India: Organised Chaos

For most of its history India has followed a socialist approach to its Economy, with tight government control over the private sector, regulations and red tape, referred to as License Raj. Between 1947 and 1990 India’s Economy stagnated. In 1991, the finance minister, Manmohan Singh, implemented policies that reduced the government’s control over foreign trade and FDI. ‘With an average annual GDP growth rate of 5.7% for the past two decades, the Economy is among the fastest growing in the world’ . It is clear that India’s path to growth has been through opening up its Economy. However it is the spontaneous nature with which India has embraced free-market Economics that characterizes it today.

Chaos theory describes the behaviour of dynamic systems, systems whose states evolve with time, that may exhibit dynamics that are highly sensitive to initial conditions (butterfly effect)’1. Spontaneous order is the unintentional emergence of order out of this chaos as first proposed by the Taoist Zhuangzi . Adam Ferguson a philosopher and historian of the Scottish Enlightenment defines spontaneous order as the ‘result of human action, but not the execution of any human design.’

Such order out of chaos is evident in India. From the hustle and bustle of Mumbai’s markets, to the ‘street-entrepreneurs’ of Gujarat and India’s chaotic roads one can begin to see how the innate behavior of Indian people has given birth to the free-market at its purest level. Take India’s roads, in essence the driving rules are; the three Gs: good steering, good horn and good luck. Crash survivor Harman Sidhu Singh describes that driving on Indian roads is ‘like playing a video game’ . It would not be unusual to see cars and lorries drive on the wrong side of the highway. Vehicles share the roads with cows, elephants and camels. Added to this chaos is the often absence of traffic lights. Being witness to Indian cross-roads is truly fascinating. All vehicles (and animals) would cross simultaneously, and on many occasions escape without collision.

When thrown into such a situation on an everyday basis people adapt quickly to the lack of regulation and avoid, what would seem to most people from the UK an inevitable collision. Traffic in some of the most densely populated areas remains flowing as if an ‘invisible hand’ governs through the chaos. This is not to say that India has the safest roads by any means, it has just 1% of the worlds vehicles, but accounts for 10% of the worlds road accidents. Whilst India’s approach to free markets is not perfect, it is evident that one can see the gradual emergence of social order from self-interested individuals. This is why India never seems to stop moving, there is an inbuilt attitude in its citizens which enables them to get things done where and when they want to.

This includes the rise of billionaires in India such as Lakshmi Mittal and Mukesh Ambani, brought about by the 1991 deregulation process. According to Forbes, India is home to the largest number of billionaires in Asia with 36 Indians on the Forbes ‘100 richest people in the world’ list. India’s embrace of free-market Economics have allowed these entrepreneurs to flourish. They have been able to tap into India’s multi-faceted and diverse human resources that are prepared for whatever their working environment may bring.

Over the last decade, India has experienced a boom in its IT sector, which has contributed to the rise in India’s billionaires. It can be said that the Economic growth has instilled a greater need within Indian people to achieve affluence. The need to be successful and rich is rife in Indian culture. It is a subject continually pursued by Bollywood directors and is evident from the way in which Indian’s worship their celebrities from Shahrukh Khan to Sachin Tendulkar. Such pursuits have reinforced the relevance of the free market to India, in that citizens aim for the ‘bright lights’. This has created a competitive streak within the India culture, from education to career path.

Today, in India we see the result of this competitive mentality, culminating in its chaotic and restless cities. Ahmedabad’s C.G. Road is a perfect illustration of this. On-street you are inundated with shoe, clothes and DVD sellers who pursue you with vigour until you pay them to leave. Combined with this is the aroma from food stalls, especially Pani Puri (a round, hollow fried crisp filled with a watery mixture of potato, onion and chickpeas). Further one can see hoards of people rushing into and out of C.G Road’s many malls and restaurants. Added to this, the occasional elephant may emerge on the road. All senses are aroused with the intent to get people to spend money. It is simply chaotic, yet the street merchants seem undeterred and remained focused in the competitive environment. It is this mentality that has given birth to India’s entrepreneurial drive.

Whilst the number of millionaires in India went up from ‘70,000 to 85,000 in 2005’ , the trickledown effect of this wealth has yet to reach the rural Indian living below the poverty line. This brings to the facade, the issue of equity, a key criticism of the free market model. Whilst free market economic may be an ideology of Indian culture, one can see how taming the chaotic nature of the country is necessary to keep it on track. Chaos is far from a long-term strategy for growth. There needs to be more stringent regulation.

Based on current growth, ‘Goldman Sachs predicts that over the next 50 years, India will be the fastest growing economy in the world’3. Further India boasts a young population with 125 million Indians set to join the workforce in about 10 years. They reflect the dynamic attitude of the country and the desire to be successful. In essence, India may appear to be chaotic and lack regulation, but underneath the surface is a growing Economy slowly finding order in its own unique way.

Sources
Wikipedia
BBC ‘No U-turn on Indian road safety’ 19/04/07
http://www.arabianbusiness.com/497870-india-colour-chaos-and-contradictions

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