While you may not be many, at least some of you keep coming back. So I’d like to inform you that I am currently contemplating an overhaul of The Discomfort Zone. As part of that overhaul this blog will turn multi-lingual, become a group blog, and may change its name.

As always, it will remain focused on international development, governance, and politics - but bring in different regional opinions. The emphasis will be on op-ed style writing that tracks the rise of the developing world and the challenges it faces. Author opinions will likely be mostly centerist with occassional journeys to the left and right.

In this endevor I have sought the company of a few well-informed friends that I will introduce over the coming weeks. However, if you have a keen and persistent interest in any of this and care to write, please let me know if you would like to join this platform - in any language of your choice. And of course suggestions for names are also welcome.

I should be back with something worth writing about in the new year. I have also taken on a few other writing assignments, which should be reflected here - though it also means my ability to update this blog very frequently will be constricted, as I will focus on writing longer posts.

In the meantime, a happy new year to you! And thank you for putting up with my opinions.

And what does this have to do with peace?

Last year, the prize was awarded to Yunus and the Grameen Bank, recognizing the need for poverty alleviation for lasting peace. Never mind that the link between microfinance and poverty alleviation is tenous at best, I cheered nonetheless because Yunus has made other significant contributions, not least of which is to prove that the poor can be part of an economic cycle.

But now, in trying to ride the climate change bandwagon, the Nobel Committee is going too far. It is turning itself into a follower of what is cool in the development community. Last year was microfinance, this year climate change, next year who knows.

I have another candidate pair for the Peace Prize - Paul Wolfowitz and Donald Rumsfield. Through their combined arrogance and incompetence these two turned Iraq into a mess. But in the process, they have set back America’s intervetionist foreign policy decisevly. No longer will, or can, the US act alone in the world. Surely, that is an outcome worth celebrating, even if it was not the intended one.

They deserve the prize no less than Al Gore. Certainly, he did much to highlight climate change and his movie made a lot of money. So perhaps he deserves the Academy Award for “most politically savvy film”. But the Nobel?

This year’s choice for the Prize bodes ill for the world. Maybe the Nobel Committee could not find any real peace makers and champions. Perhaps it is a sign that the world is sliding into chaos - in the Middle East, Burma, and elsewhere, and that democracy is so out of favor that even the Nobel Committee dare not celebrate it. Or perhaps, the Nobel Committee couldn’t be bothered to really go out there and look at who’s really doing the work. It would much rather just sit in Stockholm and bask in the glory of whoever the world has already embraced in any given year.

It is six years since my last visit to China and I look forward to be amazed by it. While much of this is officially “vacation”, I will spend time meeting people to do some groundwork and gauge the business environment. If you have suggestions on things to do and people to see, particularly in the Internet business, drop me a note.

In the meantime, here is some interesting reading on the subject of agriculture, supporting my argument on the IEB that India should not demand cuts in subsidies in the US:

• Agricultural Subsidies versus Market Access: A world bank report arguing, based on econometric analysis, that market access and import tariffs are vastly more important than agricultural subsidies for transfering benefits to poor country producers. By its calculation, up to 93% of the support to rich world agricultural producers comes not from subsidies but from import tariffs. Reason enough not to ask for cuts in US subsidies.
• Biofuelling the Food Crises: A biofuel boom presents ostensibly environmentally-friendly implications, yet leads some analysts to predict a food crisis for the world’s most vulnerable populations.
• Global Agriculture: How much liberalisation is needed? (pdf) A summary report on the current negotiating positions of major countries in the current round of trade negotiations, on issues surrounding subsidies, market access, and non-trade concerns.

This month I picked up India After Gandhi: The History of the World’s Largest Democracy by Ramachandra Guha. Guha goes back into India’s birth - and construction - to propose that “the real success story of India is not economic, but political” - of a persisting aspiration to, if not complete ability to provide, pluralism, equality, and secularism. Guha is, no doubt, helped by the exciting subject of his book, but through the first section he has also proven himself to be an engrossing writer. I have only read the first chapter, of India’s formative years, but this is clearly a book that every Indian must read to understand the immense achievement of the country’s founding parents (fathers?), and the immensity of the responsibility they left us with.

Finally, a series of books has been reviewed by Guha himself and provide perspectives lacking from the complete foreigner or Indian. These are The Clash Within: Democracy, Religious Violence and India’s Future by Martha Nussbaum, Planet India: How the Fastest-Growing Democracy is Transforming America and the World by Mira Kamdar, and Inhaling the Mahatma by Christopher Kremmer.

