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14 Mar 2024

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India's Progress Vaults It Into the World's “Big Five”

India is the most heavily populated and most fascinating country in the world. It has become highly consequential, with the fifth-largest economy in the world, while being the third-largest producer of CO2 and related emissions.

Unlike neighboring China's rigid, centralized nature, India is a sprawling, federated democracy with 28 states and eight city-states and territories, at least one unique language in each of those states, and a variety of religious cultures and societal opinions. Generally speaking, India seems chaotic to the unsuspecting visitor, often in ways that redefine the notion of chaos.

India is One of the “Big Five”
But India can now be considered as one of the world's “Big Five” – along with the United States, China, Japan, and Germany – as nations with a collective economy larger than that of the rest of the world combined. About 40% of the world's people live in these nations, and about 56% of the world's business is conducted by them.

India's per-person income is still only 20% of China's and of the world average, and a small fraction of the incomes of the other Big Five nations. Its overall economy will exceed both Japan and Germany by 2030, if present trends continue, but will will take decades for India to catch any of the others in per-person income, if it ever does.

People in the US are impressed by the 40 million population of its largest state, California. India has one state with 200 million people, two more with 100 million or more, and a total of 11 states that exceed California in population. Despite massive investments in technology in India over the past three decades, which must exceed $3 trillion by now, the enormity of its population presents one of the world's most difficult challenges in which to achieve substantial progress.

The country has indeed achieved substantial progress in building out its Digital Infrastructure, albeit with disparities across its 1.3 million square miles, with states that span low deserts, high plains, tropical savannas and rainforests, monsoonal flats and river valleys, and the Himalayas.

Digital Readiness Index Scores
Thus, according to the IDCA Digital Readiness Index, India's Economy score (which accounts heavily for the amount of Digital Infrastructure relative to a nation's income) sits at 71 on a 0-100 scale, among the top 30 in the world an on a relative par with Canada, the UK, and Switzerland.

Yet India's overall score is 45, roughly the world average, and on a par with Pakistan, Russia, and Morocco.

The Index measures hundreds of factors in four broad categories: Economy, Environment, Social, and Governance. It is in the latter three categories that India is brought low. Its Environment score – which focuses on CO2 emissions and renewable electricity – is 29, on a par with much of Southeast Asia. India's renewable grid delivers about 22% of its electricity, including a contribution of 3% from nuclear reactors.

As noted, India is the world's third-largest emissions producer, and it does this with only about 25% of the efficiency of the US. The US itself is not an Environment star, with a non-nuclear renewables grid of about 20%, producing the world's second-highest amount of GHG emissions, and scoring 49 in this category.

Average Social and Governance Scores
India has seen its own billionaire class emerge, has produced several of the world's leading IT consulting giants, and lifted a few hundred million people out of poverty. Yet income disparity is a continuing problem, human development factors (education, physical infrastructure and transportation, overall environmental factors, and healthcare) is considered “medium” by the United Nations, and its perception of corruption remains stubbornly present.

As a result, India's Social score is 39, slightly below the world average, and Governance score is 43, right at the world average. However, one doubts that India's leaders and citizens do not aspire to be just average in any aspect of their nation.

India's Governance score is actually bolstered by the country's reputation as holding elections that are considered to be relatively free and open. This latter point will be highlighted very soon, as Prime Minister Narendra Modi and the Indian People's Party he leads is expected to win a crushing victory in elections scheduled in a few weeks. Modi has focused on infrastructure, investment, and promoting majoritarian Hindu-centric politics during his first two terms. He is considered to be the most consequential leader since the early days of Indira Gandhi in the 1960s and 70s.

Continued Travels Along the Third Way
As with Indira Gandhi and other past Indian prime ministers, Modi has studiously followed a “third way” path that does not fully embrace the world's superpowers (the US and the Soviet Union in Indira Gandhi's times, the US and China today). His backers claim he has earned India vast new respect and power throughout the world, and his control is expected to keep increasing on the assumption he will easily win a third term.

Trying to Achieve Balance
The Digital Readiness Index is a highly abstracted piece of work, allowing quick snapshots of where each of the world's nations stands relatively in contrast to its regional neighbors and economic peers. It is unique in that it addresses how well each nation is doing compared to what would be expected given its current technological and socioeconomic conditions; it is not a straightline comparison that correlates tightly with income, as do most of the world's analyses of nations.

The inclusion of a large amount of robust data in the Index further allows much deeper views of each nation, pointing out specific accomplishments, areas of opportunities, and frank deficits. All nations are benchmarked against an optimal, hypothetical nation as a reality check, and the data lends itself to working toward overall scores that are balanced equally among the four categories.

The reality is that most nations of the world are very unbalanced, as might be expected, and India certainly follows this principle. Whereas each of the four categories – Economy, Environment, Social, and Governance – would contribute 25% of the overall score, in India's case the results show the Economy contributing 37%, Environment 19%, Social 20%, and Governance 24%.

How Does India Proceed?
These high-level numbers tell us that India has the opportunity to leverage the Digital Infrastructure base it's created to focus on vast new sources of renewable energy and to clean up its industrial pollution and vehicle emissions. The recent COP28 declaration in support of nuclear power should give further incentive for the nation to increase its nuclear-energy footprint. The country currently has 23 reactors with a generation capacity of more than 7 gigawatts; another seven reactors are under construction to add 5.4 more gigawatts to the total.

India has a reputation as a bit of a rogue state when it comes to nuclear energy, though, having never agreed to 1968's Nuclear Non-Proliferation Treaty, and the nation remains at the point of mutual nuclear daggers with neighboring Pakistan.

Improving India's renewables grid – gargantuan task that this is – would in turn stimulate continued economic growth, and income disparity and corruption levels traditionally following a curve that would reduce both of them as income climbs toward the world average. That said, the notion of India reaching the world average for per-person income would increase the size of its economy by five times and vault it into a virtual tie with China.

30 Years from Now...
This may seem unlikely – even if India were to continue 8% annual economic growth year after year, it wouldn't reach inflation-adjusted world-average income until 2055, more than 30 years from now.

Yet India's leaders and people have been their own most optimistic boosters for the past 30 years and have seen their nation rise from the lower depths of widespread poverty and poor economic performance to become one of those Big Five consequential economic powers today. What will this most complex of all nations achieve over the next three decades?

Photo montage from Government of India

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