India : The Next Big Thing

India – The Next Big Thing
©Peter Schuck, 8/23/04 draft

Readers of these pages know that China has in recent years been the leading new market for legal services in a rapidly globalizing world. (See [McCollam’s article and my] “China’s Legal Tea Leaves,” Nov. 2002). Soon, however, that distinction may go to India – the world’s largest democracy and soon the world’s largest country, period. China enjoyed a big head start; foreign direct investment there now dwarfs that in India, and China has more trade with us. But this could quickly change as Indian entrepreneurship, already far greater than that in China, starts attracting more foreign capital and as India’s advantages, including English and the rule of law, loom larger.

India now bars foreign lawyers from opening offices there, but the gates will soon open in 200_ when World Trade Organization rules on professional services kick in. Once the gold rush to India starts, American firms planning offices there will need to know something about the exotic society that awaits them.

The Challenge of Diversity

Actually, many societies await them there. India is a nation of contrasts so stark that some parts can seem altogether incongruous with others. The flat desert vastness of Rajasthan and the soaring cathedral like spires of the snowcapped Himalayas. The arid plains of the Deccan and the Iowa like fertility of the Punjab. The axle to axle, cacophonous, frenetic congestion of Old Delhi’s lanes and the verdant serenity of New Delhi’s embassy row. The Stone Age workshops in Calcutta’s slums and the high tech campuses of Bangalore. The tropical, spacious backwaters of Kerala in the south and the grim, teeming urban jungles of Uttar Pradesh and Bihar in the north. The intense spirituality of pilgrim destinations like Dharmsala, Rishikesh, and Varanasi, and the equally fervent materialism of Mumbai business and Bollywood. Indeed, many streets look like a history of urban transport compressed into a single bursting diorama. One sees human drawn sledges, ox drawn carts, rickshaws powered by human legs or small engines, buses, trucks, and cars, and of course the endless parade of animals – cows, pigs, goats, dogs, and sometimes monkeys, camels, and elephants – moving at their own pace through the wholly unregulated traffic. Only inches away (there are few sidewalks), countless people are sleeping, eating, conversing, doing business, and performing ablutions. The words bedlam and chaos do not quite capture the sheer energy, vitality, and congestion of this ubiquitous scene. Yet somehow the traffic actually moves (albeit with high accident rates and countless near misses), and road rage seems far less common than on the comparatively empty, well regulated American roads.

India is probably the most culturally diverse country on earth. Certainly, its vast linguistic diversity contrasts sharply with the anglophone U.S. where Spanish speakers rapidly acquire English fluency. India’s Constitution of 1950 identifies fifteen official languages (some others are seeking that status), and hundreds of local and regional tongues are spoken daily. English, the language of government and higher education, is taught in the Indian schools, but many do not stay there long enough to master it. Even fluent English speakers are often unintelligible to the American ear, as frustrated users of Bangalore based help lines know. H.L. Mencken’s quip about America and England – “two great nations divided by a common language” – applies even more to India.

Linguistic diversity intersects with – and reinforces – diversities of religion, region, and caste to create a bewilderingly complex, fragmented political system driven by scores of disciplined parties. (It is illegal for Indian legislators to defect from their party). With the world’s largest Hindu, Muslim (after Indonesia), Sikh, and Jain populations, India also has large Buddhist, Parsee, and Christian (largely due to still active missions and conversions) communities. Even the 85% Hindu majority is divided by deity of choice (Shiva and Vishnu predominate) and by other fissures. Profound regional divisions exist. In the north, Aryan culture and languages, centuries long domination by Muslim invaders, and caste based parties and ideologies have bred massive poverty and hence corruption. The south speaks altogether different (i.e., Dravidian) languages, receives large foreign remittances and cultural ideas from its millions of migrants working abroad, boasts high tech areas, inhabits a tropical, seacoast environment, and in some areas has matrilinear family and property arrangements. And although the law long ago abolished the despised status of “untouchability,” caste (actually thousands of sub castes that Indians can identify through surname, occupation, and reputation) remains highly salient. This is particularly true in the rural areas where 70% of India still live and where caste based parties demand increases in constitutionally required caste quotas in legislatures, colleges, the civil service, and would extend these quotas to private firms with at least ten employees.

