduction wasn’t achieved until the opening of the elevated tollways early in 2010, but the planners did develop parallel roads linking the two end points during the construction of the tollways, which eased the congestion prevalent in other road construction sites. The arterial roads that would never otherwise have seen any tarmac can now be used by suburban traffic, and during the construction of the tollways they addressed the short-term demand. Making it incumbent on the contractor to provide alternative routes to commuters while construction is ongoing is a simple necessary condition that needed to be included in the tender in the first place.

Interestingly, there had been several previous attempts to improve the Hosur Road between the Silk Board junction and Electronic City in Bangalore – a stretch that has often been written about in the international press since the software technology parks were set up in the 1990s. Building of the road hit a peak of excitement soon after it was started in the early 1990s, only to hit a trough of disillusionment within 4 years. By the time planners woke up to the problems, ten years later, the demand for the stretch had surpassed all planning assumptions. They tried many short-term measures – traffic lights, road bumps and traffic wardens (who incidentally were reformed juvenile offenders). At one time, well-meaning volunteers from the local community joined forces to manage the chaos and traffic.

Meanwhile opportunists too had sprung into action, making illegal intersections, setting up shops at vantage points, and making illegal extensions to their buildings as a result of the expanding business opportunities that have sprung up at nearly every traffic light. Service roads that were meant to be unidirectional became bidirectional by unscrupulous use. A client once joked that travelling on this stretch, and on Indian roads in general, was an exhilarating and choreographed musical experience. When cars shifted lanes, other cars in the lanes made way. When people and animals stepped onto the road, cars made way. In the orchestrated motion, there are the blaring horns that made up for the melody.¹³

Finally, the hue and cry of industries in Electronic City, including threats to leave the city due to infrastructure problems, were heard. Initial attempts were to widen the roads, which meant that traffic at some points was now at the doorsteps of several illegal business establishments, putting pedestrians and commuters (especially bikers) at risk. And once the roads are widened, there was short-lived relief. For regular commuters, this solution only meant that the bottleneck was now shifted to different points on the same stretch. The commute remained the same.

Few known attempts have been made to look at the issues in totality. The resulting inefficiencies were unsurmountable. Frequent commuters wondered how the authorities and planners could miss the obvious. Lost time was not the only casualty, the environment was too. More money was lost in burning fuel in idling engines. To navigate through the chaotic traffic, many people left their cars at home and began riding their motorcycles. Several lives have been lost in careless accidents on this stretch alone – mostly those of young engineers on motorcycles who had abandoned all other forms of transport in the hope of reaching their workplaces in Electronic City faster. Companies in Electronic City decreed that no employee on bikes would be allowed entry to work without a helmet. Everyone reacted.

Politicians who couldn’t benefit from underhand dealings turned whistleblowers. The domestic airport developments in Bangalore and Hyderabad are world class but those have come at a huge cost and inefficiency resulting from corrupt politicians, bureaucrats, opportunistic businessmen and land sharks all working in cahoots within the system for self-serving interests. In the bargain, collaborative planning and accountability are elusive; any citizen not party to the corrupt system ends up being a mute spectator.

Where planning has excelled, bureaucracy and red tape have too. But not all infrastructure planning has been like that. The Delhi metro is another example of good planning and execution. Minister Praful Patel’s airport reconstruction and expansion programmes in Delhi and Mumbai have also received similar accolades. Once the government opened the sector to private enterprise, privatisation of the national carrier was inevitable. Demand for airplanes and pressure from passengers ensured that improvement to the infrastructure were inevitable. An accountable government, a responsible politician, a professional bureaucrat and a demanding citizen can bring about change in India.

Opportunities in infrastructure: public-private partnerships

Some of the solutions to India’s infrastructural problems lie in public-private partnerships, but these will not solve inefficiencies within government departments and a lack of accountability among politicians. Partnership is a key step in not only securing funding, but also ensuring quality of service and accountability at the grassroots level. The government has called for public-private partnerships in roads, power, ports and telecommunications infrastructure in India. The results are now showing. India’s two major airports, Delhi and Mumbai, are being privatised and have improved dramatically. Every week you read of a set of regulations being stricken off the rule books to support private investments.

