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India: a model of collapse


New Delhi, India -- FOR MONTHS this spring and early summer, the headlines every day in Delhi horrified Indians of all classes and castes: The country's valuable gold was being physically removed and shipped to London.

Four tons on July 4, 20 tons on July 7, 10 tons on July 11, 12 tons on July 18. Nothing in this troubled country has shaken people so much as what has seemed to many to be almost an existential draining of the national blood.

"Gold is the Indian peasant's security; there is great sentiment for gold," Inder Malhotra, former editor of the Times of India and now a prominent columnist, told me. "Indians cannot hold gold outside of India. The government has 330 tons in the reserve bank, and 15 percent of that is permitted to be sold."

So now, because of India's frightful economic problems, the gold is being sent to the Bank of England in order for an increasingly desperate India to get $400 million in needed loans. The economic legacy of the late, tragically assassinated Rajiv Gandhi -- who borrowed like a drunken sailor, often for short-term credits of 24 hours to 60 days -- has left India in a position where it is sinking under its $70 billion-plus foreign debt.

And if the Indians abroad, who have deposited $11 billion in foreign exchange in their homeland, started a run on the money, economists say the country would simply collapse. That is the razor's edge that once-hopeful India balances on, and it is not at all unlike the situation in the Soviet Union and Eastern Europe.

The far more practical government of Prime Minister Narasimha Rao has been pushing through harsh cures, such as an industrial policy featuring major deregulation of the state-dominated manufacturing sector and encouraging foreign investment for the first time. The United States, which has trade with India at the moment of only $7 billion, is working valiantly through its embassy to open India economically to the West after its disastrous years as a stalwart Soviet "friend" in socialism and over-centralization. One notable change in mood is how friendly and non-judgmental the anti-Western Indians have become.

"When India felt weak, you had to be afraid of multinationals," Shri K. Subramanian, a major strategic thinker, told me. "Today, those old games can no longer be played in the world. Why should we worry about the East India Company coming back?"

Former Ambassador Eric Gonsalves, a retired Indian diplomat, put it another way. "Let's say that some of us have been taken kicking and screaming into the 21st century," he mused, as we sat in his pleasant office in the prestigious India International Center. "We have a very serious problem, one almost of a reorientation of the architecture of the world as we've known it.

"Consequently, the immediate prescriptions are no longer right. How much can you do within the status quo and how much requires fundamental change?" He paused, then continued, "For many years, we lived with the myth of ideology."

It almost seems as though all the old myths and illusions have collapsed at once upon India these last few years. India formed a huge middle class, largely through industrialization. But the great "middle class" that everywhere was to form the backbone of democracy is here instead largely only a consuming middle class, and many of them out of dislocation and rootlessness form the backbone of the extremist Hindu revivalist movements.

India tried haphazardly for a while under Prime Minister Indira Gandhi to control its extraordinary birth rate. It didn't work. Instead, today its population grows by 18 million a year, forests are virtually disappearing with the aid of corrupt officials, three-quarters of India's water supply is polluted by chemicals or bacteria, approximately one-third of the land is non-arable through misuse, and doctors say privately the only hope is to put contraceptives into the drinking water.

In short, once-exemplary India can now be seen as a classic case of breakdown. You have a body politic splitting into violent ethnic and religious conflicts. You have a political center, the Congress Party, that is ineffective and isolated from the very people it would lead. Above all, here is a nation that has lost the original power of its universalist and unifying secular ethic. And there are no answers.

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