Our economic policies, do seem a bit out of ideas tune with the globalising world. It is the `new economy’ sectors, IT, the outsourcing services sector are creating visible wealth and high paying employment.
This government doesn’t understand modern economy’s dynamics. The prevailing economic paradigm is totally out of date, we can say with confidence. This government doesn’t understand fully the full implications of globalisation, the outsourcing paradigm shift that had given India a cutting edge. A competitive advantage. How to drive this advantage to more spheres of economy, this government seem to have no clue at all.
It is not Tatas or Reliance who are driving the new growth momentum, it is the new IT start-ups that dot IT parks and surrounding areas that drive growth. The digital divide is also creating and adding new opportunities and challenges to the 700 million strong India. If this government is only focused, as it is, on the well-off 300 million urban India, then, the UPA would go the way the NDA! India shining or not? This government would be terribly embarrassed to come up with an answer! Indians are too respectful to the governments of the day. As long as the government is in existence, we tend to forgive and forget the government’s many lapses.
In agriculture the PM revealed, credit to him for the candid admission, the growth is very disappointing. Almost it is like 1.5 per cent, down from some 4 per cent and in a long-term point of view, agriculture development is slipping away. A common man’s conclusion would be the government had neglected agriculture and rural development. It is precisely on this sector, the government was voted to power. Ironically, even the pretentious Leftists seem to be largely restive. They are shouting, not on so high priorities like dis-investment.
It is a great tragedy that our large army of economists, who are all comfortably put in cosy committees and elsewhere are not having any bright new ideas to accelerate the economic growth. Economists are supposed to be experts in macro-economic indicators like fiscal deficit etc. But no one is complaining! And no one is speaking out! Nor, the government is willing to seek out opinions from the actual doers and performers in the fields and corporate offices!
The Prime Minister for once had spoken some truths about the state of the Indian economy. Speaking at Oxford he had pointed out the legacy of the British colonialism and its impact on the decline of the Indian economy. He noted that Indian economy has its own priorities. I am glad he had said this and reminded the British audience that when Independence came India was the poorest country in the world. Dr.Singh also observed as he was on his way to the US that India’s agri exports are faced with the heavily subsidised US exports and India’s concerns are “somewhat different from many other agricultural exporting countries. While liberalising agricultural trade, India has to safeguard its food security and its ability to safeguard and protect the small and marginal farmers”. So far so good. These observations are politically correct. That is all. His role as the Prime Minister for more than a year doesn’t tally with what he has said on ceremonial and other formal occasions.
There is an over-all silent disappointment and the public seems to be quietly waiting for some opportune time to express its discontent with the slow pace of the economic progress. There are certain thoughts, yes, they are all in the nature of some disparate form, that seem to have some relevance for a positive public opinion making in a constructive way.
A latest book by Thomas Friendman (The World is Flat: A brief history of the globalized 21st century) is out and is widely sold in India. I am sure our policy makers would have read it. There are some observations on India. Whether one agrees with the book’s many so-called discoveries of new truths (like a flat world) or not, what one cant miss is the many latest thoughts on how the rest of the world, including India is changing in the Internet Age. As the book specifically points to India where there are patches of large darkness in rural India that had not come within the fold of the IT revolution changes. In my opinion, the mindset in Delhi, I mean the economic thinking-mindset, by economists, various experts and the very bureaucratic structure that had got more strengthened under Dr.Singh. This government seems to me as IT-illiterate, if we can so term the very functioning of the government machinery.
There is this inward-looking attitude that is well exemplified by the so many number of committees that wont produce any practical solutions in the foreseeable future. That is before the next General Election comes! So, what is the point of feeling a bit complacent, as the atmosphere in Delhi makes one feel?
So, at one level, the current economic policies are out of date. The new economic policies as we have come to know in the post-Nobel Prizes for economics era put lots of emphasis not on just the old fashioned macro economic indicators like rate of growth etc. but on a multiplicity of factors. One chief factor is the technological revolution.
Also, there are certain new thinkings in economics. Douglass North, Nobel prizewinner in economics in 1993 has come out with certain basic new insights (Understanding the Process of Economic Change). Conventional paradigm of economics, he says, was not created to explain the process of economic change. He talks of the kind and quality of institutions as critical to economic change. Institutional infrastructure is critical for sustaining economic change and growth. We have to create institutions that can be productive, stable and broadly accepted.
There are the cultural angle to economic change: good governance, corporate governance, e-governance, education, health, infrastructure like courts of law etc. are also critical. Again, the record of the government performance in the last one year is not inspiring .There is no fire, no big vision or the drive to energise the people into many participatory development agenda.
Economic growth is all about wealth creation. This has to be done by more and more of individuals like Mr.Narayanamurthy. Infrastructure has to be developed through bold initiatives. These momentums are not now being created, it looks like that!