India and industrialization

The question: why does China produce and export so much more than India does ? At the coarsest granularity, the answer comes down to demographics, distance and war.

Demographics: India and China may have similar populations today, but the size of China’s labor force is still around twice that of India’s. This is because of the different ways in which the two countries transitioned to low fertility. China had a huge surge in population growth after WW2, but its fertility fell dramatically in the 1970s. This has given it a huge pool of workers, nearly a billion, but their number will fall off equally rapidly in the coming years.

In contrast, India will never as many workers as China does today, but will have the largest workforce of any country for a long time. India’s transition to low fertility has been steady and smooth. Basically India’s labour force time series will be flatter with a lower peak, as compared to China’s sharp curve with a higher peak.

Distance: Distance matters. A lot. Within India itself, villages within 5km distance from an urban area became 20% richer between 1993 and 2005, whereas those more than 10 km away became 2% poorer in the same period. Wealth clusters, rich countries tend to clump together in Western Europe and East Asia. The same is true for the rich states of the American North East.

China benefited enormously from being proximate to Japan, Korea and Taiwan (total population 220 million). They were already plugged into the American led rich world, and China entered this network via its contacts with them. For India, the rich countries nearby were the oil rich Gulf states, and we did benefit from them via remittances. But these desperately underpopulated countries cannot be compared to places like Japan that experienced massive industrialization in the early 20th century.

War: Among the top industrial powers in the world, China ranks first, but this is mainly due to low tech goods and high tech reexports. But after China, the countries are the US, Japan and Germany. In fact, they were the leading industrial powers since WW2. (India, by the way is sixth after Korea).

The American economy expanded by a factor of 3 in the decade of the WW2. Even though Germany and Japan were devastated, the hysteresis effects from the large scale industrialization that fighting modern, mechanized wars remained. They had the will and memory to industrialize again.

India has also seen military conflict, but this has remained confined to its margins. We have just never experienced ‘war time’ economy and discipline for long periods of time.

If Indians wanted large scale industrialization, they would demand it. But they dont. They demand everything from reservations to train routes to temples. Perhaps, the payoff from industrialization for workers is not as great as our chattering classes like to think. Foxconn factory workers in Sri City make half the salary of a maid in nearby Chennai. For many families, a second child is a better investment over the long term than the temporary boost in income from the woman working a factory job.

Trying to become the ‘next China’ is not desirable at all, we have to find ways of increasing our service exports, and improving our agro productivity.


India Impressions

I spent a month in India recently and wanted to share some impressions.

Prima facie, India is a distressing and depressing place. The overwhelming feeling is one of criminal neglect and carelessness. This feeling needs to be tempered with the real difference in wealth between India and rich countries, but the differences are present even when in comparison to similar income countries like Vietnam.

The classic example is of driving. There are a 130 fatalities per 100,000 vehicles in India, the same number for is 55 for Vietnam and 37 for Indonesia. Drivers are reckless, contemptuous of rules, near maniacs on the road. Traffic police is nowhere to be seen.

The other apparent feature of India is trash. India actually generates very little trash per capita. But virtually none of this seems to be disposed properly. The constant sight of trash on the roads, every nook and corner eventually starts to appall one. More importantly, the health and safety implications are grave.

A newer menace is pollution. In the winter, it is a permanent fixture in the sky, casting a depressing spell. Health implications will become clearer in the coming years. Street lighting is also very poor.

Cumulatively, this series of neglects produces an urban environment that leaves one paranoid, morbid and irritated.

Our Constitution makers committed a grave oversight by allowing states to decide the structure of urban governance. Legally, cities in India exist at the whim of state legislatures. Mumbai city has no independent legal existence. Tomorrow, the state of Maharashtra can merge it into Pune if it wants. Imagine the state of Texas abolishing Austin. The central government doesnt seem to care that it hasnt appointed 37% of high court chief justices. The list of governance befuddlements goes on and on.

