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India's growth story?

Durga Rao , Last updated: 02 March 2013  

In the recent past, there is much talk among the business people, media and also society about India’s growth story, consequences of slow-growth rate, ways to improve the growth and taking the growth rates again to more than 8%. Growth can certainly create employment opportunities needed and a country like INDIA with a demographic dividend can not venture young people going into distress and if this demographic divided is not used properly, it will obviously lead to disastrous consequences. Than any other issue, experts often say that India has an advantage of huge young population and these experts say that India can have an advantage even over countries like China in the coming future. We can only draw comparison with China as it has huge population like India and constantly explores opportunities to increase its energy needs. It is given that China is ahead of India and China is a Global Power today. Even going forward, it will not be easy for India to effectively compete with China and if that is to happen, we need to have a greater long-term vision. People say that China is a communist country; China’s Public Sector Companies/Government can invest heavily and with required speed in African countries and so that their energy needs are met. As far as India is concerned, India is a democratic country with lot of freedom of expression and freedom to media, and it will not be easy for any Government either at the Central level or State Level to take decisions and implement those decisions quickly. As far as foreign investment is concerned, India can largely facilitate Indian corporates invest in abroad and it will be like a collaborative exercise between Indian Government and industry. In some cases, our industry may not need any support from the Government and they can move ahead with mergers and acquisitions with no connection whatsoever with the State. Government may request the industry to bid for some coal or gas blocks in a foreign country, but, the industry will have its own assessment of risk and profit issues.  Indian entrepreneurs are respected with a proven track-record now in the world and in any discussion about growth in various countries in the world, while referring to India; they are full of praise for our corporates as to what they are doing in the world. It’s a proud thing for INDIA.

Growth means increased revenue for the state and so that, the State can spend money on welfare-programmes, can invest in education, can invest in Health-care and much needed infrastructure. Even with no substantial increase in growth rate also, State can increase its revenue if it improves its system, plugs the loop-wholes and uses its resources more efficiently. If we look at the growth rate of all states in the last 10 years, every state in India has grown and it’s really a welcome sign for India. There was a growth even in West-Bengal, Bihar, Utter-Pradesh & Orissa. However, in view of the cultural & political advantages, in view of availability of natural resources and transport facilities, some states may do well compared to other states. But, its really great that almost all the States in INDIA have grown in the last 10 years and definitely there is reduction in poverty though much more needs to be done. Despite rise in incomes, many still feel that they are poor and even with the growing middle-class, savings are getting decreased.  There is no much worry for the Government employees, employees working in Public-sector organizations as such though they express reservations about privatization, dis-investment, contract-employment etc. issues. Barring the contract-employees, people working in Government & Public Sector Organizations do feel secured with all their ‘power of pressure through Trade Unions’, constant increase in salaries and other benefits like Health-Insurance etc. There is also no problem with the highly skilled people working with the Private Sector as they are recognized by the sector and paid well along with other benefits. The problem comes with the people working in un-organized sector, low & mid level employees working in the Private Sector. Substantial section of population survives here. For these people, their lively-hood depends upon the over-all performance of the industry, performance of a particular sector and growth is important and much needed for these people. If there is no growth and any industry suffers a major set-back leading to closure of that particular industry, then, people dependant on these industries becomes job-less. Again, for these people, health & education has become costly now-a-days. If inflation is added with no rise in incomes as such, then, the lively-hood of low & middle level employees working in un-organized sector and the private sector becomes miserable.  

Agriculture is another priority sector. Agriculture provides massive employment to the rural poor. There should be constant increase in agri-production and efforts are to be made as to how to reduce costs and ensure minimum-support price for the farmers. If the costs in Agricultural production are not checked properly, then, the farmers will have to expect and pressure for higher price for their produce and it results in inflation. If there is no profit in agriculture, then, farmers can en-masse may decide not to go for crop and it is happening in some parts of the country. Compensating farmers from natural disasters is not an easy task. Even if Government has money and decides to compensate farmers when there are natural disasters, assessment of damage is  highly risky and technical; and ultimately well-intended expenditure aimed at saving the farmer can go waste or can go to wrong people. Already, there is decrease in people depending upon agriculture and people who traditionally depended on agriculture for their source of employment, are migrating to the urban areas and working in construction sector in great numbers. It is in the interests of the nation to concentrate on rural employment and so that, migration can be slowed-down and pressure on urban areas is decreased.  Both centre and states should play a very major role in planning for Agriculture. There is increase in agri-productivity and despite increase in production, food inflation continues. If there is shortfall of rain and if the Government or State Governments decides not to provide power to agriculture due to some compulsions or decides to charge more for the power provided for the agricultural activity, then, there can be substantial decrease in agricultural production. In India’s growth story, agriculture can never be ignored and if ignored, our food security will be at risk and there can be massive food inflation in the near future. With the growth, rise in middle-class, obviously, there will be demand for agri-products and if those demands are not properly met, then, it will lead to inflation as a supply-side constraint. We face these problems very often and managing our agriculture is a continuous process being both Centre and State main players.

