Having elected Manmohan Singh, in May, as the Prime Minister of the Congress party for a second consecutive term in office, this time with a clear majority, India is on the verge of a new golden era.
For the first time since 1984, the last time Congress won a clear majority, the Government is in a position of unilateral strength. In the interim, being part of a divisive coalition has weakened successive Governments.
Manmohan Singh and his Congress party now have the ability to push through the micro and macro reforms that will spur the economy on to even greater expansion and, most importantly, redistribute wealth throughout the poorer strata of society.
It is as a result of weak and corrupt governance over the past two decades that one quarter of the world’s malnourished still live in India, despite the recent exponential economic growth. The convoluted administrative structures that have been built on corrupt and dynastic foundations need to be torn down to ensure that systems are put in place to reduce the poverty gap significantly.
And it is to Mr Singh’s credit that these are the reforms that he plans to push through as quickly as possible, now that his hands have been freed from the shackles of a coalition. It is also very much to the credit of the Indian people that they have looked beyond the politicking of potential ministers who based their candidacy on the grounds of religion, caste, and regional issues.
Mr Singh has been given the chance to rule with a free hand because the Indian people believe in the reforms he has promised, and respect the economic miracle that he and Congress have presided over.
The election of Congress is not the only reason for India’s 1 billion strong population to be positive. The economy continues to thwart recessionary pressures, having just recorded two consecutive quarters of 5.8% growth.
Indeed, in India there is only talk of a slowdown, rather than a fully blown recession. Although growth rates have steadily receded from their peak of 9% in 2007, and 7.3% in 2008, the country continues to expand rapidly.
The key to India’s continued growth is the fact that, in direct contrast to China’s export-led model, the economy is fuelled by domestic demand. And that domestic demand is actually set to grow exponentially once the antiquated models of public governance are torn down, and a more equitable distribution of wealth can be achieved.
“There will be much greater prosperity in India now than ever before,” explained R. Balakrishnan, Chairman of Lowe India, an advertising agency. “The wealth disparity had become so, so huge in India during the boom, and the slowdown is actually bridging that gap. It is correcting the imbalances within the economy, and is a hugely positive force for Indian society.”
“The boom period only affected the cream of Indian society. The top 10% of financiers and property developers got very rich,” Balakrishnan concluded. “Now, the other 90% of consumers are seeing prices drop, and for the growing middle classes in India, suddenly property and cars are becoming much more affordable.”
Colvyn Harris, CEO of JWT India, another advertising agency, said: “Certain sectors are seeing growth of 20-30% year-on-year. Ordinary Indian people are seeing their disposable incomes increase in real terms as the economy corrects. India is like a pyramid, with the size and scale at the bottom, and that is what you are seeing kicking in right now. The real India is now emerging.”
It is this thriving, burgeoning, buoyant middle class that is the driving force behind India’s continuing economic success. The boom times may have seen unparalleled growth for India, but the rewards went into the pockets of a small minority. There is a huge swathe of completely untapped demand, just waiting for the moment when it can rise to the surface. And that moment is now.
On top of the existing middle classes, who are now finding themselves in the position of having increased real disposable incomes, it is the sheer scale and depth of the lower classes in India that ensures that domestically fuelled growth will exist for many years.
The entrepreneurial spirit that courses through every sinew of Indian society, allied to the reforms of Mr Singh and his Congress Government, will bring relative wealth to many, many millions more people, who have thus far been excluded from the benefits of a decade of exponential growth.
While most of the rest of the world spirals into a spinning maelstrom of recessionary gloom, India’s golden era is just beginning.