Page 64 - Nuvama | IC Report 2023

• DE-GLOBALISATION • DEREGULATION • DEBT • DEMOGRAPHY • DEMOCRACY

Direction of India’s democracy

At 75 years, the Indian democracy is young vis-à-vis the celebrated modern democracies of France
and America, which were formed a few centuries ago. India is quite a mature democracy though from
the standpoint of the robustness of its institutional framework (envisaged in its constitution).
Investors have given India a thumbs-up by pouring in billions of dollars into the country. In fact, India
Investors have has rapidly emerged as a preferred investment destination; FDI inflows have increased 20-fold in last
given India a 20 years.
thumbs-up by
pouring in billions It’s not all hunky-dory though. Internal challenges to the Indian democracy aside, democracy as a
of dollars into system of governance is on a decline worldwide. Democracies with weak institutions are vulnerable.
the country The recent Sri Lankan crisis, at its root, is a culmination of the collapse of weak institutions. The lesson:
democracies with weak checks and balance can dissolve into anarchy and lawlessness, inflict pain on
people and take a country back by decades.

Meanwhile, China, a regime wherein the state has outsized powers, is being championed as a more
preferable model of economic development due to its stellar economic growth. The Chinese and
Indian economies were almost equal as recently as 1990, but China’s nominal gross domestic product
(GDP) sped past India’s to USD17.7 trillion in 2021, which is about 5.7 times that of India’s USD3.1 trillion.
China has indeed made great strides. One such stride can be measured through its rapid poverty
reduction. Between 1978 and 2019, the proportion of people living in poverty fell from 97.5% to 0.6%
of the rural population. This is arguably the fastest rate of poverty reduction for any country. That
China is the most populous nation (it crossed one billion in 1981) makes one appreciate the substance
of the statistic.
In contrast, India’s population crossed one billion in 2000, and its poverty reduced from 55% in 2005
One must to about 16% (2019)—a much less impressive performance that languishes China’s. This is reflected in
appreciate the way India’s rank at 132 out of 191 countries on the United Nations Human Development Index 2021–2022.
in which poverty China at 79th is way ahead. That Sri Lanka, a much smaller democracy as well as economy than India,
in India has been
reduced, and not stands at 73rd (much ahead of China) goads one to think deeper.
just by how much Even so, one must appreciate the way in which poverty in India has been reduced, and not just by how
or how rapidly much or how rapidly (as argued earlier in this section).
To infer, form of governance or the nature of polity must be viewed holistically—from many standpoints.
Admittedly, India’s democratic processes have dragged its economic growth in the past. That’s
changing though. India’s economic juggernaut complemented by its democratic credentials is moving
ahead, not at the same pace as it probably should, but much more efficiently. Sooner or later, India
shall march faster even as it upholds democratic credentials. To investors, that matters a great deal.

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