Democracy came before development in India: Arvind Subramanian | Voices That Count

The Federal launched its flagship conversation series, 'Voices That Count’, with a thought-provoking inaugural session on Wednesday (December 3), at the Great Lakes Institute of Management campus in Chennai.

The event opened with a compelling fireside chat featuring two distinguished voices in public policy and development — Arvind Subramanian, former Chief Economic Advisor (CEA) to the Government of India, and Devesh Kapur, renowned political scientist and Professor at Johns Hopkins SAIS.

The duo delved into their latest co-authored book, A Sixth of Humanity, offering a data-rich and unflinching analysis of India’s developmental journey. Their conversation explored India’s unique trajectory — marked by democracy preceding development, a leap from agriculture to services bypassing manufacturing, and global integration ahead of strong domestic foundations.

The author-duo discussed their process while creating it, and explored India’s “precocious” path of development: democracy before development, services before manufacturing, and globalisation before deep domestic capability.

The fireside chat was moderated by S Srinivasan, The Federal’s Editor-in-Chief, and Prof Vidya Mahambare, Professor of Economics at the Great Lakes Institute of Management.

Data credibility

Srinivasan began the session by asking Subramanian and Kapur about the challenges they may have faced while writing the book, and how they kept it balanced. He noted that it struck the right balance in the current polarised political sphere and gave credit where it was due, while being scathing at certain points and being non-partisan in its outlook.

“I think there’s a simple answer to that," said Subramanian. "Both Devesh and I feel —almost like a religion —that we must be guided by data and evidence. The argument should follow from data and evidence rather than having strong biases or predispositions, which then shape your argument.”

He added that the data was drawn from publicly available and widely acknowledged sources. Efforts were also made to ensure cross-country comparisons over time, to lend a certain discipline and anchor to the judgments that are made.

Kapur said that in the process of writing their book in a balanced way, they did not judge the actions of the 1950s or '60s through today's lens. They made a very conscious effort to gather data from over 3,000 official government reports for almost every aspect of the economy—at the time they were published—trying to understand the country as policymakers were seeing it at the time, he added.

Entry and exit

Mahambare raised the question of India seemingly doing well in large-scale campaign-style movements, but being bad at consistent delivery.

Echoing the sentiment, Kapur said: “The Indian state does well in episodic delivery for things that have an automatic exit. Whereas, in public health, primary education, sanitation, which require day-to-day attention, the state does not do well.”

The Indian state does well in episodic delivery for things that have an automatic exit. Whereas, in public health, primary education and sanitation, which require day-to-day attention, the state does not do well: Devesh Kapur

He went on to explain that the Indian state is better at entry than it is at exit. “Exit is a self-disciplining device,” he observed, adding that without it, there are fewer, weaker mechanisms to discipline the administrative apparatus.

Why 'precocious' democracy?

The book makes frequent references to the 'precocious' Indian democracy. When asked about it, Kapur explained that the usage was to show how enfranchisement—the right to vote—rose along with economic development. In that, political development preceded economic development in India, whereas in most other countries, it was either concurrent or the other way round.

Emphasising the economic development aspect, Subramanian said that India defied the pattern of most successful cases of countries that grow from agriculture to manufacturing to services, underperforming in manufacturing and going towards services from agriculture.

He said: “The vast majority of the labour force in India is unskilled, and the Indian economy has not been very good at providing enough manufacturing, low-skill, productive jobs for the vast swathes of the labour force.”

Concentrated manufacturing hubs

Continuing in the same strain on manufacturing and the concentration of manufacturing hubs in southern states of India, Mahambare brought up the question—shouldn’t manufacturing travel to the northern belt, where the manufacturing GDP is less, rather than to prosperous southern states?

Kapur spoke about the large Hindi belt and some of the eastern states and their inability to take advantage of the manufacturing sector, and pointed out that it has a lot to do with state politics and social strife, which make them unattractive to businesses.

Subramanian elaborated that investors have been much more comfortable dealing with states that are established manufacturing hubs, with the recent five years showing a shift towards preference for southern states. “Prosperity can spread when capital goes to where the cheap labour is,” he said.

Federal funding disparity

Srinivasan raised questions on the disparity in funding between the northern and southern states, especially the non-BJP-ruled states, and matters like delimitation.

In response, Kapur said the issue is a longstanding one and that it's more acute when the Centre is made up of a majority government, compared to a coalition government.

The political consciousness is that somehow underperformance is being rewarded and not penalised, and overperformance is being penalised. I think that’s the heart of the political challenge faced here [North-South funding diparity]: Arvind Subramanian

According to Subramanian, the issue is not the level of the transfer of funds in the northern and eastern belts, but the fact that it’s rising consistently in the face of economic performance. “The political consciousness is that somehow underperformance is being rewarded and not penalised, and over-performance is being penalised. I think that’s the heart of the political challenge faced here," he noted.

Delimitation debate

On the matter of the delimitation debate between the North and South, Kapur said the concept is not unique to India. “The cardinal principle of democracy is that every individual’s vote should add equal weight, which is clearly not the case," he said.

According to him, a voter in the South has much more weight “because [looking at ] the persons per MP in a constituency, there are far more voters in the North than in the South.”

“You cannot have a situation where the South has both fewer seats and is making greater fiscal transfers,” he said, suggesting a solution. “The compromise that needs to be reached is the balance. Either the South gets its political representation maintained despite declining populations—so the representation per voter is greater. But the fiscal transfers, while they will not work, will continue.”

Elephants in the room

According to Subramanian, two elephants in the room are making the previously mentioned issues “much more salient”.

What the party in power is going to centralise, imposing a kind of ‘cultural uniformity’ on all the states, is not a part of the constitutional compromise. According to him, “It’s that political centralisation and the attempt to foist it that is the real elephant in the room that’s animating what the southern states are saying.”

The other elephant in the room is divergent economic performance. If this continues, these problems will continue with no escape from them, he noted.

Working together

Subramanian and Kapur gave credit to their mutual trust, deep respect for each other and their shared goal of ensuring “the data should speak”. They credited their fairly distinct and complementary perspectives in shaping their book.

“Development cannot be explained either by political scientists alone, or by economists alone, and how do we then show the world that by coming together we can have a richer story about Indian development," said Subramanian.

The fireside chat was followed by an engaging Q&A with students from the Great Lakes Institute of Management. The two experts answered questions ranging from urban politics to the range of prosperity of Indian states.

Event sponsors

The title sponsor of the event, powered by City Union Bank, was the Great Lakes Institute of Management.

The associate sponsor was the Little Flower Group of Institutions, while the gifting partner: was Mehta Jewellery.

The publishing partner was HarperCollins. You can read the book excerpt here.