We actually have good urban schools (PPP or government aided), which are funded by the state and managed by independent religious, cultural or educational societies. These schools have produced a generation of excellent human capital. But it is the West and Gulf states that benefit from this excellent system, due to our own short-sightedness. Those who care about India’s future need to think seriously about why the best of India’s talent leaves at the first available opportunity.

My own hope lies with Delhi. Through sheer providence, we managed to have an urban area with a sensible model of governance. The city actually has a real mayor, who by most accounts has done a great job in the last five years. If policing responsibility was also shared with the Delhi government, rather than being in the hands of a Union minister, we will see what Indian democracy can truly achieve in an urban area.


Triumph of the Gujarati

Election 2019 reflects a victory of the Gujarat model. But not the model you are thinking of. Not even that other, more sinister model. It is something very fundamental, rooted deeply in economic ecologies.

Human beings are shaped fundamentally by the networks they find themselves embedded in. In India, these networks overwhelmingly take the shape of caste groups marked by an occupational role, social status and marital rules.

For the North Indian peasant, with an economy driven by land and service to an imperial power, caste identity emphasizes kinship and honor. Biradari literally means brotherhood, and membership is conditioned on izzat.

For the Gujarati merchant, in a dry region of relatively unproductive land, caste identity emphasizes pooled resources, adherence to fiscal norms and shared interests. Even for the peasant Patels, caste is today fundamentally an economic union, channelized into farming and dairy cooperatives.

2019 might well be the year that the North Indian peasant realizes the futility of imbibing a kinship and honor based caste identity. On the one hand, these networks simply do not provide the resources to grow and thrive in a post-agrarian world. And even if optimally politicized, the sheer number of caste groups makes the gains from achieving political power limited and concentrated.

The North Indian does realize the need for new kinds of networks. And Modi’s opening up of North India to the world, via a liberal visa policy, river transport from the Bay of Bengal all the way upto Noida and big ticket global engagement platforms like the Mumbai-Ahmedabad Shinkansen would not have escaped the eye of the sharp Yadav and Jat, who realize that they will have to reach out to the world to grow.

After all, previous engagements with foreigners in the recent past have given Indians globally important automobile and IT industries.

India today is more open to the world than ever before. Everybody from Peru to Russia to Ghana to Indonesia can come in after submitting a simple electronic form. Less than 7 million people visited India in 2013, by 2016 that number more than doubled to 15 million. Modi’s Gujarati mind grasps the decisive role of networks in the growth of individual, and he might have well coaxed the North Indian to look beyond his caste tunnel.


Why Pakistan is Middle Eastern

The arguments around the broader regional framework Pakistan lies in have often centered on cultural/aesthetic similarities or pure geography. Here, I will argue that Pakistan lies in the Middle East using scientific metrics that describe human behavior.

Regional comparisons of this kind have to account for other explanatory variables. For example, comparing Pakistan, where the urban population is less than 40%, to countries like Turkey or Iran, where it is nearly 80% can be confounding. Also, these countries are much richer than Pakistan, in part due to their more urbanized and industrialized economies. Finally, these countries are not based on the plains around large rivers.

Luckily, there is a comparator which is similar to Pakistan in these control variables: Egypt. It is a predominantly rural country, with a per capita income not much higher than that of Pakistan.

We consider Hofstede’s six cultural dimensions. Hofstede gives countries scores along the following metrics: power distance, individualism, masculinity, individualism, uncertainty avoidance, long term orientation and indulgence. Higher numbers indicate a society and culture more oriented towards these values, and lower ones vice versa.

The figure below shows the scores of Egypt (blue), India (violet) and Pakistan (green) on various metrics. We see that along the metrics of individualism, uncertainty avoidance and indulgence, Egypt and Pakistan align very well with each other, but are very different from India. On power distance, Pakistan differs from India and Egypt, on long term orientation, Egypt differs from India and Pakistan, while they score similarly on the masculinity metric.