India’s Moghul and British conquerors, while often tolerating these diversities, also cynically exploited them for imperial ends. Their well honed divide and rule tactics culminated in the 1947 Partition that carved Pakistan out of the British Raj and immediately unleashed inter communal violence – savage even by Balkan standards that still haunts India today. This bitter diversity driven legacy presents an extraordinary challenge to its cohesion. The nation’s survival, not to mention its robust democracy and recent economic growth, is a political achievement that evoke one’s wonder and respect.

India’s hard won national cohesion remains fragile, still threatened by strong centrifugal forces and endemic corruption. Although its 28 states implement a single body of national law, most are historically based units around which parochial ethno political identities and separatist pressures continually swirl. To relieve these pressures, the national government has had to carve a number of new states out of old ones. It also allows Muslim, Christian, Hindu, and Parsee communities to apply their own domestic relations, religious, and other personal law. This privilege, granted by the secular Congress party that created modern India, is under challenge by the BJP, a Hindu nationalist party with long standing extremist elements. Until the May 2004 elections reversed its steady electoral progress, ending six years of national rule, the BJP pressed for a single, uniform civil code based on Hindu practice, and urged other policies offensive to religious minorities, especially Muslims.

The outcome of these elections, which The Hindu called “the biggest political upset of recent times,” is a Congress led coalition relying on a resurgent Communist party, other leftist groups, and some corrupt state and local machines. Pundits see this as a victory for secularism, a spasm of deep anti incumbency sentiment, and a rejection of economic liberalization policies that benefit the educated minority while bypassing the vast drought ridden agricultural sector where most Indians still live in utter destitution – a huge population that the BJP’s much derided “India Shining” campaign theme seemed to ignore.

Corruption : Corruption is perhaps even more demoralizing than minority disaffection and separatism. Official corruption is the problem that Indians usually mention first when assessing their society. There is no reason to think the situation has improved since Rajiv Gandhi estimated that almost half of every rupee spent on public anti poverty programs was lost to corruption. Young lawyers and students are particularly demoralized by it, and they can point to no politicians – none! – whom they genuinely admire. (Chandrababu Naidu, an icon of modernization who made Hyderabad (“Cyberabad”) a world symbol of IT fueled economic advance, lost badly in the recent election). In a parody of scrupulosity, government officials do essentially nothing for the forty days before an election lest they be accused of using their powers to aid the incumbents. Candidates for office routinely violate the unrealistically low limits on campaign receipts and expenditures. They view the mass of poor voters as reliable “vote banks” whose support can be bought with alcohol or small favors in ways reminiscent of the urban political machines of 19th and early 20th century America. This disgusts many well educated citizens who then decline to vote. Nor is whistle blowing common. Until very recently, investigation of officials’ wrongdoing required approval by their superiors. Freedom of information is not yet a well developed right. Most newspapers are highly partisan. Party leaders enforce discipline with the rigor of a maximum security prison warden. Prosecutors are seldom independent of the politicians. The Supreme Court of India is widely admired (perhaps excessively so, as discussed below), but lower level judges are often reputed to be on the take. Baksheesh is as common a topic of conversation as biryani. Dynastic succession in office is the rule, not the exception.

The Economy: With a national market of 1.1 billion people, a large and growing middle class, many highly trained workers (over 2 million college graduates a year), widespread English language fluency, very low labor costs, and generous remittances from prosperous non resident Indians throughout the world (according to journalist Gautam Adhikari, 40% of Silicon Valley start ups were by Indians or Indian Americans, and almost 10% of America’ s millionaires are from this group), India’s economic future should be bright indeed. Economic growth has been robust since the early 1980s, although still well below that of China and many other developing countries. (In campaign hype, the now ousted BJP government projected future growth rates of 10%.) The poverty rate has declined significantly, although it remains above 25% (by Indian standards, of course, not American). The much ballyhooed IT industry, centered in the southern cities of Hyderabad and Bangalore, was recently the subject of a series of admiring columns by Tom Friedman, the influential New York Times columnist.

