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India Inside Out: Analyse mega – trends, not discrete developments

20 December 2015

The end of the year provides a welcome respite from day to day professional commitments. Time for reflection, they say. So reflecting upon observing Indian political and economic developments over twenty years both as a diplomat and as a business consultant, I should acknowledge one particular gift I have received from this country in the process: The need for rigorous discipline in analysing local developments, far more so than in any other capital where I have served.

It is so vital for an outside observer not to be swayed by eddies and turns of the emotional content that inexorably marks political and economic discourse in India, fed by incestuous political and babu-ridden denizens of New Delhi. Every day one wakes up to yet another significant event overtaking what appeared to be significant the day before. The temptation is to ‘analyse’ that current event as a harbinger of new policy implications. But, alas! It is but an emotional blip on the political landscape; it represents not a sliver of reality for giving a firm pointer on policy development in one or the other direction. Foreign journalists and, sadly, even long-time resident diplomats fall into this trap as they write their breathless despatches to meet home-set, perceived deadlines (so often to beat CNN and BBC!).

The lesson: the western rationalist concept of wanting to hit the nail on the head, to pinpoint a decisive development is a chimera in India. The nails move too fast to be captured by a single hammer blow.
The answer: It is patently silly for political and economic assessments to be swayed by the ‘current’, hot event, which seems so pregnant with implications for this or that policy. The crucial point is instead to watch mega trend/s. This applies particularly to business reporting to unforgiving masters at home; the diplomats have enough nous to escape the noose of bureaucratic blame swapping.

Take GST, hanging fire since 2006 in the Indian economic reform landscape. Emotions and theatre and drama queens are at play here, defying early resolution. No matter. The important point instead is to note the mega trend at play. The reform is a given. All agree. That provides room for optimism in the long run; not pessimism as now amidst the Parliamentary hullaballoo.

Australian business and official interlocutors so often condemn the delay in introducing GST as a sign of incompetence of the Indian political class to undertake substantive economic reforms. They forget to look at the Australian GST mirror. First mooted by Paul Keating in 1985, it was the subject of interminable debates until John Howard famously reversed himself from promising “never ever” to introduce GST to actually doing so in 2000. It took a massive effort, replete with painstaking compromises with the States, and with Australian Democrats and independents in the Federal Parliament on such nodal issues as exempting book purchases by public libraries from GST or it applying to tampons – still under vociferous debate! – before it was passed.

Think about it. Australia has six States and two Territories. India is a bundle of 29 states and seven Territories. It take time to bring all on board on one pontoon from so many boats adrift in the sea of Indian political and cultural diversity. Unsurprisingly, India moves forward by centimetres in contrast to China’s Great Leaps forward.

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