In a return to the series analyzing the past, present, and future geopolitical position of a specific country, I will today look at India.
Previous reports included:
Poland: “The New Polish Commonwealth“
Persia/Iran: “The Persi-stant Empire (part 1)”
Saudia Arabia: “Kingdom of the Sand: Saudi Arabia Turns to the East“
I thought that with India increasingly torn between West and East, it would be interesting to analyze this country more deeply. Inclunding in the coutext of the BRICS association.
I am also intending to soon cover Sri Lanka's investment potential, so a better understanding of its big neighbors will be useful.
I will gloss over a lot of Indian history, simply because 4,000 years of a complex civilization (and not just a nation) cannot be summarized properly. I will however mention and discuss elements that are relevant to understanding modern India.
A Complex Sub-Continent
Geography
The region is defined by its isolation from the rest of Asia. On the North, the almost unpassable Himalayan mountains. On the East and West, more mountain chains isolate it from West Asia and South-East Asia. The southern part of India is also rather hilly/mountainous, with multiple plateaus.
Another key feature is a few very important rivers, especially the Indus River in modern-day Pakistan and the Gange River in the northern plain, between the Himalayas and the southern plateau. The Indus River civilization or Harappan, is one of the earliest centers of civilization and agriculture.
These river basins are where most of the population is living, thanks to very intensive farming using irrigation from these massive bodies of water.
Culture
Culturally, India is unique in having what historians have described as “a very weak state and a very strong culture”, sometimes describing it as the exact opposite of China.
In practice, this translated into the domination of the priest class instead of the aristocratic class like in China or Europe.
This both made India a very rich center of cultural and religious ideas, while a durably weak nation, both politically and militarily. Except under foreign rulers and invaders, India has almost always been divided and did not form into a unified state.
Another unique feature of Indian society was the caste system. While most civilizations had somewhat rigid social classes, India was peculiar in enforcing the separation between castes to a much greater extent.
It seems that 1,500 years ago, this system solidified and led to very little intermarriage between castes, with often people of different castes in the same village displaying very different genetic haplotypes, as different from each other as Germans from Italians or Russians in Europe, to give a rough analogy.
And this despite living side by side for centuries.
Religion
Religion plays a major role in the history of India, as well as its modern politics.
India is the cradle of several major religions, including Hinduism & Buddhism, but also the homeland of Sikhism, Jainism, and others, making “Indian Religions” the religion of almost a quarter of the world and having influence in many others.
It is no exaggeration to call India the religious center of South and East Asia, the way Middle Easterner monotheisms shaped the rest of Eurasia.
And if this was not complex enough, the arrival of Islam following invasions from the West added another major component to the religious tapestry of India.
Muslims are currently around 14-15% of India’s population, but the religious divide was the main reason for the split with Pakistan and Bangladesh, historically in the Indian culture sphere of influence in pre-Islamic eras.
Nation Building
As mentioned, the unification of India has historically mostly been done by invaders, first the Muslim empires (Delhi sultanate and Mughal empire), then the British Empire which progressively subdued India through control of the local elites first by the East India Company, and then by the British Raj. (Once again, this is an accelerated and simplified version, glossing over details, as well as the role of Portuguese India)
Immediately after winning its independence, British-controlled India split into India and Pakistan along religious lines, for Pakistan to later see Bangladesh (then East Pakistan) splitting away.
This period was a highly traumatic one for Indian culture, with mass expulsions, death, and conflicts. Around one million people are estimated to have died from the partition of India, with many more left destitute among the 14-18 million forcibly moved, almost 5% of the country’s population at the time.
It was also the first time a united India acquired self-rule.
Following the separation from its Muslim regions, India would be mostly under the control of the Congress Party, which would control the country for most of the 1952-2009 period.
(I will here point out that Indian politics seem remarkably fractious and aggressive from an outsider's point of view (even if Western politicians are working hard at catching up on this…), and I will not discuss too deeply the merit of each party and policy).
During the Cold War, India embraced a position of moderate socialism and state control, wisely rejecting alignment with either the Soviet or Western blocs.
It was a diplomatic success with the non-aligned countries (or Third World, initially not a derogative term, but to distinguish from the First World (West) And Second World (Communist States). The socialist policies were a more dubious economic achievement, with India lagging behind while East Asia was modernizing quickly.
It however entered into a series of conflicts with Pakistan, with no less than 4 wars in 1947, 1965, 1971, and 1999, with stand-offs and skirmishes in 2001, 2008, 2016, 2019, and 2020. Both countries are nuclear powers, with an estimated arsenal of 325 total nuclear bombs.
