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  • Dr. Amlan Das Gupta

The Basic Incompatibility of Indians with Economic Development

A few days back I had a rather unpleasant altercation with a gentleman trying to barge into the entry line at the international airport in Delhi. When confronted the person came up with a response that irritated me even further. He seemed to suggest that by confronting him I was doing something wrong, and cutting into lines was the done thing in Delhi. Anyhow, later while I was waiting to board my flight, I found time to reflect on this episode with calm. It occurred to me that there was some justification for the claims made by the rude gentleman at the gates. After all, if anything the penchant for circumventing the system is perhaps the defining characteristic of an Indian. This is evident from almost every aspect of modern life starting from the way we drive to the way we learn in schools. Some describe this as the inherent street-smartness of Indians and paint it in positive colours. However, exactly how much this trait can be potentially beneficial needs to be investigated and analysed. The Indian street-smartness may be innovative and resourceful. Qualities that are generally accepted as beneficial for private capitalist growth. Yet, there might be some aspects of this tendency that generate unwanted consequences.


To illustrate my point I would like to draw from the writings of Eric Hobsbawm, the celebrated British historian, and his book “Industry and Empire” where he talks about why the Industrial Revolution happened in Britain in the eighteenth century. In particular, he points to the same inventiveness, and resourcefulness of the people in Britain at the time, who were able to apply simple technical know-how and limited resources to solving problems, as that of the Indians of today. He writes about the situation at that time:

“The novelty lay not in the innovations, but in the readiness of practical men to put their minds to the use of science and technology which had long been available and within reach; …”

He goes on to explain that the fact that the industrious people of England lived in 17th century Britain was a blessing for them. In that age, the level of sophistication required to make use of opportunities was rather low.

“It put within reach of an enterprising, not particularly well-educated or subtle, not particularly wealthy body of businessmen and skilled artisans, operating in a flourishing and expanding economy whose opportunities they could easily seize”

The above description of an average Englishman looks very similar to an average Indian of today. However, there is one major disadvantage that present-day Indians suffer from. This is the simple fact that the world today demands greater levels of sophistication to make use of available opportunities. It is not just that each operation of business, commerce, and technology is now way more complicated, and beyond comprehension for most Indians, the day-to-day activities of working to implement the grand designs, even under instruction from specialists, demand a degree of training and skill that is not trivial. Hobsbawm also talks about the difference between the challenges faced by 17th-century entrepreneurs and those faced by the people of modern underdeveloped economies.  In doing so his words resonate with the experiences of many development planners in less developed economies. It is often easier to plan and set up large industries using experts rather than to work them successfully over a sustained period.  Many of these grand projects get stumped because of the lack of basic skills, which often are taken for granted in modern developed economies.

“Even the minor skills and habits that we take for granted in developed societies, but whose absence would disrupt them, are scarce as rubies: literacy, a sense of punctuality and regularity, the conduct of routines.”

The above words of Hobsbawm sound very true for most Indians today. It is not that Indians never follow rules and routines, but mostly such instances happen when we are put under credible threat of dire consequences. Of course, this implies that anyone looking to ensure a smooth flow of operations needs to maintain very heavy and costly systems of monitoring and punishments. One consequence of this is the dominance of caste and regional concentration in jobs. The idea here is to use traditional hierarchies in Indian societies to create a group monitoring system for people engaged. The system is evident in the dominance of certain caste groups in certain industries as documented by Kaivan Munshi in his American Economic Review paper of 2006. If such group monitoring is not available employers are reluctant to offer permanent jobs.


I should mention that the essential skills that Hobsbawm talks about are not lacking just in low-skilled workers in India but in people of all levels of skill and education. What is the evidence? I feel the most direct evidence is the levels of corruption documented in high levels of corporate and government administration in India. But a somewhat more direct and unconventional way to find out is to look at the instances of simple rule violations that have very little consequence. Something like cutting into a line, or being late to meetings where there is no chance of any consequence, or breaking simple traffic rules. What you will find is that such violations are common not just among the poor and less educated but even with the best of us. You see people trying to cut into lines even in international airports and not just small railway stations. On our roads, you would expect that a high-end Mercedes is as likely to barrel towards you on the wrong side of the road as you would a small auto-rickshaw.


This lack of the right attitude, habit, or skill, whatever you want to call it is perhaps the biggest impediment in our country taking off. And the bad news is that it does not seem to go away with increases in resources. So even if we are slowly getting richer as a country this basic incompatibility with modern economic growth seems to be persisting. Many people in India have already realized that their prospects in private sector jobs are not so great. They may not have realized the reason, but they have observed that in the private sector, secure and well-paying jobs are few and far between and dwindling further. The demand for reserved government jobs that are immune to the threats of getting fired for incompetence is preferred. So even economically strong groups have started demanding this today.


References:

  • Hobsbawm, E. J. (1999). Industry and Empire: from 1750 to the Present Day. The new press.

  • Munshi, K., & Rosenzweig, M. (2006). Traditional institutions meet the modern world: Caste, gender, and schooling choice in a globalizing economy. American Economic Review, 96(4), 1225-1252.

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