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Modi: Great Words, All The Best, But We Are Watching You

Analysts Reports, China, Economics, India, Sustainability
By John Richardson on 18-Aug-2014


By John Richardson

IT IS once again fantastic news that Narendra Modi has highlighted the need to improve sanitation in India, as he also did last month.

During his National Day speech last week, India’s prime minister called on listeners to join him in a nationwide campaign to improve sanitation, noting that many women, lacking toilets at home, wait for nightfall so they can defecate more discreetly outdoors.

And he promised to make toilets available in all of India’s schools within a year.

Modi also pledged to:

• Abolish  India’s national Planning Commission, a body created by the country’s first prime minister, Jawaharlal Nehru, who admired the Soviet Union’s centralised planning. It has held up economic development.

• Make bank accounts available to every Indian family. This could allow the government to eventually convert subsidies for food, fuel and fertilisers into cash transfers and, thus, get rid of the corruption and waste caused by these subsidies.

“I come from a poor family. I have seen poverty. For the poor to get respect, this is the beginning,” he said.

Now we need to hold him to his words. His achievements must go beyond the rally in the stock market since his election win on 16 May (see the above chart) because, of course, only a small percentage of Indians own shares.

And so we will be keeping an eye on you, Mr Modi, whilst  wishing you all the success in the world. We will, over the next few months, devise an index to measure your success that entirely ignores the Bombay Stock Exchange. We shall instead look at progress on relieving extreme poverty. Watch this space for when this index is unveiled.

Meanwhile, here are a few alarming statistics worth considering:

• Half of India’s population, or at least 620 million people, defecates outdoors, according  to this crucially important New York Times article.

• Whilst this share has declined slightly in the past decade, an analysis of census data shows that rapid population growth has meant that most Indians are being exposed to more human waste than ever before.

• “The difference in average height between Indian and African children can be explained entirely by differing concentrations of open defecation,”  Dean Spears, an economist at the Delhi School of Economics, told the NYT.

• A 2012 survey found that 42% of children in India were underweight, 58% were stunted by the age of two and only 8.1 million of out of 190 million children attend school.

India will only be able to cash-in on its demographic dividend of a youthful population if it tackles these challenges.

There is not much point in building lots of super-efficient roads, ports and bridges, in order to make manufacturing investment easier, if people are too sick to gain the education necessary to work in new factories.

Crucially for the chemicals industry, India’s demand growth potential is enormous if these challenges can be addressed. With a very similar size of population, India is miles behind China. For example, India’s polyvinyl chloride consumption was just 2.3m tonnes in 2013, according to ICIS Consulting. This compares with China’s 14.9m tonnes.