Beyond the IT industry, however, the picture is more sobering. India’s economy still bears the scars of the misguided statist and protectionist policies of Jawaharlal Nehru and Indira Gandhi, his daughter. By 1990, India’s share of world trade had contracted to 0.4%, one sixth its share at Independence. India’s recent growth spurt, then, is very heartening. It is usually traced to liberalization policies adopted by the Narasimha Rao government in 1991 and carried forward by Rajiv Gandhi. Some economists, however, date it from new pro business attitudes in the early 1980s. In any event, bureaucratic controls continue to limit productivity in many areas today, making it hard to get things done efficiently – one reason why corruption thrives. Power failures in the government regulated sector occur with a disturbingly common irregularity. The national airline is a poor, much subsidized imitation of its dynamic private competitors. Market oriented reforms are much discussed but slow to take root. The state controls 7 of India’s 10 largest companies; state owned banks control 90% of deposits, and the national railroad is the largest commercial employer in the world.

The political drag created by vested interests is of course one reason for this inertia. Another is India’s huge, meddlesome civil service. According to one survey, business managers spend 16% of their time dealing with government officials. Career bureaucrats staff government agencies to just below the ministerial level, giving the relatively few political appointees less leeway to introduce and implement new liberalization policies. Rather than struggle against these status quo forces at home, some of India’s best physicians, engineers, and entrepreneurs go abroad to find more dynamic and rewarding economies. And the results of the recent elections have created enormous market uncertainty driven by concerns that the new leftist government will discourage foreign investment and stifle the economy through re centralization and other populist measures. The Indian stock market rendered its verdict – by plummeting as soon as the results were announced – although it later recovered somewhat when the new prime minister, an admired economist who designed the earlier liberalization, was named.

Other impediments to more rapid growth exist: the lingering effects of a harsh feudal caste system; the under utilization of women outside the home; primitive transportation, electricity, sanitation, and other infrastructure; a public sector budget deficit approaching 10% of GDP; a backward agricultural sector that decades after the Green Revolution remains abjectly dependent on good monsoons; restrictions on foreign ownership of property; and the failure of many states to invest heavily in primary and secondary education. Such conditions leave 35% of adult Indians illiterate and even more at destitution levels that westerners can scarcely imagine – albeit living in family and spiritual communities that are thought to be less demoralizing and isolating than the American underclass experiences despite far better material conditions. A recent survey in The Economist finds that an estimated 300 million Indians survive on less than $1 a day, 160 million lack clean water, and a tragically wasteful system for distributing India’s ample food stocks leaves almost half of small children underweight. Endemic under employment exists; wags say that an employer must hire ten workers in order to get one job done: three are on vacation, three call in sick, and three are incompetent. The number of able bodied men one sees standing (or squatting) on urban streets doing either obvious make work or nothing at all is stunning. AIDS contagion, already alarming in some states, could break out to reach South African levels.

On a more hopeful note, a few states like Kerala and Mizoram (a tribal area bordering Burma) have managed to achieve almost 100% literacy, low fertility and infant mortality rates, and almost equal female and male births, despite widespread poverty. But despite the remarkable achievements of these states, even they do not generate enough jobs to sustain their growing populations, forcing many of their best and brightest to migrate abroad. One stunning measure of the brain drain: the almost 2 million Indians are the wealthiest ethnic minority in the U.S.; nearly 30% of the families earn over $100,000 a year, more than twice the share of all U.S. households. These migrants, who usually retain close family and economic ties to Indian; need lawyers to protect their interests in both countries.