Employment to the people comes largely from organized sector, from agriculture, from service sector & manufacturing. In India, service sector seems to have done well and our IT sector has made the country proud. Agricultural sector is to be managed constantly. But, manufacturing is not growing as expected and if manufacturing doesn’t grow properly, then, it is very difficult to provide employment to the huge young and educated population searching for jobs. For manufacturing to grow, there should be environment to set-up plants, there should be transport facilities, our industries should be competitive to the similar products being produced abroad and imported to India from countries like China etc. For our goods to be competitive to be exported, we need to obviously compete with the countries like China and other emerging markets. It is highly technical and requires a great expertise to know as to what all the barriers to be dealt-with to improve our manufacturing sector mainly. However, one-thing is sure that we need ‘power’ in order to ensure sustenance of existing growth rate and also to improve our manufacturing sector. If there is no power available to the industry, then, the industry fails to meet the targets even if there is an export market and it leads to closure of industry and leads many financial constraints from the lenders/Banks. Energy remains very critical factor going forward and to achieve the required growth rates and to ensure growth in manufacturing sector. There seems to be many problems confronting our power sector and those problems may not be solved immediately. We are heavily dependant on coal and gas for our power production; and obviously there seems to be supply constraints and our power-generation capacity using coal and gas are also being under utilized as is very clear through various media reports. There is no alternative for power production in the future except to improve coal supplies and gas supplies. Hydro-power projects can be used only when there is water in the reservoirs and for building additional hydro-power projects, we need massive investments and especially from the government in building various projects resulting in containment of water going to sea. For wind-power, it seems there are problems with the land-acquisition and wind-power generation also requires massive investment and same is the case with Solar-energy. We have got enormous problems in building our ‘nuclear power generation capacity’ and we do not know the fate of ‘thorium based power-plans’ that are sought to bring major change in our policy of ‘energy security’. For growth to continue, apart from other well-discussed and well-thought-out reforms, we need ‘power’. Severe shortage of power will lead to disastrous consequences. Already, many state governments are providing free power or power to the agriculture and its very difficult to argue against this move. However, state governments should be asked to bare the cost of power being provided to the agriculture on their own and should be asked to build additional power generation capacities in order to meet the growing power-needs of the agricultural sector. As such, it is very clear that going forward, power generation becomes very critical for our growth. We need to find innovative ways and we need a vision as to how to increase and build our power-generation capacity. We should reach a position where our power-generation capacity can be used, to the extent possible, to the fullest level. Our economy can definitely grow if we focus on enough ‘power generation capacity’. This is very critical area.

It is admitted that a very good and consistent GDP growth is essential for the progress of the nation; however, it is not all. GDP growth may mean nothing unless this growth is inclusive and every citizen is treated fairly and gets fair opportunities to grow depending upon his ability and hard-work.

When we talk about ‘India’s growth story’, we should not confine our-self only GDP figures and increased revenue to the state. There should be over-all growth in the society. If our administration is not improved and citizen doesn’t feel that his rights are protected in the society, then, there is no meaning for the growth at all. Yes, growing middle-class, and educated young people can be a big pressure group to bring change now. But, ours is still a fragmented society where caste or community discrimination is a reality though this caste discrimination has come-down to some extent due to changing realities and certain communities are not open in their discriminatory mind-set now-a-days. Indirect way of discriminating people in the name of caste or community is still a reality even among the highly educated class. This attitude should change if India should move further. People should change their mind-sets and unless it happens, it is very difficult to change the public-discourse or politics and caste or communities continue to dominate the society in one way or other.

GDP growth and increased revenue is only one-side of ‘INDIA’s growth story’.

Again, we can not compromise our critical public sector organizations beyond a point. Privatization can be done only where it is required. We can not sell our well-functioning Public Sector Banks for the sake of raising revenues and showing fiscal deficits. Liberalization and privatization has brought lot of change and going forward, every move towards further privatization should be discussed well. People understand reform now. If there is increase in diesel prices and if petrol prices are de-regulated and if people are made to understand these compulsions, people will support this move. If there is an increase in rail-fare and if there is a good argument in-favour of this move, people will definitely understand this. People will support good and well discussed reforms, but, may not support every reform measure.

