In search of an ideas revolution in India

When nations become successful and significant, it is not solely due to geography or demography. It’s the power of ideas and making them work for public purposes that helps nations create huge wealth and gain influence.

If scientific innovations and discoveries of new territories enabled smaller European countries to rule a large part of the world in the 19th century, it is new ideas on technology and capital that helped US achieve global dominance in the 20th century. The 21th century saw the rise of countries like Japan, China, Korea and Israel mostly on the back of their ideas and inventions. When nations stop coming up with new ideas they begin to stagnate.

It is in the realm of powerful ideas that India has been found wanting since its independence 70 years ago. This is perhaps an unusual aberration for a country that brought to the world some of the most original ideas and innovations, right from discovering the power of Zero to decimal system, Yoga to Ayurveda, surgery to spirituality, town planning to urban infrastructure (Indus Valley 3500 BC to 1800 BC) and mining to metallurgy.

Its contribution to the world of commerce is equally significant, being part of trade routes from silk to spice, facilitating trade finance by way of Hundi (bill of exchange) and its prowess in trading of numerous financial instruments from forwards to options even before the advent of modern markets. Though Hinduism is a religion that governs Hindus all over the world, the spinoffs of it in the form of Buddhism, Jainism and Sikhism are spread across the world.

For these distinctions India was well regarded. According to the economic historian Angus Maddison, India accounted for up to 30 per cent of the global GDP between 1AD and the 1800s. It gave birth to the original economist in the form of Chanakya (371 BC) long before the Adam Smith, the father of the modern economics was born (1723), and displayed excellent prowess in arts and crafts, trade and commerce, culture and civilisation.

For about 40 odd years after Independence India was run on a medley of mixed economy models built on socialist principles, where the State held sway, with the private sector playing second and decidedly inferior fiddle. For the last 25 years beginning the 1990s, market reforms were introduced. The private sector began to grow in stature though the State still exercises major influence over economy and finance.

The big ideas that shaped today’s world are in the realm of technology, communications and finance. The world seems to be catching with up advances in ideation faster than India.

Let’s look at how nations made a strong imprint with their ideas. Great Britain under Margaret Thatcher in the 1980s promoted privatisation in a big way that later turned into a driving principle of reforms. From fighting two of the world’s biggest wars to seeking control of Europe without success, Germany today is the key force in making EU work.

US democratised technologies for common man and children alike. Japan introduced the Asian model into the development debate that contested western models. Korea triggered a revolution in smartphones and automobiles. China blended politics of communism with the business of capitalism, leading to phenomenal capital being raised in global public equity markets and its currency going global. West Asia brought Islamic Finance and Brazil under Lula became the talk of development models with programmes such as Bolsa Familia that pulled millions out of poverty.

In India, there were a few sparks of innovative social interventions such as Integrated Rural Development Programme, and the 20 Point Economic Programme but too much bureaucracy and corruption turned them into duds. Its Five Year Plans seem to have lost their way in the mountains of paper that it produced. It has a long history of banking, finance and markets but has not been able to produce a bank of global stature.

India throughout its history is well known for trading, but there is hardly anything for which it is recognised now. State was supreme, bureaucracy called the shots, creating a maze of rules that are difficult to comprehend or comply with.

The outcome has been lack of enterprise built on original ideas, as most business models developed were based on outsourcing or plain imports. Its mixed economy model took it nowhere during its socialist regime, whereas its free market model now sees numerous flip flops.

As this century unfolds, India should create a conducive environment for generating path-breaking ideas. Its growing global negotiating power should be used to market ideas from India that could add a great deal to its economic clout. It should develop financial statecraft with a right blend of economic and financial diplomacy. The same had enhanced US influence in a big way in the past and now helping China with its expansion.

Centres of excellence, which India has in good numbers, should be given freedom without too much bureaucratisation. It is time the establishment refrained from questioning every new concept, or restricting every practice that it does not understand. A sole obsession with 8 per cent growth is too limiting for a nation that has ambitions for a major role in the global landscape. It is ideas and innovations that can trigger growth to far higher levels, and that is where the leadership should work the most.

The writer is a Mumbai-based financial consultant