Economics

Why India Can't Catch Up With the West

India's legions of petty bureaucrats are killing the country's economy.

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London—A deep gloom has settled in here: Europe's glory days, it's feared, are over. Private bank excesses and public-sector legacy costs are poised to drag the continent—and America—down for generations. Only India and China are seen as the rising stars in the global firmament. Their young economies have stalled this year. But they are expected to recover, learn from the West's mistakes and become economic powerhouses, displacing the West's global hegemony.

Setting China and its opaque autocracy aside, India, I am quite confident, ain't going to perch its tricolored flag atop the globe anytime soon. Not until it does something about its soul-sapping bureaucracy. The world's largest democracy doesn't have rule of law—it has the rule of babus, the local term for petty bureaucrats. And so long as they keep challenging India's entrepreneurs, there isn't much chance that India will challenge the West.

For all their problems and flaws, Western powers—America, Canada, England, Germany, and others—have functional institutions such as well-defined property rights, effective courts that enforce contracts and state-of-the-art infrastructure that enhance the productivity of their citizens. By contrast, India's horrendous bureaucracy systematically thwarts its citizens, killing productivity, often for no apparent reason but to exercise its powers over them. 

Consider my recent encounter with it: My husband, son and I were in New Delhi and wanted to make a short trip to Malaysia with our cousins. Thanks to a law passed after the 2008 Mumbai attacks, noncitizens (as we are) who wish to leave and re-enter the country within 90 days have to get special permission.

Hence, at 8 a.m. one day, armed with our Malaysia tickets, hotel bookings and other documents listed on the government website, we drove to the Foreigners Registration Regional Office. After waiting in line for one of the five mustachioed babus, we were informed that we were at the wrong office. First, the Home Ministry must grant permission. Then their office would enter it in our passports.

We sped across town to the ministry where, after some frisking and interrogating, we were directed into a room where 100 other supplicants like us were crammed. This 15-by-30-foot space reeked of urine from the ramshackle lavatory walled off in one corner. At one end sat a secretary. At the other, the babus. We needed the secretary's green light to see the babus, and to see her, we took a number: 85. She was then processing No. 12. After two hours, she got to us. "Incomplete paperwork," she sneered. "Get photocopies of your visas, passports and return flights to the U.S. before the babu calls you or else you'll have to come back another day."

We ran around frantically to get everything ready, which we managed to do just before we were summoned. Alas, there was another problem: Malaysia is not contiguous with India and therefore not among the countries from which re-entry is allowed. We'd have to cancel our trip, the babu said, unless we persuaded his superior—call him Mr. Singh—to give us special permission.

We anxiously headed for Mr. Singh's office, intercepting him, luckily, just before he went home for lunch with his waiting wife. He hurriedly penned us a note granting permission. Overjoyed, we returned to our babu, who seemed satisfied. He kept all our documents and told us to head back to the original registration office before 4 p.m.

Giddy with relief, we drove back, expecting smooth sailing. Wrong again. We needed to resubmit all the documents that the ministry babu had taken from us to the registration office or it wouldn't stamp the passport. Once again, we scurried. We returned 15 minutes before closing at 6 p.m. with everything—only to be told that they had forgotten to tell us that we also needed the electricity bill of our permanent address in New Delhi.

I snapped. But I retained enough presence of mind to play my final card: I threatened to report them to Mr. Singh, who—I pretended—was a family friend. That worked. And, after some face-saving kvetching, they grudgingly stamped our passports.

In other words, a routine matter that shouldn't have taken more than 10 minutes swallowed 30 hours of our lives. Yet, by Indian standards, ours was a happy ending. Episodes even more Kafka-esque than ours are replayed daily across the country. We had time, resources and the savvy to devote to a matter that, ultimately, didn't have existential stakes for us. But what about, say, a poor rickshaw driver who needs a license to earn his meager income? Or a farmer who needs the title to his land (something that can take 240 to 400 days in some parts of the country)?

Western bureaucracies are inefficient, but get things done. Indian bureaucracy is orders of magnitude worse and gets nothing done—unless you count harassing people—which is why it is ranked the worst in Asia. And literally every world survey rates India among the very bottom in ease of doing business. The World Bank puts India virtually last among 183 countries in enforcement of contracts.

This is all thanks to the immense discretionary powers that India's irrational rules hand to bureaucrats. Until that changes, fears that the sun is setting on the West are premature, to say the least.

