Saturday, September 28, 2013

Wealth of nature and unintended impact

Ancient civilizations were a agricultural based society. It was the wealth of the land which translated to well-being of a society. The table below shows the top 4 nations and the comparative land mass and the ratio of cultivated and arable land. It is clear that India was an extremely well-endowed country.

Rank
Country
Cultivated
land
(km2)
Cultivated
land
(%)
Arable
land
(km2)
Arable
land
(%)
Total
land area
(km2)
 World
17,298,900
11.61
15,749,300
10.57
149,000,000
1
1,669,302
18.22
1,650,062
18.01
9,826,675
2
1,535,063
51.63
1,451,810
48.83
3,287,240
3
1,504,350
16.13
1,385,905
14.86
9,640,821
4
1,192,300
7.28
1,174,284
7.17
17,075,400


This bounty of nature allowed India in early ages to develop and excel in science, culture, art, development of religions (Hinduism, Jainism and Buddhism) in the same manner that propelled the Europeans at the time of the industrial revolution. However, India never participated in the industrial revolution that took place in the west in the 18th and 19th century nor did it develop the industrial architecture post independence. We moved seamlessly to the services age from an agrarian economy in the late 20th century, skipping industrialization. The Europeans during the industrial age did not only massively develop their infrastructure to the support this change, mass production also pushed them for resources and markets outside their immediate neighborhood. India had no such compulsion, it continued to live in a self-contained world. Further, nature (harsh winters) enforced no compulsions to develop better infrastructure whether for transport or food.

A L Basham, Professor of Asian Civilization in the Australian National University, Canberra in his book The Wonder that was India published first in 1954 makes some interesting commentary in this regard, "It has often been said that the scale of natural phenomena in India, and her total dependence on the monsoon, have helped to form the character of her peoples. Even today major disasters, such as flood, famine and plague, are hard to check, and in older times their control was almost impossible. Many other ancient civilizations, such as those of the Greeks, Romans and Chinese, had to contend with hard winters, which encouraged sturdiness and resource. India, on the other hand, was bless by bounteous Nature, who demanded little of man in return for sustenance, but in her terrible anger could not be appeased by human effort. Hence, it has been suggested, the Indian character has tended to fatalism and quietism, accepting fortune and misfortune alike without complaint."

The incestuous nature of development where one segment allows the other segment to in turn develop has in the 'fatalism and quietism' completely escaped the India policy makers. Our anciently most evolved sector (agriculture) today suffers due to lack of industrial development - lack of irrigation and mechanization, new seed development, transportation infrastructure among other things. The growth in GDP which has been driven by services over the last few decades have been propelled significantly by technological changes globally (IT outsourcing and communication technology) and adopted in India which in turn has driven domestic demand in areas of local trade, real estate, financial inter-mediation.

Niall Ferguson talks about 6 killer apps of development (and my thoughts on where India is on each of them):
  1. Competition - We have seen this only in the last 2 decades since the opening up of the Indian economy consequently a very limited period.
  2. Scientific Revolution - India is not there in the list of 'patents in force' of top 20 countries 
  3. Property rights - At best we have partial rights and extremely difficult enforce-ability
  4. Modern medicine - We have seen significant leap in provider infrastructure but India is nowhere at the cutting edge of equipment, pharmaceuticals or education of medicine.
  5. Consumer society - Our GDP has had a healthy mix of consumption. Availability of finance and choices in the last decade have further helped this.
  6. Work ethic - This I will let the reader decide for himself..Indian labor is 10% of US GDP per person employed as of 2012 

The reason for historical success has constrained development in the more recent past. We became complacent. We had begun to make significant strides post-1991 but again our instincts failed us in the last decade - we cannot blame the bounty of the gods nor continue to live in the halo of our forefathers.

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