Guha is justifiably proud of India’s achievements, and painfully aware of its failings. He appreciates the positive attention India is getting from these authors, that claim that “India has much to offer to other nations” or that “no other country matters more to the future of our planet than India.” Yet, rather than bask in the glory Guha cautions against great expectations:

The western writers of the 1960s warned their readers that India was a losing proposition, the laboratory, as it were, of failed experiments in democracy and nation-building. On the other hand, some writers now insist that India must get it right if humanity in general is to get it right. India must show the world how to combine growth with equity and sustainability; India must also show the world how best to negotiate the delicate balance between faith and state. Admittedly, to be treated with contempt and condescension was not very nice; but to be burdened with these great expectations is not very comforting either.

The title suggests the subject matter is full of contradictions - just how exactly is the rise of India “strange”? Those apparent contradictions are explained so well that Luce makes my job of recommending this book easy. If you can read only one book on India, make it this one.

This is a book about Indian society, politics, and economy. But it starts with history - specifically, the history of post-independence India. Gandhi and Ambedkar are mentioned briefly, but it is Nehru that receives the most attention. To him, Luce ascribes three enduring legacies - secularism, democracy (through universal franchise), and socialism. The first two proved to be propitious for India; the last still retains a vice-like, often tragic, grip on the masses.

In this history lesson, no topic is taboo. Luce expends considerable ink on the caste system, using it to explain contemporary Indian politics. The rise of India’s lower castes in politics — and in general — is used to explain much, such as why the state cannot be blind to the identify of its citizens, and how caste politics is countering the economic forces of homogenization resulting from upward mobility and economic interaction.

On international relations Luce looks at “the triangular dance” of the US, China and India - both externally (discussing nuclear politics and energy security) and internally. India may be a key state in the years to come and is better asserting its powers today, but he concludes its rise is not yet fully assured nor its diplomacy fully able to grasp the “argument of power”. Regardless, on the economic front at least, he avoids seeing India’s rise as simply a numbers game.

Rather, he suggests India chooses stability (through the exercise of democracy) over numeric growth. He is not critical of that choice, saying that “India challenges us to provide a clear definition of what we mean by development, which is usually taken to mean economic prosperity and little else. Should it not also mean giving people significant choices in how they express themselves?”

For his many accolades, Luce can often be critical too. In a rare moment of sweeping generalizations he says:

The rest of the world could learn a lot from India, among which tolerance, the management of diversity, and the rooting of democracy in a traditional society loom large. If world trade were to be conducted purely in cultural products, then India would have a thumping annual surplus. But India continues to lack in practice - if not in principle - the basic condition of genuine citizenship — [Equal citizenship] in practice falls far short of the claims it [the constitution] makes.

Such statements should not be swept aside, least of all by Indians. For while Luce is an observer par excellence, and this is an exceptional book about India, it is a book for India too. It may be humorous (India is described as both a “functioning anarchy”, and a “lorry on twelve wheels”), but the challenges it identifies for India’s future are very real. The last chapter ends with a discussion of four - poverty, environment, HIV/AIDS, and protecting India’s liberal democracy which “along with the talents of its people, is the most precious asset the country possesses”.

Luce’s extended analysis suggests that Indian concepts of ethics, social construction, and political economy have their problems and often cause inequities that prevent India from achieving its destiny. But he also accepts that the west does not have a monopoly on ideals of modernity, admitting even that it can coexist with tradition.

In dealing with that contradiction, Luce still manages to do what no other western observer has been able to do - view India through a lens uncolored by western conceptions of liberalism, secularism, or development. If this book had nothing else to offer, that itself would be sufficient to recommend it.

Reproduced and revised from BlogCritics.org

La Revue - a bi-monthly publication of the French magazine Jeune Afrique has an entire special section on India, titled, “L’Inde à pas de géant”. And this is a serious special section - an entire half of the issue (about 80 pages), is about India. And the opening article, by André Lewin - former French ambassador to India - sets the tone (Google translator):

Immensité du territoire, multiplicité des langues et des religions, persistance du système des caste…L’Inde aurait pu être ingouvernable. Pourtant, son unité est réelle et sa démocratie fait preuve d’une belle vitalité.