Reason Foundation Senior Analyst Shikha Dalmia, a native of India, is a columnist at The Daily, where this column originally appeared.

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  1. Babus. I really think that this is the goal of the US regulatory state.

    Babus is a wonderfully contemptuous term. I’ll use it for our DMV denizens.

  2. The same thing happened to Dhalsim one time and he almost didn’t make it to the tournament. Which actually would have worked out better for him since Blanka ripped out his spine.

    If only the babu had been a bit more effective, he might still be alive.

    1. Street Kombat? Is the sonic boom going to be a fatality?

      1. Street Fighter.

        Cung Li all the way baby!

  3. How many times do you need to run the same story?

    1. It’s the SNL version of political commentary.

    2. You need to be reminded of how superior Amerika is and how life is always getting better here cuz we have more gadgets and stuff.

      1. Don’t forget our superior commentariat.

  4. Western bureaucracies are inefficient, but get things done.

    Which is unfortunate.

  5. Amerika has the rule of law? What a joke.

    Amerika wants to make a hero out of Louis Freeh, who cared not about the screams of children consumed by the conflagration at Waco.

    1. But he did care about the screams of the children at Penn State. Or at least about the ‘consulting’ fee.

      1. We know there were screams from the branch davidian kids; but jerry’s kids?

        1. I like how you spell America with a K. It’s edgy.

          1. Thanks. Do you like edgy? We can do more edgy if you like.

            1. “We?” Do you have co-writers?

              1. Yes, we have authors, artists, bloggers, bloviators, creative consultants, critics, directors, dilorenzos, editors, freelancers, gophers, hoppes and hornbergers, illustrators, journalists, kinsellas, literature lovers, manifesto makers, napolitanos, noise makers, oracles, partisans, polemicists, quixotics, reasonoids, rothbardians, shaffers, troubadors, unionbusters, virgins, woods, xenophiles, yorkies and zenmasters.

                1. For some reason in my head I imagined that being said in Heady Hedley Lamar’s voice from Blazing Saddles.

                  1. We have flatulence makers, too.

                2. But I wanted rustlers, cut throats, murderers, bounty hunters, desperados, mugs, pugs, thugs, nitwits, halfwits, dimwits, vipers, snipers, con men, Indian agents, Mexican bandits, muggers, buggerers, bushwhackers, hornswogglers, horse thieves, bull dykes, train robbers, bank robbers, ass-kickers, shit-kickers and Methodists.

                  1. They are not at chez libertymike. You will have to go see Louis Freeh and his cheerleaders like Mr. Kravitz.

                    1. I’ll check out his wares but I think Robert Mueller is the current proprietor of that establishment.

            2. Needs more Umlauts

  6. Sounds like Dalmia is simply arguing about which slave master gives her the most links in the chain.

    The problem with all nations is that they claim they have some right to direct the private travel of individuals. They do not.

    Instead of looking at the efficiency of western government slavery, why don’t you just recognize that either way you are still a slave and speak out about that?

    1. A mini-arhcist is still a statist. They all suffer from the fatal conceit that prevents them from understanding that it was their precious nation states which slaughtered hundreds of millions in the 20th century.

      1. Does a mini-archist want a government of only people under 4 feet? Or does he want the government fleet to be only Coopers.

        1. Much snarkier than my reply would have been, therefore better.

        2. I think that would be a midgie-archist.

      2. LM, do tell us which minarchies slaughtered hundreds of millions.

        1. Didn’t the US start off as the minarchist state? Didn’t it slaughter the native Americans? Didn’t it engage in slavery?

          You could argue the minarchist version of the US died because the more limited government sect was in favor of private slavery.

        2. Not to mention that there aren’t many anarchist situations to reference.

  7. India tops the world in agreeing with the statement that a major role of a government is to “tax the rich and subsidize the poor”

    Estimates of India’s average IQ – the most important factor in economic development, hence ignored by Reason – range from low 80s to mid 90s; in any case nothing to write home about.

    1. You mean a nation-state that contains 1/6th of the World’s population has an IQ that is 1 SD from the mean? Color me shocked*!

      (*That is if I believed in a singular g and that current psychometrics could accurately measure it.)

      1. “Estimates”, HM. It ain’t like they’ve got a culturally appropriate IQ test to administer to a vast collection of illiterate peasants.

