Reviving The Indian Economy A Pragmatic And Precise Agenda For The New Government
The first job of the present Prime Minister (which no other PM did in the past) is to draw and roll out a precise road map for eradication of poverty and for improving two other important parameters simultaneously, i.e. Human Development Index and ease of doing business in India. India occupies 135th place in the International ranking in these two parameters
Narendra Modi became the 15th Prime Minister of India on 26.05.2014 at a time when both Indian economy and governance are in total mess and disarray. The country is riven with many serious problems. GDP growth has come down to 4.6 per cent. Fiscal deficit is 4.47 per cent (Rs. 5.09 crore) of GDP. Internal debt is 37.2 per cent (Rs 42,12,575 crore) of GDP. Current account deficit is 1.7 per cent of GDP. The cumulative loss of Air India is more than Rs. 30,000 crores. Other airlines are also bleeding red. Jet Airways suffered a loss of Rs 2154 crore in the quarter ending March 2014. Inflation and unemployment rates are soaring. Investment climate is not salubrious. Therefore the all-round scenario in the country is very depressing. On the other hand, Chinese economy is still growing at 7 per cent. In fact, the rise of Narendra Modi at this point of time is like the Phoenix from the ashes. Therefore by becoming the Prime Minister of India, Mr Narendra Modi has worn a crown full of thorns. On the other hand, the Indian voter has also become aspirational, transactional and unforgiving. He has built a mountain of hopes from the new Government and will not hesitate to berate it if his hopes are not answered or fulfilled in the foreseeable future, particularly in the fields of controlling inflation and unemployment. According to Rajesh Srinivasan, Gallup’s (a polling organisation) research director for Asia says: “It is very dangerous to create expectations and not meet them.” Given the horrific poverty and terrible inequality in India, the youth is impatient for the early return of good days in the near future as promised by the Prime Minister during his election speeches. Otherwise all that the modern youth needs today is a match-stick event. Stephen P. Cohen, an American thinker is right when he says, “Conflicts over water, ethnic and linguistic tensions and the pressures of widening income disparities all threaten India’s stability from within. Yet other than the Maoist uprisings in eastern India, these issues are generally relegated to the bottom of the threat hierarchy.” The new Prime Minister must realise this harsh reality. Today every knowledgeable voter switches his TV set in the evening to find out what new decisions the new Prime Minister has taken during the day.
The unwritten mandate for any Government is to eradicate poverty from the map of India. It is eradicable within the next decade if the government is determined to do so and has prepared a precise road map for economic resurgence of the country. As on today (67 years after independence), 40 crore people are wallowing in harsh poverty conditions. Almost an equal number living just above the poverty line, called marginally poor, are also struggling in life. Remaining 45 crore people constituting middle and upper middle class are also living in non-congenial environment because of omnipresent insanitation, polluted air and dishonest dealings called corruption. So only saints may be leading a peaceful life in upper Himalayas. Root cause of unending or ever expanding poverty and other associated problems is the failure of successive Governments to control the population explosion which at present is rising at the rate of 18 million people (equal to one Australia) every year. As a matter of fact, all the economic and socials ills are born out of this malady. By now, India would have been a prosperous country had its population been controlled to 700 million people. No Government on earth can tackle poverty problem of India till it tapers its population growth to zero percent within the next decade.
Indian voter desperately wants results in the following five areas
1) Promotion of employment opportunities so that an educated youth gets a reasonably good job to live a decent life.
2) Lowering the sale price of essential commodities.
3) Prevention of adulteration in food-stuffs.
4) Improvement of delivery of service from the in-place infrastructure like hospitals, schools etc. Quality of education is now inversely proportional to the expansion of educational institute.
5) Eradication of Poverty and raising of sanitation level.
Basically the growth of economy is achieved by taking following 5 core measures
1) Fiscal management using fiscal prudence.
2) Initiating massive infrastructure projects in core sectors of roads, rails, airports , irrigation ,power projects , ports and industrial townships. Infrastructure development is the unfailing engine of growth and key to solve many problems.