We see that Indian society is more individualistic and has higher tolerance for uncertainty and risk taking than Egypt and Pakistan. It is also much more indulgent.


Hofstede attributes India’s scores on individualism and uncertainty to Hindu philosophy. The caste system is certainly an important factor on India’s power distance score. On the other hand, the shared religion of Pakistan and Egypt decisively shapes values regarding individual autonomy, risk aversion and indulgence.

There are other similarities as well. The preeminent minority group in both Pakistan and Egypt are Christians. However, Egyptian Copts are a stronger group with links to the West, but the Pakistani Christians are former Hindu Dalits, who converted during the British rule to unshackle caste chains. In terms of marriage customs, both Pakistan and Egypt see predominantly cousin marriages.

They key difference between Pakistan and Egypt is that Pakistan’s elite speaks English and has a vocal diaspora in Anglo countries. The longer and deeper historical imprint left by Britain has decisively shaped Pakistan, indeed much of the country was settled as canal colonies during British rule. Such a deep British imprint is not seen in Egypt, where the elite was originally Francophone, but an increasing switch to English is underway.


How serious is the Hindu-Muslim conflict in India ?

Writing in the journal India Review, Korean scholar Heewon Kim says,

This article reviews the approaches used to understand the BJP-led NDA government’s policies toward religious minorities and argues that far from marking a radical departure, there are more continuities than discontinuities in these policies with previous administrations.

For all kinds of keyboard internet warriors, this conclusion would come as a disappointment. But it is only the boring conclusion to a truly banal argument.

There seems to be an understanding among many that Hindu-Muslim conflict is primordial, immemorial and ultimately irreconcilable. Partition is seen as incontrovertible proof of this view.

I would like to offer another perspective. In my view, taking into context the entire history of the twentieth century, the Hindu-Muslim conflict in India is rather benign, mainly due to the low real stakes in this conflict. I base this view on my readings of Russian, Chinese and Mexican history, especially the scale and intensity of armed conflict seen in inter group rivalries within those countries.

The forces of industrialization and democratization unleashed by England starting from 18th century proved immensely destabilizing to all world civilizations. This period saw extremely volatile political competition between groups harboring competing, irreconcilable visions for the future of various countries. In Russia, China and Mexico, this competition took the form of conservatives (usually capitalists), versus radicals (usually leftists). In the Muslim world, such competition has appeared in the form of secular regimes being pitted against Islamist movements, and increasingly, sectarian conflicts amongst various conservative movements.

The stakes for both sides in these conflicts were extremely high, and no accommodation with the opposing group was sought. This is evident from the sheer scale of warfare seen in these conflicts. The death tolls in each country ran into the multi millions, with decades of devastation.

Italian Trulli

Such high levels of conflict are not seen amongst Hindus and Muslims in India. The real stakes in Hindu-Muslim arguments are simply too low to militarize the conflict. On the table in other world conflicts, were programs of massive wealth transfer via land reform, extreme and eternal concentration of political power and utter suppression of language and religion. In contrast, Hindus and Muslims mostly argue about long dead kings, culinary choices and obscure theological points.

The simple truth is that even the establishment of a Hindu state will not alter the ground realities for India’s Muslims. Nepal was a Hindu monarchy for many decades, and its 5% Muslim population showed no interest in challenging the regime. Interestingly, the eventual overthrow of Nepal’s Hindu monarchy was carried out by a leftist movement (comprised of Hindus) in a civil war, much like the pattern seen in Russia, China and Mexico.

In many ways, India’s immense diversity and the sheer scale of its minority population, has restricted conflict to elite sparring rather than total war, which has very much been the norm across the world. But it has also prevented a genuine confrontation between the masses and the elites, the often mentioned lack of a revolution in Indian society. For a left vs right conflict in India, Hindu would need to fight Hindu. But the very presence of the Muslim seems to have softened any edge in this conflict.