There are some realities. Government Schools are not functioning well in this country even where there are good buildings, play-ground and well-paid teachers. Private Schools can not be regularized properly even if there is a law to regulate them. Private Schools find all kinds of ways to improve their revenues and they argue that they can not provide quality education unless they get the required revenue through fees. Some Schools run by Trusts are doing wonderful job in the society. Private Schools are run with a profit motive though I have read somewhere in the well reasoned Supreme Court judgment that imparting education is not a ‘business activity’. Reality is different. The reality is that the lower and mid-level employees are spending lot of money on their children’s education as they are scared to send their children to Government Schools if at all those are available in the locality. With inflation, costly education & costly health-care, we can not expect higher savings and this is the main reason that our saving rates are coming down drastically despite growth and rise in incomes. Like-wise, our primary education is not doing well and we are not able to find a right kind of policy or model for providing reasonably affordable and quality education to our children. Same is the case with Higher Education also and everyone knows as to how our universities are functioning in this country and we have got only few reputed autonomous universities or campuses like IITs and IIMs, other private colleges administered through Universities. There is a need to restore quality at Higher Education. There is also a need to ensure reasonably affordable and quality higher education to our people. We can not leave our education only to private sector though private sector needs to be encouraged and allowed to establish world-class universities and colleges. Our state sponsored schools, colleges & autonomous universities should also work well and its all about keeping proper focus and insisting on better administration.

Apart from education, as everyone knows that health has also become so costly. Government spends lot of money on health-care, however, nothing seems to be working and it is true that we need so many private hospitals at our major villages, small towns and so that, affordable health-care is available to our citizens. Everyone knows as to how our Government Hospitals are functioning in this country and in-spite this; we can not close our Government Hospitals as of now and can not argue against Government spending on health-care. A proper planning and vision is needed to improve our health-sector.

Everyone knows about our law-and-order situation and as to how police discharges their functions in the country though there can be exceptions and there can be many responsible and committed constables and police officers. This requires a major change and we need a great plan and frame-work as to how to make this system work. I don’t think that providing complete autonomy to the police department is the solution to the problem. Infact, this move can be disastrous in actual practice and police bosses can become all powerful and can dictate terms to the elected leaders in the society if this becomes reality. As such, though in theory, anything can be said, we need real vision as to how to improve our police department and so that, law and order situation can further be improved. I do strongly believe that there is a change in the mind-sets of the people in their approach to police in many parts of the country with growth/enlightenment, but, a lot requires to be changed yet.

Our court system is not working well. Our court system requires a major surgery and I strongly feel this. A well-functioning court-system can decrease the law-and-order problems. Now, the situation is that if a common man has a dispute over his land, he is thinking of approaching court as a last option and he is trying to get his dispute settled using unlawful elements or through police. This is unacceptable in a democratic society and instead of seeing improvement in our court system, it is becoming much worse and this is what common citizen feels. Improving our court system is not a simple thing and we need a great vision and political will and consensus to do certain things. Under compulsions, despite criticism, in 1991, our economy has embraced major changes in our system and in the same way; we need to go for a very major changes in order to improve our court system. My problem is that no one is showing the solution as to how to improve the court system and instead, they are arguing that the people should not come to courts. We can not call ourselves as a well functioning democracy unless we are able to establish well functioning court-system. This is certainly possible and there is no way for INDIA going forward except to improve our existing court system. This is another highly critical issue to be addressed.

Extremism and growing regionalism poses another bigger challenge to the nation and I do strongly believe that people will not support extremism and regionalism in future and instead, with growth and frequent movements across the country, people will support the idea of INDIA rather putting state emotions before this great nation INDIA. We can not build a strong INDIA if we keep fighting ourselves on every issue and I don’t think that even the people will support this moves in future and especially our younger generation can think differently.

Looking at our systems, some may argue that maintaining 8% consistent growth may mean nothing unless we see overall improvement in our administration or systems. Its true.

When we talk of INDIA’s growth story, we need to talk about the overall situation and not only GDP figures though GDP is essential for all-round development. GDP may not lead to overall improvement in the society.

Again, going forward, further reforms and changes are to be discussed well and people should be made to understand things. Even GDP figures need to be discussed in detail.

Finance should be made available to the small-businesses with an assurance of return of money and without scaring these people.

To see real growth in India and for taking it forward, we need overall improvement in the society and we need good and better ideas. Those ideas are to be implemented and our society should have bi-partisan approach to certain issues though politics are a reality and politics are there everywhere including America and in America also political funding is a subject for discussion and all kinds of mudslinging is also seen in election campaigns in the highly developed countries like AMERICA.

Apart from focusing and talking about GDP growth and figures, we need to focus and push for real changes in the society. We need to have some frankness in thinking for the sake of the nation as otherwise; these competing forces can continue to damage the society as a whole.

I strongly believe that all our problems in the society can be solved and INDIA can certainly become one of the most influential countries in the world soon even on-par with US.

It is the responsibility of the youth of this country to take this country forward, not to continue the mistakes, not to repeat the mistakes and give-up partisan thinking when it comes improving the society and making INDIA strong.

GDP figures are to be discussed in detail in future, every reform measure is to also be discussed in-detail and ‘India’s growth story’ is to be discussed and seen from overall situation in the country and without confining ourselves only to GDP figures and Tax Adjustments & concessions.

Note: the views expressed are my personal and also I can be wrong in my views.


V.DURGA RAO, Advocate, Madras High Court.

Email: vdrao_attorney@yahoo.co.in

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