3) Reforms in different departments to obtain optimum efficiency and expediency.
4) Promoting tourism and attracting FDI.
5) Controlling population to achieve zero growth.
30-point programme which will answer all the five aspirations of the Indian voters
1) Reduction of fiscal deficit to 2 per cent of GDP by 2017.
2) Reduction of Current Account Deficit to 0.5 per cent of GDP. A special cell should be created to advise government how to bring record FDI in India by dismantling trade barriers .
3) Reduction of debt on power utilities ( read the statement of power companies of Delhi before the Supreme Court on 19.05.2014 ). The total amount of bad debts for all the power utilities in various states amounts to Rs. 3.0 lac crores.
4) Reduction of N P As on banks. The total amount of bad loans is Rs. 5 lac crores.
5) Reduction of debt on state Governments and Central Government. The debt on West Bengal government is Rs. 2.25 lac crore. The state government is paying an annual interest of Rs. 25000 crore. Hardly any amount is left for development projects. The trend in some of the states to make regular payment of interest to the bankers and keep the principle amount outstanding indefinitely also constitutes financial indiscipline.
6) Improving the level of sanitation and Human Development Index of the people of India. Scope of the term, “sanitation” is very wide and does not simply relate to providing sanitary latrines in villages. It means total cleanliness in the local rural and urban environment including 100 per cent sewerage system in urban areas and recycling of waste products. As a matter of fact, a new ministry should be set up for recycling of waste products. Accordingly launching of National Sanitation Program ( NSP ) will give a new brand value and look to India. Only then India will be truly called “Incredible Shining India”.
7) Promoting the level of ease of doing business in India. Presently she occupies 135th rank-in the table of 189 nations. Also wage a war against drug menace and increasing obscenity in films and media. Stop funding the NGOs as most of them have become dens of corruption.
8) Controlling price rise of essential commodities, particularly vegetables and pulses. The problem of vegetable shortage by promoting vegetable farms in 7 N-E States , Chhattisgarh and MP and extending Apni Mandi concept in all the towns.
9) Water resources and Hydro-power development in various river basins of India. Brahamputra river basin alone has the potential of generating 75,000 MW of power. The state of M.P. alone can feed whole of India if the entire agricultural land is brought under irrigation and mechanised farming. Development of hydro power and Nuclear power plants is the key to prevent growing dependence on thermal power plants. India cannot survive without developing additional hydro power to the tune of 1.0 lac MW within next 15 years.
10) Expansion of Railway network and convert it into a major engine of growth for Indian economy. The immediate requirement is to electrify and double 18,000 kms of railway track. Railway Ministry has become a behemoth organization and needs urgent downsizing. The best way to achieve this objective is to allow the state governments to run the trains within the respective states. Railway Ministry should run only inter-state trains. The Freight Corridor project should be declared as Sun flag or Flagship project of India. Electrification of Railway network will save huge amount of diesel consumption worth rupees 25000 crores. Special scheme is also needed to fully utilize the under- utilized railway tracks. Special railway lines need to be laid to provide access to new coal-mine and iron ore areas.
11) Massive increase in Infrastructure Development in core areas (roads, power plants, cement and steel factories, drainage and ports). Revive Bharat Nirman Program and accomplish the same within next two years. Rural roads in most of the states are in dilapidated condition and need immediate carpeting.
12) Reforming FCI and prevent the decay of food-grains for want of adequate storage capacity. Presently wheat production in India is more than the consumption . Export of wheat will take place only if improved seed varieties are developed and introduced.
13) Cut down the consumption of crude oil and reduce the heavy import bill ( of 160 mt of crude oil ) costing Rs. 10 lac crore annually (9 per cent of GDP) and explore new avenues of oil and gas aggressively in India and abroad. Only one discovery has been operationalized so far from the blocks allotted under 9 NLEPs. This program will be the key to India’s economic security.ONGC and GSPC should be given the best blocks separately for exploration of oil and gas. Promote the manufacture of ethanol and its use as fuel in vehicles to the extent of 15 per cent. The technology of high yield sugarcane growth and manufacture of ethanol needs to be imported from Brazil.
