“The Nation of Losers”: This was the title of the cover story of one Illustrated Weekly of India issue towards late 1992. India, for the first time after 1968, failed to win a single medal in the Olympics that year. The much-anticipated gold medal in the men’s hockey final went to the Unified Team of former Soviet republics. A total of 53 Indian athletes competing in 12 events returned empty-handed. The public was not amused. Neither was the press. The much-respected Indian magazine questioned why India could never win. Not just in sports, but in anything. It argued that India had been “restrained in its wheelchair” for 45 years since independence. From politics to business, education, science and the arts, India had been a dismal failure. The magazine’s criticism was harsh, but it reflected the frustration that many Indians felt at the time: India had the potential to be a great nation, but it was not living up to its potential.
Ironically, the Illustrated Weekly of India discontinued publication a few years later. Had it existed, the editor would have faced a difficult choice in deciding on the cover story for the last week of August 2023. India marked not one, but three international triumphs in that month. The Indian spacecraft Chandrayaan-3 entered lunar orbit on August 5 and touched down in the lunar South Polar Region 18 days later. This made India the fourth country to successfully land on the Moon and the first to do so near the lunar South Pole. Also that month, Rameshbabu Praggnanandhaa, a chess prodigy born in August 2005, became the world’s youngest player to reach the Chess World Cup final. He finished the tournament in second place.
Neeraj Chopra, an Indian track and field athlete and former Olympic gold medalist, won the first gold medal for India at the 2023 World Athletics Championships. He achieved this feat in the men’s javelin throw event. All three of these stories are worthy of being featured on the cover, and they all represent significant achievements for India.
India has now emerged as the world’s fifth-largest economy, with a GDP of $3.4 trillion, and is projected to become the third-largest economy in the world by 2030, with a GDP of $5 trillion. This transformation is even more impressive considering that India’s neighbours, Bangladesh, Pakistan, and Sri Lanka, are all facing serious economic challenges. So how come a “nation of losers” became an economic powerhouse in such a short time?
It’s a long story.
India’s economic transformation over the past three decades is one of the most remarkable success stories in recent history. Its transformation was not easy. It required several bold and far-reaching economic reforms, which were initiated in 1991. These reforms included opening up the Indian economy to foreign investment, reducing government regulation, and devaluing the rupee. The results of these reforms have been dramatic.
India’s GDP growth rate has averaged over 7% per year since 1991, and the poverty rate has been halved. India is now home to the world’s second-largest middle class, and its IT and manufacturing sectors are booming. Many factors have contributed to India’s economic success. These include a young and growing population, a skilled workforce, and a strategic location. However, the most important factor has been the government’s commitment to economic reform. Narendra Damodardas Modi, the current Prime Minister of India, has been proactive in claiming credit for the recent achievements in space and sports, as any astute politician would. Undoubtedly, he is deserving of recognition. In his nine years in office, Modi’s government has accomplished notable feats. Shortly after assuming power, his administration initiated various economic reforms, notably campaigns promoting digital payments such as the Unified Payments Interface (UPI) and Bharat QR, as well as streamlining the tax system and attracting foreign investment.
In 2016, Modi implemented demonetization, a measure aimed at integrating cash from the informal economy into the formal one. The objective was to combat corruption, and fraud, and disrupt the funding of militant attacks in India. Additionally, rural electrification has progressed rapidly in the country; the ‘Make in India’ initiative has fostered entrepreneurship in manufacturing and other sectors; and India has become an appealing destination for foreign investors. The Indian government has prioritized augmenting the manufacturing sector’s contribution to the nation’s GDP. While the target was for manufacturing to account for 25% of GDP, it presently stands at 15%. Furthermore, the introduction of Aadhaar, a 12-digit unique identity, has significantly transformed Indian society by providing a platform for numerous other applications. The country is also home to a thriving startup ecosystem.
Yet, it wasn’t just Modi who did it all. He stood on the shoulders of a few others who preceded him. One leader we cannot take out of the equation is Dr Manmohan Singh, the so-called ‘Accidental Prime Minister’ of India. The third longest-serving Prime Minister after Jawaharlal Nehru and Indira Gandhi, his tenure was from 2004-2014. Still, he was better known for his work as the Minister of Finance in the early 1990s.