India has an extensive road network of 3.3 million kilometres – the second largest in the world. Roads carry about 65 per cent of the freight and 80 per cent of the passenger traffic. Expressways constitute about only about 66,000 km (2 per cent of all roads) and carry only 40 per cent of the road traffic. To support an annual growth of 12–15 per cent in passenger traffic, and 15–18 per cent in cargo traffic, the government spend of US $10 billion annually over the next five years isn’t enough. According to the Investment Commission,¹⁴ India will require over US $90 billion of investment over the next 5 years to improve road infrastructure, the bulk of which will come from private partnership. One hundred per cent foreign direct investment is permitted for all road development projects with incentives such as 100 per cent income tax exemption for a period of 10 years. These initiatives have led to the Golden Quadrilateral, North–south and East–west Corridors and a programme for six-laning of about 6500 km of the nation’s highways. The government has identified rural roads as one of the six components of the US $40 billion Bharat Nirman Programme¹⁵ to improve rural India.

In the power sector, India has a transmission and distribution network of 6.6 million circuit kilometres – the third largest in the world. India also has the fifth largest electricity generation capacity in the world: coal-fired plants constitute 54 per cent of the installed generation capacity, hydroelectric 25 per cent, gas 10 per cent, nuclear 3 per cent and renewables 8 per cent. At 141 GW, producing 663 billion kwh, it still has a low per-capita consumption of 631 kwh, less than half that of China.

According to the Investment Commission, to meet demand for growth at a compound annual growth rate (CAGR) of 5 per cent, India requires an additional 78,000 MW of generation capacity and an additional 60,000 circuit kilometres of transmission network by 2012. Over 150,000 MW of hydroelectric power is yet to be tapped in India. The government envisages joint venture or a 100 per cent equity model in what it deems as a total investment opportunity of about US $150 billion over a 5-year period.

With favourable demographics, socio-economic factors leading to high growth, and growth of disposable income combined with changes in lifestyle, India is expected to be among the fastest growing telecom markets in the world. It is expected to grow at 27 per cent annually to reach 500 million subscribers by March 2010. Over 8 million new users are added every month – mostly in wireless. There are investment opportunities of over US $76 billion across many areas, such as network infrastructure to increase service coverage. New investments are required for 2G, 3G and WIMAX networks and applications for voice, data and broadcasting services.

In the management of ports and maritime activity, the government has dominated in the past. India has 12 major ports and 187 minor ports along 7517 km of coastline. Policy direction is now oriented to encouraging the private sector to take the lead in port development and operations. A comprehensive National Maritime Development Policy has been formulated to facilitate private investment, improve service quality and promote competitiveness. As a result, significant investment in port terminals on a build-operate-transfer basis have begun. Foreign players include Maersk (Mumbai), Dubai Ports International (Mumbai, Chennai, Vizag and Kochi) and PSA (Tuticorin, Chennai). Minor ports are being developed by domestic and international private investors, such as the Pipavav Port by Maersk and the Mundra Port by the Adani Group.

Cargo handled by major ports, which take 74 per cent of the total traffic, has increased by 10.4 per cent annually over last few years. Of the 12 major ports, 11 are run by Port Trusts. Two major government projects are underway, namely Project ‘Sethusamundram’: Dredging of the Palk Strait in Southern India to facilitate maritime trade through it; and Project ‘Sagarmala’: a US $22 billion project for the modernisation of major and minor ports.

To handle demands for growing cargo handling at all the ports to support the growth of exports at a CAGR of 25 per cent over the last 2 years and valued at US $124 billion per year, large investments are required to upgrade the port infrastructure. According to the Investment Commission, investments of US $12.4 billion and US $7.7 billion in major and minor ports, respectively, are under the National Maritime Development Program (NMDP) to boost infrastructure at these ports in the next 9 years. Under the NMDP, 276 projects have been identified for the development of major ports. Public-private partnership is seen by the government as the key to improve major and minor ports, 67 per cent of the proposed investment in major ports being envisaged to come from private players. These projects include port development (construction of jetties, berths, etc.), procurement, replacement or upgrading of port equipment, deepening of channels to improve draft, and projects related to port connectivity.

Several sectors, such as health care and urban development, can benefit from public-private partnerships. The education sector is an example. The private sector in education has grown in the country purely because of public demand. It has become an industry attracting both legitimate and illegitimate interests. Back in the 1980s the demand for professional courses in Kerala had reached such unprecedented proportions that the state funded and aided private engineering, and medical colleges couldn’t meet the demand. Neighbouring Tamil Nadu and Karnataka capitalised on the opportunity by allowing its private sector into education. Professionals of all shades who emerged from these institutions met the demand in the industry. Many lives were transformed as a result. The best of the lot even contributed to the growth industries. Perhaps the government should open rural sectors to private partnerships as well.

Social change, an imperative

Development will not happen divorced from the complexity India inherently has with its roots in the aftermath of colonialism, problems of social inequality, class struggles in politics and bureaucracy in public service and its complex socio-economic, cultural, political and even fragile religious boundaries.

