India (28 page)

Through all these reforms, it was not hard to find people who condemned Manmohan Singh and his works. He was, one commentator said, “the harbinger of the neoliberal economic policies of liberalization-privatization-globalization” that made India “the junior military ally of the U.S. and Israel” and “demolished the image of India as the peace-loving, sovereign supporter of the people of the Third World, and made it the target of Islamic fundamentalists.”
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The benefits of the system Singh developed were questioned, especially after the global credit crisis of 2008, as if the meltdown was evidence that capitalism was a flawed operating system. If things had gone so wrong, how could economic liberalization be good for India? Surely it would be better to return to a command economy? In the words of the leader of the Communist Party of India (Marxist), Prakash Karat: “We, communists, have had no illusions about the nature of globalized finance capital and imperialist globalization. We have doggedly fought the neoliberal policies being imposed in India … We should continue the fight against the military collaboration agreement with the United States.”
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Was the global financial crisis caused by capitalism? In the U.S., a poor person would be offered a loan to buy a house. Sometimes the loan would come to more than the cost of the property. If the value of the house rose and the person paid the mortgage, all might be well. Some of these mortgages—debts—were rolled up into bonds. By 2005, $507bn of high-risk, subprime loans had been repackaged as mortgage bonds.
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Spinning around inside the global financial system were securities worth more than $500bn which were in fact questionable loans, loans made to part-time maids in Indiana and air-conditioning-unit maintenance men in Florida. The bonds were sliced up, depending on how likely the mortgages were to be repaid,
and the weaker tranche repackaged and given a new credit rating and sold on to investors. Once U.S. property prices flattened, the house of cards fell and the effects cascaded around the world. The crisis had many causes—greed and incompetence, the collusion of credit rating agencies, America’s failure to control the high-risk lending of its banks, financial instruments few people even in the institutions themselves understood—but at root it was an enormous pyramid scheme, not capitalism exactly. The problem was human nature: if people are encouraged to cheat, they will. India, with its more strictly regulated banks and its deep tradition of saving, was to an extent protected from the worst effects of the global credit crunch.

Socialism, or the principle of equality, did not come naturally to the subcontinent. In a society with a system of gradation in the form of caste which extended across communities and to every aspect of life, it would have been impossible for any ruler to expect uniformity, even if the ruler had been a great deal more coercive than Jawaharlal Nehru or Indira Gandhi. Nor did Indians have any hesitation or embarrassment about wanting money, even if they were abstemious and interested only in saving. There was no suggestion it was easier for a camel to pass through the eye of a needle than for a rich man to enter the kingdom of heaven; materialism and religion were united. For Hindus, the worship of the goddess of wealth and prosperity, Lakshmi, was assumed, and in some cases emulated by other religions. At the festival of Diwali, you seek the blessings of Lakshmi, and at any Hindu temple it is usual to see gods and banknotes intermixed.

When I visited India for the first time, in 1986 as a teenage student, hoping to see the world, I brought with me a selection of electronic goods to sell. I had been told this would be a good way to fund the trip, so I left China through Hong Kong and stocked up on calculators, digital watches, digital games and even a few bottles of branded whisky—the sort of things that were difficult to obtain in India at that time. Bringing them into the country turned out to be straightforward, since the customs officers at the sparse airport were all off duty that night, and on the streets of Delhi these rare goods were snapped up with no trouble, with taxi and rickshaw drivers being the conduit to the Punjabi dealers in such low-level foreign desirables. In those grey, Soviet-style days, everyone wanted shiny goods from overseas and enjoyed the idea of something new which said: “Made in Hong Kong” or “Made in Taiwan.”

Apart from the government stores selling handicrafts and finely made hand-woven cotton items, little was available to buy except on the semilegal street stalls. Bookshops offered cheaply priced Russian novels translated into English, which seemed to have quite a following. I was able, by braving the touts in underground shops on the fringes of Connaught Place (looking back, it seems strange that I risked being robbed for a few thousand extra rupees), to secure a dollar exchange rate about 20 percent higher than the official rate, since the rupee was not a freely convertible currency.

