Is India's Economic Potential Over-Hyped?

There have been many articles in Fortune, Forbes, Business Insider and other publications heralding a new age for India and investors in India. It seems glory days are just around the corner. The crux of the argument is that with a young population, it is only a matter of time before India’s demographic dividend begins to pay. However, it may be worth pausing a bit and looking anew, critically, if such an eventuality will indeed come to pass.

Many components make up a country’s economic potential, including the intellect of its population, size of its population, natural resources, quality and strength of its institutions, etc. One key component is the willingness of its population to embrace risk and a mindset of entrepreneurship. This is a key factor, one that led to the rise of both Great Britain and USA as global powers. British ships sailed the oceans and conquered “new” worlds. Intrepid settlers braved the weather and hostile territories to conquer the West in America (to the chagrin of Native Americans, but that is another story). Without that culture of risk taking, none of that would be possible. It is that same risk taking one sees in China today. Do we see this in India?

I left India 32 years ago and had been largely out of touch with the Indian mindset except for visits that were few and far between. Six months ago, I joined my medical school class’ Whatsapp group, and was exposed to the thought process of my classmates, who represent the privileged cream of the society. A topic had come up regarding which model was superior, a service model (such as the NGO’s that proliferate in the country) or an entrepreneurial one, exemplified by the Indian version of Amazon (AMZN), Flipkart. It seems I was the only supporter of the latter, with 70 of my classmates lined up against me. One of my classmates derided Flipkart and Amazon as a modern version of the British East India Company (EIC) that established the British rule in India. The sub text was that I was a quisling, supporting big bad Western companies that would dominate India a-la the East India Company via Flipkart.

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Ashok Sinha 10 months ago Member's comment

I don't understand which of us opposed Flipkart. When I lived in India 5 years ago I used to extensively use it, now my son does. Actually, even if you pay a small amount more, one should factor in the cost of travel to the store, and the price differential disappears.

If the EIC was only trading, why did they raise an army?

They actually got into what today would be called a protection racket.

I have switched countries, jobs, without too much of a safety net other than a pension, at 53 years. Indians are risk takers, and enterprising.

The demographic and English speaking population dividends are paying off. The only problem is a corrupt bureaucracy and slow moving government. The current one has changed things a lot, but more is needed and change engenders resistance to change.

Ketan Desai 10 months ago Author's comment

AJ opposed Flipkart. You can decipher the initials. Glad to know you approve the entrepreneurial mindset, but it seems that you are in the minority.

Regarding EIC, they made a profit and saw it fit to raise an army to protect it. It was a protection racket that grew into an Empire.

Many Indians are risk takers, especially those who migrate. But many many are not. It is that mindset that led to 10 million applicants for 10,000 railway jobs 2 weeks ago. If new industries and not encouraged, where will the jobs for "demographic dividend' come from?

Your last statement hits the nail on the head - change engenders resistance to change. Including within us. Unless we recognize it and address it, things will not improve.