The Legal System: India’s proudest inheritance from the British was its legal system and the professionalized civil and military service that would implement it. Most of the founding generation’s political and legal leaders, like Nehru, Mahatma Gandhi, B.R. Ambedkar, and Jallabhbhai Patel, were educated in England where they creatively combined their anti imperialist fervor with an almost Anglophilic respect for British legal culture. Today, 57 years after Independence, even the most nationalistic Indians revere this colonial legacy. For reasons that Freud well understood, few colonized peoples have done as well as India in achieving the political ideological maturity to cast off a despised imperial rule while appropriating some of the empire’s best traditions.

This legal culture consisted of a number of elements, some of which India has assimilated more readily than others. Indian legal education, as in Britain, has traditionally been a three year highly specialized course of study at the first degree (undergraduate) level. Several programs, including some of the free standing “national” law schools that are now operating with more central government funding in Calcutta, Bangalore, Hyderabad, Bhopal, and Jodhpur, have begun to move to five year programs that will include some non law courses. Even today, however, the law schools tend to have large lecture classes that discourage interaction with students, little use of interdisciplinary analysis, few clinical programs, only limited training in legal research and writing, and an emphasis on rote learning. The vast majority of professors lack training in non law fields and conduct little original research.

Most Indian lawyers practice alone with tiny offices on or near the street. In contrast, the higher status ones spend almost all their time as advocates before the Supreme Court of India in New Delhi, or before the state high (supreme) courts. (Unlike in the U.S., almost all Indian law is national law, making all high court judgments appealable to the Supreme Court of India). The legal profession generally enjoys less social prestige than engineering, medicine, or high tech work, and – again, in contrast to the U.S. – some of India’s most talented young people (law graduates included) aspire to highly competitive positions in the relatively well paid and secure Indian Administrative Service, rather than private sector jobs. This may change, however, as the civil service continues to downsize through privatization initiatives.

India’s vision of a judicial system carefully meting out justice through judges who are as independent as those in Britain and the U.S. remains unfulfilled. American researchers Marc Galanter and Jay Krishnan find that “Indians avail themselves of the courts at a low rate and the rate seems to be falling.” Even so, the courts stagger under mind boggling caseloads and delays. Criminal defendants can spend years in jail before reaching trial. The civil court backlog of 24 million cases proceeds at the pace of Jarndyce v. Jarndyce; great heaps of litigation documents spill over from clerks’ desks onto floors and into hallways. In contrast to the U.S., relatively few cases settle. A 20 year old reform, lok adalats (“people’s courts”), follows a number of earlier efforts to improve ordinary citizens’ access to justice, usually modeled on informal, indigenous, village based courts. But a new study by Galanter and Krishnan concludes that lok adalats generally operate in a peremptory, top down manner that provides little of the speedy, fair, deliberative, grassroots justice that was promised.

Even more demoralizing than the slow pace and inefficiency of the judicial system is the common view among lawyers that many lower court judges (and even some on the high courts) take bribes, favor certain litigants, and do not really know or apply the law. The judges ’ ethical standards are thought to be little better than those of corrupt politicians. An outsider, of course, cannot readily assess the accuracy of this view. Revealingly, however, the Supreme Court of India requires that high court judges be periodically rotated to other states and that their chief judges come from other states – a mandate largely designed to reduce corruption opportunities.

Many “good government” advocates who are disgusted with party politics, are desperate for change, and do not know where else to turn have cast their lot with the Supreme Court of India, making it a primary focus of their reformist hopes. It is easy to see why. The 26 member Court, which sits at the apex of the legal and political systems, is perhaps the most prestigious organ of government in India, and is certainly one of the most powerful and autonomous. The Constitution confers remarkably broad authority on the Court, which has energetically extended this authority to (if not beyond) its outer limits. For example, it has even invalidated duly enacted constitutional amendments, ruling that they violate the spirit and intention of the Constitution ’s framers.

