Edward Luce, In Spite of the Gods: The Strange Rise of Modern India, London, Little Brown, 2006.

Edward Luce, who reported for the Financial Times on the subcontinent, has written an account of India, fifty years after independence in 1947. The very different India of now would still be recognisable to the trilogy of the three most important figures of twentieth century India: Mohandas K. Ghandi, who proposed ‘English rule without the English” to a mass-based movement of all Indians; Bhimrao Ambedkar, the leader of the millions of untouchables, who in contrast to Ghandi, called the village ” a sink of localism, a den of ignorance, narrow mindedness and communalism”; and Jawaharlal Nehru, Prime Minister between 1947 and 1964, lover of Lady Mountbatten, who half-jokingly referred to himself as “the last Englishman to rule India”.

Edward Luce’s book is a must read for anyone wanting a subtle, well informed introduction to the phenomenon that is India. Emphasizing both the British legacy and the legendary founders of modern India, Luce discusses the development of the economy since 1947, and the rapid changes following partial liberalisation in 1991; the pervasive bureaucracy and the caste system; the emergence of Hindu nationalism; the presence of an impoverished Muslim population, and the confrontation and rivalry with Pakistan; the emergence of China along with the tightening links with the US; and not least, the way that India’s democracy, and entrepreneurs, are transforming the country in a kaleidoscope of old traditions and modernity.

The chief influence shaping India, writes, Luce, is the British legacy.Most importantly, the Raj defined Indians as equal to each other under the law; India’s Anglophone élite join clubs, speak and write some of the best English in the world, as did Nehru who was deeply versed in English literature, reading Shakespeare in British jails; cricket is a national sport; the British and Indian armed forces share many of the same battle honours, and Indian democracy is now deeply rooted.

Bureaucracy, argues Luce, is the “true exploiter class” in India. The country has 21 million civil servants, who benefit by life-long employment. Getting rid of incompetents is impossible. The language of the bureaucracy tends to be distributive, while its practice is extractive. Bureaucrats have been estimated as pocketing 85% of development funding, and though the “license raj” of permits and licenses was abolished for the larger Indian corporations in 1991, an extensive political market for patronage and favours continues to flourish.

Nehru rightly considered that Indian unity could only be achieved through a secular state. Luce is critical of Nehru’s concessions,allowing each community to retain its own civil laws, thereby promoting a dangerous pluralism at the expense of the liberalism that he cherished. I disagree. In the 1950s, Nehru hoped to create a marriage law for all Indians, but realized that he could not impose this on Muslims, without very serious consequences.  He had no option than to accept pluralism as a second best. In the 1980s, as Congress pushed through legislation to  reserve government jobs for Dalits–the untouchables–upper caste Hindus rallied to the cause of Hindu nationalism, in the form of the BJP-the Bharatiya Janata Party- whose intent was, and remains, to create a more exclusive Hindustan, not least through a rewriting of Indian history for secondary school children.

With 85% of India’s population Hindu, this was the nightmare that precipitated the division of the British Raj and the creation of Pakistan. Prime Minister Atlee’s instructions to Lord Mountbatten, the last viceroy, had been to preserve India’s unity. The die, though, was probably caste well before the last two years of  British presence in India. As Luce points out, the two major strands of Islam in the subcontinent–the more secular, organized around the Aligarh Muslim University, founded in 1875 by Sir Sayyid Ahmed Khan, and the Deobandis, created in 1866 to restore Islam to its first principles–proved irreconcilable.  The Deobandis backed the Indian Khalifat movement, to restore the Caliphate, dismantled by Ataturk in 1924. Ghandi welcomed them, thereby prompting Muhammad Ali Jinnah  to split from Congress on the grounds that religion and politics should not mix. Jinnah went on to form the Muslim League, which Congress leaders refused to recognize as sole representative of Muslims in India. The British Viceroy, Lord Linlithgow, however, did in exchange for the League’s support of Britain’s war effort. So did the Princes who held sway over large tracts of the Raj. Despite last minute efforts by both Ghandi and Mountbatten to forestall division, personal and communal animosities proved too deeply rooted.

Around one million people died in the violence surrounding the creation of Pakistan, sparking the first war between the two countries in 1948. Paradoxically, the secular Muslim Jinnah created the first modern Islamic state, while Congress’ leaders went on to confound the pessimists by creating a modern, secular democracy for a multi-faith population. Pakistan remains therefore a fundamental challenge to modern India’s identity. Muslims remaining in India number upwards of 130 million, making India the second largest Muslim country in the world. Given their poverty, and high illiteracy rates, they are wide open to the preaching of extreme Wahhabism from Saudi Arabia.

Luce is non-commital about modern India’s economic record, citing the equality of poverty in South Korea and India in 1951, compared to 60 years later when Korean per capita income is 10 times greater. South Korea managed a fundamental land reform, compensating large landowners generously, and thereby creating the wealth that went to the formation of the chaebols, the large conglomerates. In India, by contrast, rural élites stymied land reforms, while the license Raj restricted the rapid development of a large manufacturing sector. As Luce points out, the formal manufacturing sector in India numbers only 7 million, compared to the 100 million or so in China’s.   Despite India’s achievement of food self-sufficiency in the late 1960s, Luce reports that 47% of under 5 year olds in India continue o be undernourished.

Surprisingly, Luce does not give sufficient attention to the many things that have gone well. Not least of these is the tripling of the population since 1947, accompanied by a rise in life expectancy from 32 at independence to over 70 today. Then there is the creation of the Technical Institutes, whose output of highly skilled engineers has attracted multi-nationals to invest in three times more research laboratories in India than in China, while creating the foundations for the boom in IT since the 1990s. Indian-based multi-nationals now scan the world, and indeed have become the first manufacturing power of the UK economy–as my great and late colleague, Sumantra Ghoshal quipped to me, a nice case of reverse imperialism. In the twenty-first century, one in four university students in the world will hail from India.

The other major achievement of modern India is to have established a viable constitutional democracy. Violence flairs up regularly across the vast country. Corruption is rife among elected as with unelected officials. The party political system has fragmented, as local parties with minimal concern about India, have become prominent. Small parties, as in Israel’s highly fragmented political system, can set the tone of national policy. The Maoist Naxalite movement, extending from Nepal through central India, presents as large a challenge to Indian security as does the confrontation with Pakistan.

That being said, India is the largest democracy in the world. Over 700 million people cast their votes at election time. Indira Ghandi suspended elections in the mid-1970s, in an effort to impose top-down policy changes. She failed, the simple reason being that however poor many Indians may be, they have one wealth, which is to caste a vote every election. When the BJP campaigned on the theme of “Shining India”, addressing the urban middle class, they were voted out by rural voters who pointed out that there was still not much sign of shine  in the Indian countryside.

Democracy, as Nobel Prize Winner Amartya Sen has demonstrated in his studies on famines, is vital for development. Without democracy, the poor have no way of drawing attention to their plight. The last major famine which Indians suffered from was in 1943, when high-handed policy combined with incompetence of the British authorities, condemned millions to death. The 1943 famine demonstrated as conclusively as possible that the offer of the British Raj to rule India benignly in exchange for loyalty was hollow.

Luce concludes on an upbeat note, but lists also the key challenges facing India for the coming decades: to lift 300 million people from poverty; to deal with the dangers of environmental degradation; to confront health challenges, such as a HIV, and above all to protect and promote of India’s constitutional democracy. The key challenge that he identifies is the inefficiency of government. Why, one may ask, is Indian government inefficient? The answer is because India is what it is. If you wish to learn more about India, there is no better than to read Luce.


About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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