In fairly long articles, the issue covers the Nehru Gandhi dynasty, the political shifts caused by caste-based politics, demographic changes, the economy, society, and diaspora. Comprehensive, often fairly accurate, and going beyond the superficial coverage one sees in more mainstream English media, where India’s popularity has already peaked.

Banque & Finance - a Swiss banking bimonthly - also spends an entire 3-page article extohling the virtues of investing in India, and complains how offshore funds (mutual funds run our of Switzerland) are not very good, particularly when compared to the performance of and immense diversity of onshore funds. The article, while cautioning of overheating markets, identifies four pillars of India’s growth:

1. Outsourcing gains momentum
2. Infrastructure development catching pace
3. Rural India to benefit from multiplier effect
4. Favorable demography drives consumerism

Now, the Swiss are not known to be ahead of the curve. And Swiss banks are notorious for being the most boring, staid, and risk-averse institutions on this planet. So, if a mainstream Swiss banking publication is talking about the Indian growth story, surely, India’s time has arrived. In fact, it may already be past its peak!

In so many ways, as Piya puts it, there is indeed no place like home. We’ve all heard the success story of economic growth and unbounded professional opportunity. That story is very much true, and its scale only visible after one arrives in India, but that is only part of the story.

Contrasting Lifestyles: Comfort vs. Chaos

Living in Switzerland, even in the US, is comfortable. I can get used to getting up at 7am, walking to work at 8am (stopping for a coffee on the way), eating at noon, walking out at 7pm (not my case unfortunately) to a bar in old town, staying for a few drinks as friends join, and walking back home at 11pm. I can plan, to the minute, the time it will take me from any place in Geneva to any place in Zurich, because I can set my clock to the trains. Going to a public office to get things done can be a headache, but if I know the process, I know the outcome.

I can forget all that when I land in India. Process and rules are only synonyms for the ‘guideline’. The outcome is what is important, and achieving it dependent only on how badly one wants it. The Indians have a word for it - jugaad. It makes us special. Frustrating as the chaos can be, managing it only requires understanding that there is a method to the madness, and to learn to be a little mad oneself.

A Twinge of Loss

On a personal level, as Piya seems to be discovering, that chaos reminds everyday of how things have changed - the value of money is no longer the same, fashions and practices of Nani’s days are dying; and how they have not - bribes still get the work done, Indian English is still quirky, and things may or may not work.

Yet, I cannot but feel a twinge of sadness for a way of life fast disappearing under the trample of short-term growth. Delhi, in so many ways epitomizes this problem. The Supreme Court just announced a ban on outdoor food stalls, so Piya may not enjoy some of the food she so loves. Earlier, the Delhi Government in all its wisdom banned cycle rickshaws from Chandni Chowk in Old Delhi. Delhi is set to become very boring.

Beyond the nostalgia, it is also set to become more unlivable. Worse, such decisions are frustrating because they come when Europe has managed to retain its old-world charm, and sprawling cities in the US are promoting pedestrianization and cycles. India, in trying to catch up with the west, is still catching up with the west of yesteryear. And nobody seems to know better.

Why Returning is So Difficult

That, in fact, is the biggest problem I faced in India. Of developments that are mediocre, and people that accept mediocrity, or even ignore that it exists. Let me explain with my pet peeve - Delhi’s transport infrastructure.

Several years ago, the Delhi government announced a series of flyovers and highways around Delhi. They were heralded as state-of-the-art, and today most are ready. Simultaneously came the Delhi Metro, a modern marvel that is transforming commuting practicies in Delhi. Yet, if you have ever been to any modern city, what strikes you is not how good these developments are, but how good they could have been. Flyovers have no space for pedestrians or bus stops, the larger ones have an amazing array of lane changes and merges with no space for them, and are bad design more generally. Similarly, the metro while amazing inside, is an eyesore outside. These heavy concrete constructions are in stark contrast to the sleek constructions one sees in South East Asia and Europe (I learnt Indian construction contracts are paid by weight, which explains why we want heavy flyovers).

If all this is a problem, even more difficult to reconcile is that most Delhiites - and Indians - see it as the epitomy of transport infrastructure. They compare to Bangalore and say it is so much better. I could not understand why they compare to what is worse, rather than what is better, till very recently.

It is the same jugaad, and our meagre expectations of what is offered in public that constrains our expectations. When Delhiites say public infrastructure is excellent, even if it is not, it is not their aspirations talking, but their experience.