Much of the Court’s work consists of standard constitutional and statutory review, albeit sometimes in highly controversial disputes. In April, for example, it ordered the retrial of 21 Hindus acquitted on charges of burning fourteen Muslims alive in a bakery during Gujurati religious riots in 2002 that many believe were instigated by members of the BJP and its state counterpart. In many cases, however, the Court has gone much farther, mandating quite specific and complex public policies that the politicians and bureaucrats have either rejected or failed to adopt. For example, it has banned older vehicles from being used in New Delhi, banned late evening noise, banned polluting industries within a certain radius of the Taj Mahal, ordered the cleansing of the holy Ganges River, and ruled that no divestment of public sector undertakings can be done without certain additional formalities.

The Court effectuates such policymaking by combining a remarkable procedural authority – “public interest litigation” (PIL) under Article 32 of the Constitution – with creative readings of the Constitution’s open ended substantive provisions (such as transmuting the “right to life” into a dignified and safe life), of the document’s broad “directive principles,” and of regulatory statutes. Under Article 32, the Court has eliminated virtually all standing requirements in PIL, allowing any concerned citizen to apply to it or to a state high court to redress any legal wrong – political, environmental, dignitary, social, or otherwise suffered by any person or group of people who by reason of poverty, disability or disadvantage cannot sue on their own behalf. And because PIL also receives priority on the judicial docket, lawyers have filed a very large number of such cases. Indeed, an angry Supreme Court panel ruled in March that most of these cases have nothing to do with the public interest or with the spirit animating Article 32. This ruling followed an earlier case in which it had felt obliged to issue guidelines designed to prevent frivolous and abusive PIL claims, apparently with little effect.

The Court’s power extends well beyond substantive decisions in particular cases. In a remarkable 1993 decision, the Court interpreted the Constitution to empower the Chief Justice of India and his most senior colleagues to determine, in effect, who is appointed to fill vacancies both on the Court itself and on the high courts of the states, while another Court interpretation allows the Chief Justice to transfer high court judges from one state to another. In a far flung country like India where the quality of life can vary enormously from state to state, this gives him immense power to reward and punish other judges. The Court does not brook vigorous criticism of itself or its rulings. In a 2002 case involving Arundhati Roy, the celebrated Indian writer and social activist, it held that her sharp attack on one of its environmental decisions scandalized the Court, tarnished its dignity, and thus constituted contempt of court – although the Court, citing its own “magnanimity,” reduced her sentence to one day in jail. In these and other ways, the justices seem to have succeeded in intimidating journalists, the bar, and the legal academy from engaging in the kind of feisty assessment of their decisions that are routine in the American context. The Court claims to welcome constructive criticism but its distinction between such criticism and contempt, coupled with the potentially severe penalties for crossing this uncertain line, inevitably chills debate over its performance, which in turn could degrade the Court’s integrity, the quality of its work, and perhaps the rule of law itself.

The Future : These and other concerns that I have expressed qualify, but by no means deny, India’s extraordinary achievements and future promise. Out of the wreckage of the British Raj and a congeries of ancient cultures and feudal principalities, it built a gigantic world class nation state. Since its birth trauma culminated in the Rwanda like holocaust of Partition, this state has managed to govern with relatively little violence (outside Kashmir) and with an uncommon respect for and tolerance of the astonishing diversity of its people. Its economy is finally on the right track, powered by a large, growing middle class, immense internal and regional markets, and first rate technical training. Its civil society esteems strong families, communal solidarity, higher education, and (like the U.S.) a generative mix of spirituality and materialism. Its democracy (like most, including ours) is not pretty to watch but remains remarkably robust and secure. Its legal institutions – the courts, bar, legal education, bureaucracy, and constitutionalist ethos are probably stronger and more mature than those in any other developing country. This last is not faint praise; instead, it is recognition of a kind of historical cultural miracle. When American lawyers finally arrive in India, they will find much there to dismay them but even more that is promising, intriguing, admirable, and even inspiring.