I had travelled previously in Poland, where the communist system left the shops even emptier, but the surprise in India was that nobody appeared cowed by the system. Rather, they worked around it, using ingenuity to manipulate regulations. The restrictions of the state seemed if anything to make people more entrepreneurial and self-reliant, so that the permit raj was like a stagnant obstacle rather than a threat. The tendency in India was to call the choked bureaucracy a legacy of the colonial period, but British form-filling was less pervasive and the state’s direct interference in business was lighter before independence. This seemed more of an indigenous development, something that had evolved in the way that further sites of devotion spring up around an existing shrine. The economist Kaushik Basu suggested in 1992 that the market economy in India worked in the wrong way, since:

Many of the regulations—for example, the law requiring a bureaucrat’s permission to sack people if you had more than fifty employees—would have been positive in intent, but in their implementation they became a source of corrupt money and did more to protect poverty than to protect the poor.
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The restrictions on choice were in some ways attractive, with the ban on Coke and Pepsi creating odd local fizzy drinks like Campa Cola, Limca and Thums Up, with its missing “b.” The system looked stuck; in the pre-reform era, politicians took pleasure in making it impossible for foreign corporations to do business in India. A senior Western ambassador in New Delhi told me he was informed by an official from the Ministry of External
Affairs in the course of a difficult negotiation during the 1980s: “All foreigners are basically spies.”
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Indians did things their way, and outsiders had to adjust. Even in more recent times, when a minister kept nearly a hundred international delegates waiting for more than three hours, including assorted high commissioners and ambassadors, he saw no need to apologize: “Slowly, they will also get used to living like this in India.”
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A vigorous opponent of this national tendency was P. Chidambaram, who in 2009 outraged the officials in the home ministry by introducing fingerprint scans to ensure everyone reached their office by 9 a.m. and only left at 5:30 p.m. Bureaucrats at “the joint secretary level and above” had mistakenly assumed these new regulations would not apply to them.
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In the era before liberalization, India was known around the world for its poverty and its mysticism. Comprehending the country was a specialist interest, rather than a necessity, as it is today. It could be a playground for foreign visitors, a place where backpackers might pretend to be hippies or sadhus for months at a time and survive on a few dollars a day in Pushkar or Goa, and still feel superior to the general dereliction. The unspoken assumption behind the Western view of India at this time—all disease, dirt and deities, stemming from Mohandas Gandhi’s exaltation of village poverty and the romantic attitude taken by anti-colonial writers like E. M. Forster—was that it would always be like this: India was exotic, eternal, to be admired and patronized, but incapable of helping itself. It needed the pump-priming charity of outsiders and was certainly not a competitor, not a country that might take off and revitalize itself. Had Bob Geldof been less busy organizing Live Aid, he would perhaps have gone there to plead for an urgent increase in foreign aid.

Yet at the very time that Westerners were travelling to India in search of suffering and spirituality, and writing replica accounts of it, a more interesting shift was taking place. Indians, and in particular those who came from extended business families, were migrating to North America and Western Europe in search of modern opportunities. They moved into a range of businesses: import-export, shopkeeping, automobile parts, fuel dealerships, steel, catering, jewellery, construction, computers, hotels, motels and potels. (A potel is a motel run by someone from the Gujarati community of Patels; Indians now control around half of all U.S. lodging properties, and the officers of the Asian American Hotel Owners Association are Hemant D. “Henry” Patel, Tarun S. Patel, Chandrakant I. “C.K.” Patel, Ashwin
“Ash” Patel, Alkesh R. “Al” Patel and Fred Schwartz.)
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Across the cities of America and Europe, neatly dressed professionals from the subcontinent can be spotted playing their part in a global success story, shifting formally and securely back and forth between cultures. With its annual output of dedicated software, medicine and engineering graduates, India was seen as the natural home for any business process that could be outsourced. Yet through all this, poverty and affluence have grown side by side, and many foreigners still find it nearly impossible to work out how to do business in India.