14) To mine adequate amount of coal to feed all the thermal power plants. Inadequacy of coal production is the major cause crisis in power sector.
15) Bringing revolution in the development of solar energy and wind energy. Solar cooking and water heating can save huge amount of cooking gas and power. Solar power should be developed to the tune of 50000 MW in the desert areas of Rajasthan and Gujarat by 2020.
16) Controlling population explosion to ensure zero growth rate by 2020. The issue of population explosion has taken the shape of a time bomb which can explode any time during the next decade. Demographic disaster can be converted in to demographic dividend only on papers.
17) Development of Tourism hot-spots particularly in North-Eastern States. Reduction of road distances with the help of tunnel roads in hill states will greatly boost tourism.Tourism in hill states is greatly handicapped because of poor conditions of roads which needed to be resurfaced.
18) Splitting bigger state like U.P. into smaller states (or set up sub-capitals within the states) to improve the level of administration. U.P. state is of the size of a very big country and it cannot be run efficiently and effectively on the existing model. The right size of an efficient state is equal to 20 constituencies of Lok Sabha and bigger states like Maharashtra should be re-organised. U.P. will never progress till it is split into three states because a Chief Minister cannot rule a state of the size of a big country under existing political structure. In Maharashtra , Mumbai is at one end of the state and the other ends are 1000kms from the capital. Consequently there is a great need for setting up sub-capitals.
19) Developing dairy development and horticulture hubs in seven N-E States. These states can bring white revolution in India very soon. Unffortunately these states have not yet in the national mainstream and a special initiative is needed to do the needful.
20) Economic participation in African countries on the pattern of Chinese initiative.
21) Decongestion of over-crowded cities along with strict implementation of urban renewal programme. Set up 100 new intelligent cities in different states. Also to introduce modern Mass Transport System like Delhi Metro Railway System in all the major cities of India to get rid of the daily traffic snarls. Every town need a circular bypass road to decongest the traffic.
22) Setting up of SEZs and new growth centers along the 100 new smart cities to ensure a big bang in industrial development. Also to set up intelligent industrial parks along the coastal areas to tempt foreign companies to set up their units in India, the way China attracted Taiwanese manufactures to Shanghai SEZ. Creation of special Central Environment Authority is urgently needed for fast track clearance of projects and not repeat the POSCO and other stories. Renuka dam project in Himachal is waiting forest clearance for the last six years. Also a special scheme needs to be introduced to improve the infrastructure level of the existing industrial parks in the country. Remodel the new Land Acquisition Act to facilitate early acquisition of land for important infra structure projects.
23) To take up special program in irrigation and agriculture development in areas ( Vardha and Yavatmal districts of Maharashtra) where farmers are committing suicides.
24) To take special development is work programs in Naxalite infested areas. Infrastructure development id the best anti-dote to the growth of Naxalism.
25) To take special economic activities in highly underdeveloped districts like Kalahandi and Saputara in Odisha and Gujarat states respectively.
26) To launch a strict program for controlling adulteration of food-stuffs, milk products and medicines. Adulteration of food-stuffs has became a very serious health hazard requiring urgent attention and action.
27) Reframing poverty alleviation programs and doling out direct cash to 8.0 crore BPL families to prevent huge amount of leakage of funds. However the welfare schemes should be linked with family planning practices adopted by the BPL families.
28) To create a special cell to monitor the level of delivery of services from existing infrastructure like hospitals, colleges and universities.
29) India’s Geology offers a remarkable resource bounty ( mineral wealth ). Therefore it is very essential to create a special authority to regulate the mining and export of minerals to earn huge amount of foreign exchange. Cracking on illegal mining is the immediate need of the hour as this is a sure step to nullify the adverse impact of Current Account Deficit. India could have been a mojor producer of steel head the two projects of steel plants ( Mittal and POSCO) being commissioned by now or SAIL had set up its own additional plants.