Structural Conflicts between Bharat and India

The Indian Republic has a problem. It is deep and structural and vexing. The wheels of industrialization have brought half the country in conflict with the other.

The country is seemingly convulsed with agrarian distress and farmer unrest. Some have located these issues in climate change, others in the prominence of neo-liberal reform. But the issue is far more structural. Half of India knows only to make a living from farming, and they are seemingly getting better at it every year.

India’s farmers have been outperforming the world in terms of growth quite comfortably.

So if we are having year after year of record agrarian yields and remain a next agro-exporter, whats the problem ? The problem is that the other half wants food at the cheapest prices possible. This other half lacks the decisive political numbers that the rural group does, but lives in the more vocal and wealthier urban areas. Farmers obviously  want better prices for their work, but urbanites are understandably wary of overpaying for food when they know they can spend their hard earned monies on modern goods and services.

But the conflicts dont end there. They extend into the realm of international trade relationships. India’s urbanites want to interact with the industrial world for personal growth and opportunity. India’s IT, pharmaceutical exports and remittances provide valuable foreign exchange for its fuel imports, and investment needed for modernizing its economy. But the industrial world is also super efficient at growing food and sees food as an important export. One American farmer can still produce what 50 Indian farmers can.

The Indian farmer thus requires protection from foreign competition, which is far more advanced technologically and is not constrained to small land holdings like he is. But such protection is not in congruence with the freer trade that its urbanites want and need for industrial growth.

Food inflation and international trade are thus two critical parameters on which rural and urban India face a structural conundrum. It is not that other cultures have not faced this crossroads before. Every country that has industrialized (Germany, Russia and China) has dealt with the question of its unproductive agrarian class. Authoritarian political structures meant that the ‘solution’ pursued by these countries brutalized the rural populace.

India’s democracy is deep and will prevent the urban elites from executing such brutality, despite their cultural and historical obsessions. Gaon tatva might seriously blunt Hindutva.



The Wani exception

When I came across news of slain Kashmiri militant Burhan Wani, I was struck by his last name. I had known for a while that Kashmiris had castes or as they call it ‘krams‘, like most other people of the subcontinent. And the Wanis are the kram of converts from the mercantile castes of Kashmir. On the wikipedia page linked above, Burhan Wani is listed as the only notable Wani. To understand how odd this is in the broader context of the subcontinent’s mercantile castes, imagine a (fictitious) militant ‘Altaf Agarwal’ being the only notable Agarwal or ‘Afzal Singhania’ being the only notable Bania.

To reflect further on the oddness of Kashmir’s Wanis, note that conversions of upper caste Hindus (Brahmin, Kshatriya, Vaishya) to Islam, although not completely absent, were quite rare. For example, in Punjab, Dr. Gopal Krishan (Punjab University) tells us,

Conversion was negligible from the higher castes such as Brahmins, Aroras, Khatris and Aggarwals.

There seem to be two major exceptions to this rule. The first are Sindhi, Punjabi and Kashmiri Rajputs (Soomra, Janjua, Bhatti, Rathar), who converted heavily to Islam. The other, less talked about exception are the Vaishya Wanis of the Kashmir valley. I have never heard of a Hindu Wani and the conversion to Islam seems near total. Such a total conversion of mercantile castes to Islam is not seen in any other region of India.

It would be interesting to know what explains the exceptional status of Wanis. This is not just interesting from a historical perspective, but could also be important in understanding contemporary developments. Consider the issue of Kashmir’s industrialization. A crude model of India’s early industrialization would be Brahmin technical/management education + Bania enterprise. Indeed, Aakar Patel points to the Brahmin-Bania complex as a hegemonic force in the economy of modern India,

HDFC is run by a Bania (Deepak Parekh), Hindustan Unilever is run by a Brahmin (Nitin Paranjpe), ICICI Bank is headed by a Brahmin (K.V. Kamath). Jaiprakash Associates is run by a Brahmin (Yogesh Gaur), L&T is run by a Brahmin (A.M. Naik), NTPC is run by a Brahmin (R.S. Sharma), ONGC is run by a Brahmin (also called R.S. Sharma). Reliance group firms are run by Banias (Mukesh and Anil Ambani), State Bank of India is run by a Brahmin (O.P. Bhatt), Sterlite Industries is run by a Bania (Anil Agarwal), Sun Pharma is run by a Bania (Dilip Shanghvi) and Tata Steel is run by a Brahmin (B. Muthuraman).