The 1991 Indian economic crisis was a result of a balance of payments deficit caused by excessive reliance on imports and other external factors. India’s economic difficulties began to worsen in 1985 as imports surged, leading to a twin deficit: a deficit in the Indian trade balance while the government faced a significant fiscal deficit. In response to these challenges, the newly elected Prime Minister, P. V. Narasimha Rao, appointed Dr Manmohan Singh (MMS), an economist, academician, and former Reserve Bank Governor, as the Finance Minister. Despite facing strong opposition, MMS implemented a series of structural reforms aimed at liberalizing India’s economy. These measures included a two-step devaluation of the Indian Rupee, opening doors to foreign investment, reducing bureaucratic red tape that hindered entrepreneurial initiatives, and streamlining industrial policies. The rest. as they say, is history.
The outcome: India has experienced a notable surge in foreign investment, heightened economic growth rates, and a transition towards a service-oriented economy. The Indian government has implemented measures such as the relaxation of business creation restrictions and import controls, alongside the promotion of key industries like automobile manufacturing, digitalization, telecommunications, and software development. Furthermore, subsequent reforms throughout the 1990s and 2000s aimed to enhance international competitiveness across various sectors, including auto components, telecommunications, software, pharmaceuticals, biotechnology, research and development, and professional services.
The success of these liberalization policies is evident through the substantial annual growth rate of 18% in exports during the 1990s, largely attributed to the thriving software sector. Additionally, the implementation of these policies has resulted in Indian citizens experiencing a 25% increase in income compared to what they would have earned without such reforms. This transformation in Indian society is exemplified by Tata’s production of an affordable vehicle, initially priced at just INR 100,000, catering to the lower middle class who previously relied on motorcycles or scooters for transportation. While the Tata Nano project can be regarded as more of a setback than a triumph, it serves as a testament to the profound societal changes that have taken place. Before the 1990s, vehicle ownership remained a distant dream for many middle-class Indians, including doctors, engineers, and university professors.
Economic liberalization was a turning point in India’s development, but it was not the starting point. The journey to a new India began even earlier, with the leadership of Jawaharlal Nehru, India’s first Prime Minister.
Nehru is often overlooked when new India is discussed, but he played a critical role in laying the foundation for India’s scientific and technological progress. He established the Council of Scientific and Industrial Research (CSIR), the Indian Institutes of Technology (IITs), and the Indian Space Research Organization (ISRO). He also promoted the development of nuclear power and other cutting-edge technologies.
ISRO was established in 1969 to develop and promote space science and technology for peaceful purposes. India’s first satellite, Aryabhata, was launched by the Soviet Union in 1975. In 1980, ISRO launched the Satellite Launch Vehicle (SLV-3), making India the seventh country to achieve orbital launch capability. ISRO’s space programmes have played a significant role in the socio-economic development of India. ISRO’s satellites are used for a variety of purposes, including weather forecasting, disaster management, and communication. ISRO’s launch vehicles are used to launch satellites for both civilian and military purposes. Today, ISRO is a leading space agency in the world. ISRO’s achievements have helped to put India on the map as a major player in the global space industry.
Nehru’s vision for the IITs was to create world-class institutions that would produce engineers and scientists who could contribute to the nation’s development. He also wanted the IITs to be institutions of national importance, which would be free from political interference. The first IIT was established in Kharagpur in 1950. Nehru laid the foundation stone for the institute in 1952, and he inaugurated it in 1956. Four more IITs were established in the following years: Bombay (1958), Madras (1959), Kanpur (1960), and Delhi (1961).
The IITs have since become some of the most prestigious institutions in India. They have produced many of the country’s leading scientists, engineers, and entrepreneurs. The IITs have also played a major role in India’s economic development. Presently, graduates from IITs, along with their peers from the National Institutes of Technology (NITs), which were also established under the guidance of Jawaharlal Nehru, are considered the elite group within the global IT industry.
Then the inevitable observation: Sri Lanka has never had a leader, whether they held the position of President/PM or not, who could even come close to the calibre of the three individuals mentioned earlier. None of the Sri Lankan leaders have demonstrated a vision for science and technology. Even when we attribute the “opening of the economy” to Junius Jayawardena, it pales in comparison to the economic liberalization that took place in India under the direction of MMS. Furthermore, we have never had leaders with the level of determination exhibited by Modi. Despite coming to power due to communal votes, Modi does not shy away from acknowledging his priorities. Unfortunately, no Sri Lankan leader, including Jayawardena, has displayed such a trait.
So why has Sri Lanka never had a Nehru, MMS or a Modi? This is an interesting question we should ponder leisurely. It would be unjust to attribute these deficiencies solely to the Sri Lankan electoral system. The Indian system had its shortcomings and may have even been worse. Nonetheless, Indian leaders demonstrated the initiative to address their nation’s requirements. In Sri Lanka, it appears that a dearth of such leadership is what we have experienced. As delving into this topic necessitates further exploration, I shall defer its comprehensive explanation to a subsequent exercise.