30) To set up a high grade scientific research institute to help in the indigenous production of large scale defense equipment. This institute should also act as a Think Tank for overall skill development and promotion of innovative ideas. All the State Govts. and Central Ministries be directed to curb the huge expenditure on publicity. The Govt. of India spent Rs. 187 crore on the publicity of Bharat Nirman Program alone.
Therefore, the first job of the present Prime Minister (which no other PM did in the past) is to draw and roll out a precise road map for eradication of poverty and improve two other important parameters simultaneously i.e. Human Development Index and ease of doing business in India. India occupies 135th place in the International ranking in these two parameters.The basic philosophy behind the road map should be to attain a fast track economic growth such that India supersedes China by 2025 in terms of the size of the national economy. This document should not merely harp on the single parameter of achieving 9 per cent growth of GDP. The growth scenario should be accompanied by two more factors i.e. distribution of new found wealth to all the strata of society (inclusive growth) and increasing the level of sanitation in all the streets of India. Till now we don’t have even 10 cities which may boast of 100 per cent sewerage system. The billion dollar question on everybody’s mind, “When India will be free from poverty and called a developed country!” This should be the sole motto of the new Government and the vision document should provide an answer to this starred question.
By far India should have been much ahead of other nations. China during the 1950-60 period was way behind India. It was Deng Xiaoping who strictly enforced the one child policy and large scale economic reforms to open up the Chinese economy in 1974. The race against time (in economic build-up) started thereafter. For the next thirty years, mainland China delivered the fastest-growing economy in the world. Before his death, Deng could claim to have lifted more people out of poverty than any other leader in human history. China is a closed society with an open mind whereas India is an open (Democratic) society with a closed mind. This attitudinal diversity makes the difference between two big economies hanging at different levels. India is a country with fabulous wealth and fabulous poverty. Now you can see the difference between two countries. To give one example, China took only six years to build the 18200 MW 3- Gorge dam whereas the capacity addition by NHPC is only 7000 MW since 1983. Still all is not lost yet. Foreigners still perceive vast untapped potential of economic dynamism in India and they want Indian democracy to bloom vis-a-vis China. A stable Government has arrived after many years and let us hope and pray that it rises to the occasion this time to develop a strong and vibrant India and herald the promised good days very soon. One wishes that the new Prime Minister plays the role of Deng Xiaoping. In other words, the Government or the entire Parliament must have a burning desire to take India ahead of China by 2025.
All these issues mentioned in very knotty and require patience for their solution. It will be good strategy to pluck low hanging fruits first. Development of solar energy for heating, cooking and power requirements is one such ripe fruit to give very early returns. Launching of National Sanitation Program is another. Issue of controlling fiscal deficit is the most difficult task. This is because MNREGA and Food Security Bill schemes involve huge expenditure (Rs. 2.5 lac crore) and even 50 per cent money doesn’t reach the poor. These two schemes need to be converted into a single social security net for the poor whereby a sum of Rs. 200 lakh crore should be directly sent to 8 crore BPL families through banks. This system will totally choke the leakage of funds in the process. However, this doll out should be stringed to family planning measures being adopted by the BPL families. Mr. Ruchir Sharma clearly tells in his famous book, “Breakout Nations” that financial system collapsed only in those countries who could not control the three metrics i.e. fiscal deficit, current account deficit and debt to GDP ratio within the prescribed limits. These limits exceeded mostly in those economies where money was spent more on welfare schemes and less on infrastructure projects. Accordingly fiscal prudence and discipline are the need of the hour to save Indian economy. Therefore the new Prime Minister needs to urgently discuss these issues with the secretaries and advisors of the government and draft a pragmatic road map for the economic development and then address the nation accordingly. This 30-point programme encompasses all the issues of economic development, GDP growth and unemployment. There is no other short-cut to achieve this holistic objective. Therefore, the Government needs to adopt and implement this programme sincerely and strictly to make India the elusive economic power house and supersede China by 2025. The country has the strength to achieve this feat by 2025 and there is no doubt about it.
By Ram Niwas Malik