More examples are given in the linked Aakar Patel article. We can see that the Bania-Brahmin complex is spread across India, from South to North, West to East. In more recent years, there has even been a diffusion of skills and attitudes, with Brahmins moving into entrepreneurship and Banias into higher studies. In important ways, urban Brahmin-Banias are merging into a single caste.

Is it possible that the religious schism between the Kashmiri Brahmins and Wains possibly precluded such a complex from forming ? One could conjecture that this played an important part in slowing the industrialization of the region, and its economic integration with the rest of India.

In summary, what explains the total conversion of Kashmiri trading castes to Islam, a pattern not really seen anywhere else in the subcontinent ?

Did this effect industrial growth in Kashmir, and provide more reasons for the emergence of an insurgency there ?


Naya politics in South Asia

As an English medium Indian, for a while, I was taken in by the ‘corrupt politicians’ are the problem narrative. I thought that any news about them getting taught a lesson, losing power or even getting incarcerated was good news. For some other members of my class, it went much further. I remember reading news about a Bihar politician dying. But what I recall most is the frustration of the few commentators who actually knew about the politician’s work and were trying to pay homage to him, but getting overwhelmed by the ‘good riddance’ type comments most Indians of my type were expressing.

This narrative remains predominant in the English medium class in India even today. With a preponderance of STEM graduates, who are not accustomed to critical thinking and subjective analysis, the ‘great man’ narrative is easy to fall for when it comes to explaining (and solving) social problems. Every achievement is the result of a ‘stern’, ‘uncorrupt’ leader, while every shortcoming is because of ‘corrupt’ or ‘weak’ politicians.

The politics of newly politicized, upper middle class South Asian youth thus revolve around a ‘great man’. The manifestations of this are of course, Narendra Modi in India, and Imran Khan in Pakistan.

In India, with its deep levels of politicization, the influence of the upper middle class is not that great, but played no small part in getting Narendra Modi elected. Modi has moved things since he came to power, demonetisation, GST, RERA, insolvency act, ease of doing business and so on. But a Congress government with the same kind of mandate (a full majority) would have done exactly the same things, with the exception of demonetisation. More importantly, there isnt a single program or policy of the Congress that Modi has substantially altered, be it NREGA (hated by economic conservatives) or RTE (hated by extreme Hindutva folks).

Modi, like any smart politician knows that politics in a feudal and agrarian society like India revolves around patronage. And the key to this patronage is massive state spending on rural development, agrarian subsidies and government salaries. In every budget that the Modi government has presented, the proportion of spending on these patronage enabling items has remained unchanged from previous administrations. Corruption is simply the informal channel that actually makes this money trickle down.

In Pakistan, even though the proclivities of the English class are similar to their Indian counterparts, the situation is different. The scope for patronage spending is already constrained by the high budget demands of the army, its control of key economic sectors and the need to service existing debts. From this perspective, one can speculate that the conflict between Sharif and the army was a structural consequence of the demands of South Asian patronage politics on the one hand, and the vested interests of a small, but powerful group of people (the military). It is not clear what will enable Imran Khan to sidestep this reality. His party is filled with turncoats from other parties who know for sure that without patronage power, they dont stand a chance at getting reelected. But he does not seem to have the will or even the inclination to constrain the military.

Only an industrialized economy in which workers are less dependent on local strong men for employment and crisis-support can really alter things. Can kaptaan take Pakistan there faster than India ?