Lakshmi was a bubbly 14 year old when I first met her. She spoke good conversational English because she went to a school in Bangalore until the 8th standard. She engaged our son in small talk and my wife took a liking to her. Although we encouraged her to get back to school, her parents weren’t supportive. Coming from a home where her father didn’t do much and her mother was a maid, there wasn’t much expected of her other than the mundane – help her mum with her work and then get married and have a family of her own. My wife attended her wedding and gave her a small gift. Her parents married her off to a taxi driver who worked for a company that was contracted to a BPO firm, a regular, salaried job. The couple could have had enough to start a modest life in the city. Four months later we heard that Lakshmi had allegedly been killed by her husband and parents-in-law for not bringing enough dowry. Lakshmi, named after the goddess of abundance, wealth and beauty, was 16 years old when she died. Her husband was in jail, her family devastated. Depending on how he handled the police and the law, her husband may have been released by now. Lakshmi had access to the law, but the law didn’t come to aid her fundamental human rights – the right to childhood, education and safety. Such gut-wrenching tales are not uncommon among India’s urban poor.

Around the time the toll booths were ransacked, the local Bangalore newspapers ran a small story that escaped the attention of most readers. Students of a Hindu educational institution in Indira Nagar demolished a temple. According to the report, land mafia in cahoots with local politicians had built the temple on the institution’s property. Erecting a building of religious importance is a common practice to legitimise an illegal occupation of public property. In this case, the public administration did not pay attention to the complaints that were given. Public and political sentiments were divided because religion was involved. But the students whose land rights were violated took a bold step. They removed the temple. The police stood by. The administration stood by. This is a different way in which democracy can work in India in an unprecedented way to dismantle the nexus between politicians and criminals in the name of religion.

Young people in India are beginning to take the lead against the corruption and criminalisation of democratic processes that has crippled the progress of the nation, often in the name of caste, creed, ignorance or self-serving interest. Rahul Gandhi, architect of the Congress Party’s 2009 comeback, put it well in his post election comments that ‘the young people and poor people of India have spoken’. He is right. The key to India’s emergence as a superpower lies in empowering the young people to uplift India’s poor. But it is the vulnerability of the poor that is exploited by divisive forces to meet short-term political gains. Suketu Mehta in his book Maximum City chronicles the dynamics of poverty and power. He says it is the poor in the slums who come out in hoardes on election day. The rich stay indoors. It isn’t surprising then that the leaders that India has elected so far are those who can pay for votes.

That the middle class often don’t bother to vote is a key problem, Mehta observes. The discerning few are far outnumbered by the ill-informed masses living in the harsh Indian countryside, where the promised prosperity has been no more than a hesitant drip. In the recently concluded elections, 712 million Indians were eligible to vote in five rounds. Although India has many well-intentioned, reform-minded civil servants and parliamentarians, it is getting harder to buy patience from voters. The biggest hurdle is access to the last mile in any centrally managed policy framework. This is where local politicians woo voters with money, inflicting fear or exploiting ignorance. The positive change in the UPA government, voted back to power in 2009, is that they have made serious attempts to cut levels of bureaucracy and reach out to the common man and woman.

There has been a clear marginalisation of sectarian, caste-based and divisive politics among both the poor and the rich. Once the middle class and the rich in India cease to be mere spectators of the political process and when they begin to visit polling booths more often to choose the ideas (rather than figureheads) that will shape India, the momentum can be sustained. Today the power of the middle class is often self-serving, often extending to carving a parallel economy of the classes that can support a self-indulgent lifestyle. The power of the middle class is explicit in the economic landscape. But their potential participation can at best be described as latent unless there is a self-serving interest in pedalling a pet agenda. When middle-class educated Indians engage in arguments for civil liberties, as Mumbai residents have shown after the Mumbai terrorist attacks of December 2008, they will be a force to reckon with. The fury that Mumbai residents and middle-class Indians unleashed on prime-time television, on social networks and in the blogosphere was unprecedented. The disdain shown by politicians for something as fundamental as individual safety and security was evidenced in the emotionally charged, nationally televised debates that followed, where political invitees were conspicuously absent. If for nothing else, the Mumbai attacks meant that the elusive middle class joined in the political process. Several political careers were again sacrificed. But it shouldn’t take a barbaric 60-hour siege of Mumbai, costing the lives of at least 174 innocent people, for a city’s citizens to come together for a basic cause.

This is perhaps the central paradox of India today. Its society is open, eager, confident and ready to take on the world. But its state – its ruling class – is far more hesitant, cautious and suspicious of the changed realities around it. Nowhere is this tension more obvious than in the realm of rural development policy and the increasingly large and important task of determining how India should fit into the new world order.