I visited Andhra Pradesh in 2002. On the day I reached the capital, Hyderabad, known optimistically by local software enthusiasts as Cyberabad, twenty men and women dressed in the olive-green jungle uniform of the banned People’s War Group attacked the railway station at Chalana, about a hundred miles to the north. After herding the railway employees and their families into a hut, they disconnected all telephone lines, blew up the station buildings and the signals box and exploded an improvised mine under a stationary locomotive, causing several of its carriages to run down a hill into an advancing goods train. Then, in a scenario worthy of Monty Python, they lectured the assembled railway workers for an hour on the evils of the capitalist system and wrote revolutionary slogans in the station-master’s register before melting away into the forest.

Chandrababu Naidu of the TDP was chief minister of Andhra Pradesh at the time, doing his best to draw foreign investment and build infrastructure. Bill Clinton and Tony Blair had both recently been to see him, and one of his aides told me about a remote monitoring project he had established for the restoration of a temple complex at Tirumala: each evening, an engineer on the site had to make a video of the work and email clips to the chief minister in Hyderabad, and as a result the project was completed at a fraction of the expected time and cost. Naidu seemed the very model of a CEO chief minister. I asked him how he coped with the People’s War Group, who had tried to kill him on several occasions. “The days of revolution are over,” he said. “Now people want employment, they want their land to be developed and to have proper electricity and water supplies.”

He had sent a paramilitary police unit, the Greyhounds, in pursuit of the Maoists, but believed a purely military victory over them was unrealistic. “How can you win a war against terrorism?” he asked rhetorically. “They
only need three or four people to put a mine in the road and explode it, and the problem is there.” The People’s War Group targeted infrastructure like railway tracks and representatives of the state.

Revolutionary violence had intermittently raised its head in independent India. In 1967 an improvised army of tea plantation workers and landless peasants revolted against their landlords at Naxalbari in West Bengal. The rebellion was the start of a protracted phase of violent unrest, and the Naxalite or Maoist movement became a significant threat. China was then at the height of the Cultural Revolution, and Beijing applauded it as “the front paw of the revolutionary armed struggle,” which would “start a prairie fire and set the vast expanses of India ablaze.” Insurgency became popular among poor people in some rural areas, urged on by intellectuals and a generation of Indian university students, who in turn were encouraged both by the romance of Chairman Mao and the
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in Paris and elsewhere. A Maoist political party was formed, which soon splintered into factions, one of which was the People’s War Group. The revolutionaries turned against the “class enemies” of Nehruvian India; even poor Mahatma Gandhi was charged with “devoted service to imperialism, feudalism and the comprador bourgeoisie.”

In Andhra Pradesh in the early 1970s the People’s War Group gained control of 15,000 square kilometres of land, aided by social hatreds and resentments dating back to the days of the Nizam of Hyderabad, who had ruled before independence. The reclusive Nizam was an exceedingly rich Muslim (he used a diamond the size of a gull’s egg as a paperweight) but most of his subjects were Hindus who lived in extreme poverty. His feudal political approach formed the backdrop to the present unrest in Andhra. In the 1970s the Maoists had forcibly redistributed large amounts of land, with some popular support. In areas such as Warangal they ran what was effectively a parallel government, holding “people’s courts” and collecting “taxes” from businesses and forest contractors. In the 1980s their popularity faded, but now appeared to be growing again. They were the only armed movement in India that was not perceived as secessionist; they did not look different, or follow a minority religion. Although the Maoists were widely condemned, they had tapped into an anger felt by many against the Indian state, and the sense that the fruits of economic liberalization were bypassing swathes of central and eastern India.