Why not Persian for the pre-1971 Pakistan ?

Update: I’ve undeleted this since Zach has admitted that he overreacted below. If you want me to trash this post again Vikram just leave a comment below and I’ll do so. -Razib

I understand the nostalgia and desire for an Islamicate language among the Ashraf elite of British North India. After all, Hindus have a similar desire to live in the house of classical Indian languages, and the vast majority of Hindus give their children names from these languages.

But what baffles me is the the Ashraf insistence on Urdu. Choosing Persian as the national language of Muslim South Asia would have had many benefits:

  1. Just like Hindus, whether Kashmiri or Marathi, have a reverence for their classical languages (currently mainly Sanskrit for North Indian Hindutva types, but with a bit of maturity this sentiment also extends to other Indian classical languages), Muslims whether Sindhi or Bengali see Persian and Arabic as their classical language. This would have dramatically reduced the internecine conflicts amongst South Asian Muslims due to language.
  2. Persian as a national language would cement Pakistan’s relation with the Iranic world (and thus the core Muslim world), which is the ancestral land of much of the Muslim Ashrafi in South Asia. South Asian Muslims would come into deeper contact with a sophisticated and highly cultured Muslim population.
  3. Muslims of South Asia would have access to a true, expansive classical literature (including heroic epics, not just romantic poetry) dating back to antiquity, much like Indians have access to classical literatures in Sanskrit, Pali and classical Dravidian. This would diminish the need for extreme religiosity as the glue for holding the Muslim nation together, and produce a far larger, self confident cultural output.

On the other hand, the choice of Urdu created quite a few issues for the preservation and growth of Islamicate culture in South Asia:

  1. At the end of day, Urdu is an Indo-Aryan language with Sanskrit grammar and substantial Sanskrit vocabulary. Even the most Arabo-Persianized version of Urdu (Pakistan’s official Urdu) has at least 40% Sanskrit and Prakrit vocabulary. More so, since Hindus speak Hindi, which has the same grammar, but a steadily increasing Sanskrit vocabulary, it leaves Urdu perpetually vulnerable to an increase of Sanskrit vocabulary.
  2. Some key words in Urdu like aap and sakna have roots in Hindu concepts (aap comes from aatma, the higher self) and sakna derives from Sanskrit shakt, which has a higher meaning in Shakti, the feminine divinity of Hinduism, walla from pal, which means protector.
  3. Muslims in Pakistan and Bangladesh, already have their own languages and literatures, especially the Pashtun, Bengalis and Sindhis. No wonder the imposition has led to substantial conflicts instead of synergy towards the ultimate goal of a sophisticated, modern Muslim culture in South Asia, which is also shared by these populations.

All this leaves me baffled as to why the Muslim Ashrafi were so insistent on Urdu. My best guess is that they mistakenly felt that Urdu was a variant of Arabic and Persian, with no real Sanskrit influence. This is quite possible since the different language families would not have been widely known then, and since Urdu was written in the Arabic script, which is dramatically different from Indian ones.

In any case, the Ashrafi insisted on Urdu. This led to a breakdown of Muslim nationalism when Bangladesh separated. Bangladesh now uses an Indic script, and speaks a language with mainly Sanskrit vocabulary. On the other side of the subcontinent, for the first time in more than two millennia Pashtuns could be under more Indic influence than Iranic (this might change as Iran rises again). Within India, Urdu has declined dramatically, as Muslim families in UP and elsewhere have reconciled themselves to Hindi[1]. Knowing Urdu leaves Pakistani Muslims vulnerable to a substantial amount of Hindu literature and concepts via television shows and Hindi movies.

None of these could have been the goals of the Ashrafi when they demanded a Muslim homeland.

[1] – Urdu is the only scheduled language in India that registered a decrease in the absolute number of speakers between 2001 and 2011. Its proportion of first language speakers has decreased from 5.22% in 1971 to 4.19% in 2011, despite an increase in Muslim population percentage.