Scams amounting to lakhs of crores of rupees seem to be the defining feature of the Sonia Gandhi-led UPA government. The theft of public assets is nothing new, however. It is a structural problem endemic to the system of governance imposed on the Indian people. The mind simply boggles at the sheer size of the loot. Estimates regarding money stashed away in offshore banks amount to $1 trillion and more. And that’s just one part of the wealth stolen from India.
We speak rather glibly about large numbers such as a trillion. But we actually don’t have the capacity to comprehend such quantities. Since we are creatures limited in space and time, only small numbers are meaningful to us. A thousand we can understand. For example, a thousand seconds is just about 17 minutes, a time span we can appreciate.
Moving up the scale, even a million seconds is still fine since intuitively we understand how long 11 and a half days are. It gets harder to fully understand a billion second — nearly 32 years. Our lives are usually less than three billion seconds. But a trillion seconds is frankly impossible: no one has a real understanding of what 317 centuries feels like. The human species — homo sapiens — have only existed for about three trillion seconds. That’s how large a trillion is.
So back to that stolen wealth sitting in foreign banks — around 1 trillion dollars. That’s an unimaginably large amount of money. But there are larger numbers still, compared to which a trillion dollars is a trivially small number. That is the invisible theft that we are totally unaware of, leave alone being worried about it.
Let’s do a little bit of arithmetic. At the time of India’s political independence from Britain, India’s population was around 350 million. The per capita GDP was around $250 (in constant 2010 dollars). Over the last 65 years, India has grown at an average GDP growth rate of close to 2.1 per cent. We call that the “Nehru Rate of Growth,” (the rate at which the time to double the GDP is 35 years).
If you add up the GDP of India for the years 1950 to 2010, you get a figure of approximately $25 trillion. In other words, the Indian economy produced an aggregate amount of goods and services that are valued at $25 trillion. During that time, the population went up from 350 million to around 1.2 billion.
Now consider a counterfactual. What if instead of the 2.1 per cent annual Nehru rate of growth, the Indian economy had grown at a reasonable 6 per cent per year? What would have been the aggregate GDP then? The answer is a staggering $145 trillion. That means that Nehruvian socialism has cost India around $120 trillion so far — and counting.
The question that naturally arises is this. Is it possible for a large economy to grow at 6 per cent a year for many decades? Yes. China has grown at an average rate of around 8 per cent a year for over 30 years since 1978. India could have started at least four decades before China did. If India had, it would have occupied the space that China occupies today in the world of manufacturing. China has India’s failed Nehruvian socialist policies to thank for at least a part of its success.
What would India have been like had its leaders such as Jawaharlal Nehru and his daughter Indira Gandhi chosen to make India economically free? India would have been at least a middle-income country with a per capita income of around $10,000 per year.
Hundreds of millions of Indians would have had a shot at living decent lives and contributed to global welfare. The loss India has suffered hardly bears imagining.
It is high time India chose a different path — one that leads to prosperity instead of poverty. But for that, Indians will have to first fully understand how needless and futile socialism is for economic well-being.
Photo Courtesy: Phil Whitehouse