    2. Did this make sense in your head while you were typing it? Just curious because it seems irrelevant here.

    3. Indian engineers, mathematicians etc. are in high demand in other countries, Indians don’t lack brainpower.

  8. In other words, a routine matter that shouldn’t have taken more than 10 minutes swallowed 30 hours of our lives.

    Like filing income taxes in the United States.

    1. I wouldn’t be surprised if the man-power time and therefore cost of complying with regulations in America – the regulatory burden – wasn’t comparable with India’s. But Indian’s citizens earn far less, perhaps because it takes so long to get anything done.

  9. “A routine matter.” But why do you need special permission to leave re-enter? It shouldn’t have been a government matter at all.

  10. SUMMARY
    Shikha Dalmia writes a story about how Indian bureaucracy is thwarting economic progress. Commentators, ever vigilant, see an opportunity to trash America. Indians continue to immigrate to–and prosper in–America, a nation of slaves.

    1. I agree. I see a lot to be worried about in the United States, but I will accept the “We are a fascist nation, nation of slaves, what-have-you” narrative when we cease to have any significant immigration issues.

  11. I don’t see what Shikha is complaining about. Seems that India has bureaucratic inefficiency and ineptitude down rather pat, just like the rest of the industrialized world.

    1. You obviously didn’t read the story. This excerpt might interest you:

      For all their problems and flaws, Western powers?America, Canada, England, Germany, and others?have functional institutions such as well-defined property rights, effective courts that enforce contracts and state-of-the-art infrastructure that enhance the productivity of their citizens.

      Unless you are arguing that India is just like successful Western economies. Is that what you are saying? Or are you just throwing out some nonsense and hoping nobody with a brain will notice?

      1. “state of the art infrastructure”? Just like the cross bronx expressway or the bourne and sagamore bridges or all of the other roads and bridges which are falling apart and down and rotting?

        1. Nobody said the state of the art was all that good, LM.

          1. perhaps its the state of the art prisons in which we warehouse more people than any other fiefdom in the world.

            1. Thanks. You answered my last question.

              1. You mean your question, “why am I a slaver”?

                1. “Slaver”! Awesome. Did you just make that up?

                  1. looks like we have a noob slaver that has never been called a slaver

  12. Dude is not making a lot of sense man, I mean like wow.

    http://www.Privacy-Been.tk

  13. This sounds like a typical day at the Sacramento building departments, which on a bad traffic day the different departments of the department are an hour or more apart.

  14. The USA may not be at Indian levels of bureaucratic inefficiency just yet, but we’re working hard to get there! Go USA!

  15. Of equal import with the present level of bureaucracy is the trend in each country.

    What I have heard about India is that they are taking steps to reduce the burden of bureaucracy and the power of bureaucrats.

    Unfortunately, the US is moving in the opposite direction. The passage of the ironically-named Affordable Care Act and the so-called Dodd-Frank Act dealing with financial regulation transfer more power over large sectors of the private economy to unelected American Babus. Agressive power grabbing by the EPA is destroying the coal fired power industry. I could go on.

    The two key aspects of Babuical control of the economy in the US are the (administrative) burden on the individual taxpayer or business and the amassing of power and wealth by the American Babus.

    Americans who are old enough to remember a time before the explosive growth of government at all levels will tell you (if they are honest) that they did not spend nearly as much time in a typical week dealing with administrative tasks and problems related to regulations. All Americans should be familiar with the tip-of-the-iceberg case of Solyndra, but companies large and small have been cashing in on the growth of government for decades, both by providing “consulting” services and gaming the system for redistribution of wealth to companies favored by the Babus (ear-marks, Solyndra, bailouts). This is not a new phenomena (see Chrysler and Lockheed bailouts).

    1. The government parasite class in India (or here, for that matter) is not going to go away without a fight.

  16. Many Western countries are playing catch up fast with India in terms of bureaucracy. I completely disagree with the author, India has a very bright future ahead. Getting entry to America is not as pathological as the stories mentioned in the article, but efficient is not what most people trying to visit will call it either.

  17. Many Western countries are playing catch up fast with India in terms of bureaucracy. I completely disagree with the author, India has a very bright future ahead. Getting entry to America is not as pathological as the stories mentioned in the article, but efficient is not what most people trying to visit will call it either.

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