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First, Fix the Plumbing

5 minute read
Krista Mahr

At around 3:30 p.m. on Sept. 24, Indian Prime Minister Manmohan Singh’s bespectacled visage popped up in the Twitter feeds of his 231,902 followers. “In a growing economy, there is enough space for big and small to grow,” his missive read. He was touting his government’s recent decision to pave the way for more foreign investment in retail, a long-awaited move that its supporters say promises to create millions of jobs, increase farmers’ profits and decrease prices for consumers. Minutes later, Singh got his first reply: “@PMOIndia: can we also have clean toilets sir.”

It was a cutting retort. Walmart and Tesco won’t change the fact that less than half of Indian households have toilets, or the fact that the country can’t maintain a decent power grid (as July’s historic power outage, when some 600 million people were without electricity, made plain). There may be room in India for big and small to grow, but it’s hard to grow by candlelight or when having to steal away to answer a call of nature.

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The past few weeks have revived hopes that help is on the way. On Sept. 13 and 14, the government announced what is perhaps its biggest suite of economic reforms devised since it came to power: opening up not just retail but also aviation to more foreign investment, raising the price of diesel and taking other measures aimed at boosting the flagging economy. The reforms showed a resoluteness in the face of political opposition that many inside and outside India have been craving, and restored some faith in the Economist in Chief’s view that a high-growth path is the best way to improve the lives of the nation’s poor. Said Singh in an address to the nation: “The world is not kind to those who do not tackle their own problems.”

Politics isn’t kind even to those who do. Within days of Big Bang Friday, as Sept. 14 has come to be known, protesters vented anger against the diesel price hike and reforms they believe will steal jobs from millions of small traders in India’s informal economy. Mamata Banerjee, the mercurial head of West Bengal state and the Trinamool Congress (TMC) party, pulled her six ministers and 19 MPs out of the ruling coalition, saying that the measures place an unfair financial burden on citizens (and voters). Her move left the Congress Party — led United Progressive Alliance without a parliamentary majority at a time when it is still trying to contain the fallout of a tumultuous year, though Congress says it has enough support from outside parties to survive. Global ratings agencies have been piling on the economic gloom. Debate over an on-going investigation into the alleged misallocation of coal-mining licenses on the government’s watch turned the last session of Parliament into little more than a sustained shouting match. In July, a spasm of violence in the northeastern state of Assam raised the ghastly specter of ethnic strife.

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And then there are the more basic issues, like toilets. Singh has given an important signal to investors that he won’t be held hostage by domestic pressures, at least in the area of economic policy. But one has to wonder why New Delhi seems stuck on more fundamental improvements, like ensuring a steady power supply or getting running water and plumbing into more homes. Progress has been made: last year, the U.N. projected that India’s poverty rates would drop to 22% by 2015, down from 51% in 1990. But everyone knows the country can’t afford to stop there.

The government says there’s more to come. Several business-friendly laws that will increase room for foreign investment in insurance, create a statutory regulator for the pension sector, simplify India’s direct-tax structure and streamline the laws for corporate governance may go before lawmakers in the next parliamentary session. But reaching a general consensus — never mind negotiating the fine points — could be derailed by a recalcitrant opposition, a slighted TMC or by the simple defection of one of the coalition’s new allies, any of which could grow more skittish as general elections, scheduled for 2014, approach.

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To be sure, the government has shown determination, and may even survive the political spasm that has come in the wake of Big Bang Friday. But if Singh — or his successor — doesn’t find a way through the political morass to ensure that big and small can really grow together, there will be plenty more PCs and fridges for sale but few who can buy them, let alone power them up.

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