Leapfrogging | Luis Rubio

Luis Rubio

India advances uncontainable, but in an exceedingly peculiar manner, deftly skirting the obstacles imposed upon it inexorably by its extraordinary linguistic, religious and ethnic diversity. An extremely complex and stratified society coming up against enormous barriers to progress, it has found innovative ways to break through fiefdoms, dogmas and ancestral practices. There is much that Mexicans could learn from its experience.

“India lives in all centuries at once” says ex-Prime Minister Manmohan Singh. That characteristic, with which Mexicans can clearly identify, has not impeded India from undertaking one of the most impacting transformation processes in the world. The obvious contrast is China, countries with similar population levels, but with radically opposed politico-social natures. While in China the government controls all the processes and has shown the capacity to impose its vision of development on the totality of its population, India is a democratic nation and, at the same time a remarkably diverse, disperse and disorganized one. For these reasons, the challenge for India has been that much greater.

How, under those circumstances, can change be implemented for the sake of achieving development? Such has been the quandary of that monumental nation throughout the past three decades. How to crack the ancestral mental, social and religious barriers? How to attract new, productive and promising investments, in an environment plagued by bureaucracy, corruption and interminable regulatory decision-making processes? How, in a word, to break through those obstacles, tenaciously deep rooted as they are, as an indispensable condition for raising the growth levels of the economy and to be able to aspire, from that point, to development?

The solution found by the most recent governments, and more so with the drive of the present one, headed by Narendra Modi, has been to leapfrog, to leave out stages, that is, not to copy the experiences of other nations, but instead to strive for quantum leaps. Perhaps there is no more illustrative example, albeit an obvious one, than that undergone in the ambit of communications: rather than investing in wire telephony in a nation where 80% of the population has never had a land-line home phone, the decision was to develop cellular telephony in accelerated fashion. Fewer than two decades after launching this initiative, the country rose from having twenty million land lines to 1,150 million cell phones. The next step was to break with the monopoly of financial services, creating a payment system sustained by mobile phones, through which the entire population is now in the possession of an ID card, thus the possibility of paying and receiving limitless funds at no cost.

To appreciate the size of the obstacles that the reformers have come up against, an example is sufficient: until up to five years ago, each of the 28 states making up that Asian nation levied a different sales and value-added tax (VAT) and demanded payment in cash on crossing each state border. The consequences of this requirement were interminable queues of trucks lining up to make their payment to unhurried bureaucrats. After more than ten years of negotiations, a system of federal taxes was finally agreed upon that respects the different rates, but that permits electronic payments, eliminating the customs barriers between each of the states. Something like that would have been resolved in one month in China, but in India it dragged on arduously for years and now it has transformed the logistics of all of the companies, which previously had to conform to a bureaucratic rationale for their distribution systems and warehouses. Some goods, above all foods, dropped suddenly in price. The point is that conditions have been being created for solving problems, often without changing what exists (such as the bureaucracy or the banking regulations) rendering it irrelevant. The result has been two decades of high rates of economic growth, the birth of an enormous middle class and generalized and contagious optimism.

The great difference between India and Mexico in terms of their transformation process lies in that the government of India is crystal-clear in terms of its need to incorporate itself swiftly into the XXI century and has been willing to face (sometimes going around) powerful business, political and union interests and, no less important, the traditionalistic dogmas that for centuries have perpetuated the oppressive economic and social system in force.

At a conference that I attended in India of late, the words most frequently articulated by governmental, social and business speakers were: middle class, Internet, development, education, technology, productivity, interconnected world, health. None of these words is found in the daily presidential morning press conferences in Mexico these days.

Although at times reluctantly, Mexico has been advancing along a similar course, but now the dogma that the poverty of the past was always better has been officialized. A total of 1.3 billion citizens of India demonstrate that that is not the pathway to success.

In India, I ran into the following dialog: Charlie Brown: “There are many smart people in the world.” Snoopy “Yes, but the majority is asymptomatic.” In India those who are moving forward are those who see through to the future.