(The Pakistani-Indian relation is another minefield of impassionated aggressive opinions, which I will treat only superficially, and will stick to only relevant aspects to investors and foreigners).
Economy
India is to this day a rather poor country, at least on a per capita basis. In nominal GDP per capita, it is ranked at the level of Congo, Ivory Coast, and Uzbekistan. If looking at PPP, India is still ranked in the vicinity of Venezuela, Nicaragua, and Honduras.
This can be deceiving, due to India's massive population, which allows India to be the world’s 3nd biggest GDP if measured by PPP.
So somewhat paradoxically, India is too poor to really provide for its population, but can also mobilize massive resources into limited projects, as illustrated by the recent Moon landing, making India one of the only 4 countries on Earth to have explored the surface of the Moon.
I think this dichotomy is a major driver of the schizophrenic public opinion about India, usually falling either to “INDIA SUPERPOWER !!!!!!” or “undeveloped dysfunctional economy“.
Both opinions can be placated by cherry-picking either the GDPper capita or the total PPP GDP of the nation.
Economy structure
As a whole, India;s economy is mostly driven by the primary (agriculture - 16.4%) and tertiary (services- 54.3%) sector, with low levels of industrialization.
This is due to a deliberate strategy to “skip” over industrialization, and focus on high-value jobs, notably in IT.
Among the few Indian industries that have succeeded at becoming large exporters is the pharmaceutical industry, mostly contract manufacturing of other companies IP.
As a rule, India is famous for byzantine bureaucratic process, leaving plenty of room for unfair treatment and corruption (85th out of 180). Abudance of permits, obscure rules, and other obstacles to economic activity keep the country poor and the rich protected from competition.
India has also often been singled out for unfair treatment of foreign corporations, notably by China, even if it seems to me Chinese corporations might be facing unfair rules, but in the same way that ALL foreign businesses do.
The relative poverty of India is not a fatality, as India and China had an almost identical GDP 35 years ago.
Education & Demography
India has a very young population (average 28.2) and still growing, now the most populous country on Earth and adding 10+M people per year.
This demography should be conductive to economic growth, if not for poor utilization of this human resource.
Only 40% of people aged 15 years and above offer themselves for work. The rest 60% are dependents. This data might miss a lot of undeclared work, but it is hard to tell the real level of unemployment and under-employement. Youth unemployment is also at 40%.
Written contracts, benefits and other “high quality” employment perks are also missing for 90%+ of the population.
Chronic poverty and poor employment creates a situation where 74% of the population cannot afford a healthy diet.
Education is rather good considering the country’s GDP per capita, but suffers from a massive brain drain. A clear symbol of it is the abundance of Indian CEOs of foreign tech companies, but virtually no national champion beyond conglomerates like Tata and Reliance.
The previously quick and now slowing down population growth has been a major driver of India’s growing GDP, more than a rise of productivity. This fact in itself puts into question the ability of the country to truly become more prosperous, making India’s GDP growth more akin to Nigeria’s than China’s.
Coming Next
With that background out of the way, let’s discuss India's geopolitical position and opportunities.
In part 2, I intend to analyze India’s internal issues, especially economical, and how it could fix them. And why it might work or not.
In part 3, I will look further at India geopolitical position, its opportunity and risks, and possible scenarii for the future.
In classic naive western historian fashion you seem to have missed the complete pulse on what India is and how the diversity and rich history have shaped the social and economic fabric of the country. As an investor yes there is value in understanding the historical construct of a region but all you have done is regurgitate the same old outdated points on “caste” system, “population density”, and religion especially the proportion of Muslims vs Hindus, and demographics by pointing out outdated facts like “74% Indians don’t have access to a healthy diet”. I urge you to go to india and see for yourself the ground reality and the sheer scale and pace of development. India has leapfrogged the west in terms of social tolerance whether it be in terms of religion, economic status, or sexual orientation. Go see the penetration of mobile and digital FinTech infrastructure where you can go about your whole day without need of a credit card or cash right from a tea seller to a 5 star hotel. Nobody in India cares about caste, gender, or religion and you don’t even have to go that far and just see the current President, prime minister, and historical track record of background of former presidents and prime ministers of the country. In terms of education just look around the stalwarts in every industry and in the prominent western colleges. You will see Indians all around so for the next article please ground yourself in state of India today instead of just reading outdated articles written about Indian history in the west and regurgitating that in your blog