It is all too easy to overlook these problems. Returning NRIs in particular, can easily roam in their air conditioned cars, driving from door to door. In that world, of private enterprise where salaries are easily Rs. 100,000 a month, India is getting much better, because the hotels, resorts, and houses have become bigger and better. But in another world, of the average middle class Indian, of teachers paid Rs. 15,000 a month (these numbers are based on personal experience for someone with my experience), and NGO or government employees receiving Rs. 30,000, India illustrates the tradeoff between growth and lifestyle. The improvements for one segment are coming - at least so far - mostly at the cost of the second (perhaps best illustrated by the soaring inflation, driven largely by upper middle class consumption).

Then Why Return?

So, if returning is frauth with such ethical and emotional challenges, why return? Because avoiding that challenge is to be a sissy? Worse, because it is those very challenges that remind one of being alive. Skiing is fun, but its not in the big scheme of things that important. Giving a city its first metro network is; creating a major conglomerate from nothing is; creating policy on energy efficiency for a country of over 1 billion is (the chief of the BEE left the private sector because, and I quote from a meeting, “this is the chance of a lifetime”).

In finance, one holds that big risks come with big returns. India is fraught with risks, including the possibility of not being able to live there. But it has incredible opportunity too. Professionally to make money and make a name. Personally, to feel alive.

Returning was , for me always a question of when, not if. In those three months, I met numerous returned NRIs, several expats, and many NRIs contemplating return. To the last I can only say that this is India’s time. No matter what you want to achieve, you can achieve it in India. Born and bred in the ‘management school of scarcity’, most things are possible, including the attempt to reshape societial priorities (my own preference). So go ahead, follow Piya’s travails and wish her luck. For her story may well be yours.

Goldman Sachs is bullish on India: Various papers (IHT, HT) are reporting a new Goldman Sachs report that predicts India will be the 2nd largest economy in the world by 2050, surpassing the US in size. This latest report marks an upgrade for India, from Goldman Sachs. According to IHT:

India has moved onto a much faster growth trajectory than the bank had previously expected, fueled by strong and steady productivity gains in its legions of new factories, which are producing everything from brassieres to cars.

Goldman now expects the Indian economy to grow at 8 percent a year through 2020, higher than the 5.7 percent rate it predicted in 2003 (original report here).

It is not all good news. The growth will create competition for resources and severe environmental damage. It will also result in an estimated 700 million migrants into urban centers.

The Harvard International Review has a special feature on India, with three articles (the APAC section has more, worth reading):

• Going Forward: A review of future prospects
• India Needs its NGOs: A piece on civil society
• Regenerating Lands and Livelihoods: on sustainable resource management

Going Forward, by Nirvikar Singh is peppered with western influenced economic ideals such as a preference for free trade, which is somehow expected to promote employment. Still, it understands well India’s challenges and its fairly unique context:

Among developing nations, the combination of a large population, a democratic government, and a strongly multi-religious and multi-ethnic demographic makes India somewhat unique.

The plan to create growth first and then equity later may work in the Chinese political system, but it will not be successful in India’s democracy. India needs a more inclusive model of development.

Milton Friedman did some work on India, in 1955 and after. As reported by Sepia Mutiny (part I and part II), Friedman was both appreciate of India’s potential, and frustrated for its waste. In 2000, he said:

I continue to be impressed by India’s enormous potential and depressed by the contrast between that potential and the minimal progress that has been achieved in the forty-five years since I was first in India. The latest decade shows more signs of change. India may finally be on the way to realizing its potential. If so, it will be a blessing for the people of India and for the world as a whole.

In July 2006, he said of India and China in an interview:

Yes. Note the contrast. China has maintained political and human collectivism while gradually freeing the economic market. This has so far been very successful but is heading for a clash, since economic freedom and political collectivism are not compatible. India maintained political democracy while running a collectivist economy. It is now unwinding the latter, which will strengthen freedom of all kinds, so in that respect it is in a better position than China.

Now, absolute numbers don’t mean much in a world of unequal incomes and expenses. So I figured I’d compare my Indian and US salaries. The result is a little revealing. In India, my salary put me in the top 13% (around 773 millionth richest person). But my salary in the USA in 2002, 6 months after my move, made me the 49,322,169th richest person, in the top 0.82%.

So, I still have 49,322,168 people to beat!