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Indian Economy Fault finding or fact-finding?

Indian Economy Fault finding or fact-finding?

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  10 Dec 2019 5:08 AM GMT

Dr B K Mukhopadhyay

(The author, a noted management economist and an international commentator on ongoing business and economic affairs, can be contacted at m.bibhas@gmail.com)

Problems do not crop up overnight!

It must be agreed upon that in India’s planning this is nothing uncommon – set the high targets and ultimately become a laggard! Most of the plans lack the realistic touch inasmuch as sectoral target fixing cannot ignore the spatial dimensions, regional peculiarities and related other sociological factors. More than often the politics pushes beck the economic positives. Rather economics is used for achieving the political purposes.

Not only is this the reality in India but in the entire developing world. Either the projects are not taken up or even when the same is taken up the rate of progress remains at a palpably low level – cost escalation is rewarded! What is more is that projects completed are not subsequently followed up, supervised adequately as a result of which the same assignment is to be repeated within a short span of time involving more expenses.

Bursting Population: The menace holding back development

The global urban population is set to rise to over 66 per cent by 2050, and India is a significant contributor to it. While the country’s urban population currently totals around 410 million people (32 per cent of the total population), it is expected to reach 814 million (50 per cent) by 2050, as per a report. Is it not a fact that the growth of India’s urban population has not been accompanied with commensurate increases in urban infrastructure and service delivery capabilities?

Cities in India face a range of challenges in areas such as water, waste management, energy, mobility, the built environment, education, healthcare and safety. Obvious enough: these challenges may exacerbate further if timely and adequate action is not taken, and if neglected, it could even derail India’s growth. The plan announced by the Government of India for 100 smart cities and 500 Atal Mission for Rejuvenation and Urban Transformation (AMRUT) cities is undoubtedly important, but taking the leap to smart cities requires more than just government proclamation.

Whatever steps we take the growth process is always aggravated by the population menace. Where is the productive utilization of this huge work force? Skill-shortage does not allow us to leapfrog. The plight of the metropolises is well known by now! Borders are yet to be fully sealed. Already we have experienced huge influx from the neighbouring countries. How long could we allow this to continue? The Government has to remain firm to save the country, otherwise insurgency; clandestine activities; among others, can never be controlled!

Forget about the differences, cooperate to achieve S5 trillion economy

There is, thus, no question of complacency. Challenges galore and the call of the time: be fast and consistent, maintaining speed and stability. An all-round growth of the rural and urban sectors could reduce the incidence of regional imbalance.

A very recent study conducted jointly by the World Economic Forum and PricewaterhouseCoopers (PwC), specifically observed that the private sector will play a pivotal role in the development of smart cities, it also said that problems in areas of water, waste management, energy and mobility would exacerbate if timely action is not taken. The private sector will play a pivotal role, with support needed to deliver much needed infrastructure and help address capacity issues across state governments and urban local bodies.

Export-led growth: A way out

A close look at latest FTP [2015-20] will reflect its internal strength, practical nature and solid base inasmuch as it has touched virtually all of the vital wings. At this stage the crying need is a close supervision so that some better things could still be done during the pendency.

China has been a good example on this score. We cannot catch up overnight, but over a specific time span we can do this provided a practical planned approach is taken up. Foreign trade policy has to be more seriously planned so that we can tap in a bigger way the relatively less explored region / commodities and services. We must not forget that we are not poor resource-wise, rather very rich potentialities on certain arena do exist.

It is really heartening to note that the government has unveiled an ambitious agriculture export policy that seeks to double agri exports to $60 billion by 2022 and do away with arbitrary curbs on exports. Though the policy found little support from experts who termed the target ‘highly ambitious’, given how exports had fallen from nearly $40 billion five years back to $36 billion in 2017-18, yet the move is in right direction inasmuch as the very purpose is to push India into the list of the top 10 agri export nations.

The policy ties in logistics support, a better trade regime, and states-led product development to connect farmers to global markets. Each state will have a designated department for promotion of agricultural exports, apart from cluster-based development for specific commodities. Several sea ports have been identified to serve as gateways for specific agri exports.

Naturally, the challenge is to create exportable surplus (trade surplus referring to an excess of export receipts over import payments as compared against trade deficit which means an excess of import expenditures over export receipts measured on the current account and also known as merchandize trade deficit) and at the same time producing goods/ rendering services at the least comparative cost - so as to get a strong foothold on the international market in the face of intense competition

Yes: with the Government of India striking important deals with the Governments of Japan, Australia and China, among others, the external sector is increasing its contribution to the economic development of the country and growth in the global markets.

Can we reasonably expect that by implementing the FTP 2015-20, by 2020, India’s share in world trade is expected to double from the present level of three per cent?

And finally, rural development not to remain in paper only

Rural sector should not continue to exist as a depressed corridor. Farm sector calls for result-oriented time-bound actions. Water, energy and food securities have to simultaneously move forward.

Best water use process is another area that deserves attention. Here also scientific planning regarding exploration of ground water holds the key as indiscriminate use gives rise to other problems. Surface water utilization has also not been optimally done.

The urgent need is there to go for overall farm development efforts. For that matter needless to say the infrastructure holds the key. The loss incurred during the entire production process inclusive of the damage done in the unscientific threshing, rat menace, field loss, can be minimized.

Time is ripe for adopting practical realistic strategies that could ensure food, water and energy security. This involves (i) empowering key actors and enhancing positive action by assigning top priority to the public sector and enabling it to play a leading role in creating conditions for all stakeholders to function effectively; (ii) supporting the development of an effective and transparent market mechanism; (iii) improving the efficiency of the informal sector by providing legal, institutional and other support mechanisms.

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