The new competition among the States is welcome!
Intelligent Chief Ministers can make the difference!
Economic development is now on everyone’s mind. Only fast economic growth, intelligent use of govt funds, adoption of new technologies, use of human resources, in what is often seen as the merging knowledge economy, we need knowledge workers, to earn the sort of high salaries as earned today, say in the Silicon Valley of India, Bangalore. The average age of the software engineers is now just 23! If at that age an youngster can earn Rs.18,000 per month, then it becomes the standard aspiration for other youngsters.
That is how India of the youth, the NextGen, as it is termed now set the aspiration levels high!
So, what do you have if you still have Chief Ministers as in TN and W.Bengal where the two States still pursue, what is perceived to be extreme Right and extreme Left mindset? Only islands of corruption in the midst of much extremist and empty rhetoric that is again a common feature of the most States. Communalism, casteism, regional chauvinism are all now out of date, yet unfortunately, it is these extremisms still swing the votes, in an anti-development mindset.
Let us start realizing these days are now gone. There is a new competition among the States. Karnataka and AP show the progressive ways of economic development. So too even small States like Goa, HP and other States, like Rajasthan. The other States are stagnating and also progressing in only some select sectors. Over-all, only a few States show maturity of a political vision and a matching fairly open governance norms.
We are living in the globalization era. It is an enormous opportunity for development of everyone. The individuals, the States and the country. There is the IT revolution, the world has become famously flat and the Internet and the booming Indian outsourcing business gives every State great new opportunity to create more high-paying jobs and the new middle class younger generation with so much money in their hands have created a new India of plentiful opportunities.
Yes, there are structural problems, distortions, economy as a whole of growing at 8 per cent while agri sector is stagnating somewhat, though here too the impact of our many infrastructure developments, roads and communications in particular must open up the markets, the interiors and wealth creation, the urbanization, migration and the many States’s current priorities, emphasis on social sector, education, health and employments, so many of the populist schemes all must contribute, they are contributing to the abolition of poverty in a shorter time than we imagined.
We live in a coalition era, there are allies in the UPA with their own governments in States, TN and W.Bengal giving two examples of extremist politics and yet they too fall in line with a largely World Bank setting the agenda of governance, in the delivery of many public services, should all help to reduce much of the deprivation in basic needs, food, shelter, power and education and the various social securities. Now, it is extremist politics, populist politics that only keep the people poor! In an unusual move, the UN Secretary General Kofi Anan had written to the Prime Minister about the extremely disturbing level of polio cases in UP and asking the PM to take steps to tackle this virus on a priority basis.
Yes, this comes as a step to remind us that there is no great sensitivity in India, in Indian polity and society about the great issues of the day. Take economics. We are supposed to have an economic expert as the PM. What do we hear from him by way of timely economic policies to accelerate economic growth? Not much. The same old tired rate of economic growth, the so-called 8 % growth for which everyone claims credit! But see the state of agriculture or employment. Or the very uneven rate of economic development in the States.
In a recent conclave in Delhi we found the State Chief Ministers for the first time debating their respective points of view. It is good they at least speak out what they perceive to be their priorities.
As for economic development, we don’t have great minds thinking aloud as they did in the past. We have had great economists like Lord Keynes, Joseph Schumpeter, Friedrich von Hayek who held the world stage in their times. In China, there is no law and order and no legal system or judiciary to settle issues. Such an economy won’t be sustainable. India is better. There is a command economy. This is not what makes for sustained growth of economy. In China, the great economic thinker, F.A.Hayek’s famous classic, The Road to Serfdom, was translated in Chinese language, copies were snapped up by people so quickly! So says a China expert from Harvard University.
In our own times, we have had economists like Galbraith or Schumacher (Small is Beautiful) who gave us hopes for economic prosperity in the world. Today we have yes, economists, professional ones, but no economic thinkers! Even the much admired Amartya Sen has not given any known insightful advice to give to the Indian Government! It is a great pity. Nor has he helped his own State, W.Bengal either Just now, I have come back from Bengal (I visited Sen’s residence too) but I came back with great disappointment.
Bengal is one State we can say still remains backward! Its track record in tackling education, health, poverty is pathetic. I saw everywhere, in the Calcutta city and in the rural areas, a pathetic lack of government, governance, the hopelessness and helplessness I can see visually everywhere. Rural people look haggard; no big investment has taken place. Buddhadeb Bhattacharjee, the CM, is yet to turn the tide. What the great economic experts (W.Bengal has plenty) haven’t helped is they haven’t spoken out about the harsh realities in the State. Nor they had visited or shared the comparative performance of the other Indian States.
Punjab is agriculturally prosperous, yet the number one State in agri debt. Next comes TN which is advanced and number two in agri debt. TN is also an extremist political State. Now, the current CM is engaged, as can be seen from his daily routine, in undoing everything done by his predecessor, Jayalalitha! So, in a sort of generalization we can say that it is the extreme quarrels, personalized in some states including in UP, that come in the way of sound economic policy making, in attracting investments, implementing the several policies suggested by the World Bank to accelerate economic growth.
So, even an economic expert like Dr.Singh can’t do much in raising the economic performance of the States unless there is a public awakening of what makes for a State economically advanced. Individual Chief Ministers, the more intelligent and sober among them, can make all the difference. Gujarat, yes, attracts investments, but politically and socially seen as a pariah. So too Kerala, highly educated and yet economically a weak State. Its only resource is human resources!
There has to be a climate of some economic reality, there has to be a desire for economic fruits, good standard of living, decent employment, high salaries and so good entrepreneurs who would take risk and invest. Narayanamurthy’s own story is a good example. At least, he made it before Deve Gowda came along to obstruct him! Now, the new CM had copied him but we have to see what Murthy can do in a Government! Likewise, in States like Bengal, Orissa and Jharkand, the iron ore rich States invite huge investments. But then there are other issues like governance, corruption, how investments creates jobs, the issues of disinvestment, partial or full privatization of some PSUs etc.
There is a huge backlog of mental blocks, in Bengal Jyoti Basu,the patriach,is posing a hurdle to big investments, his ideology comes in the way, the trade unions of the State are a big hurdle, the need for privatization of a huge number of new and old projects needs a more open mind. This, only now is being realized. In TN, one State with lots of populism eating the public funds is now opting for Chennai airport privatization, as against the Leftist’s wish.
The point is that many States, the men in helm, don’t realize that big new infrastructure projects like roads, ports, airports can’t be built by government servants. It has to be done by experts and with much expertise, and such tasks are better left done by those who are willing to do it! That is all about privatization!
Only slowly this concept is getting appreciated. As for UP and Bihar, two very backward States, separate priorities have to be set. Economic prosperity comes with many historical, geographical and strategic perspectives. USA has certain of these advantages. So too Russia, so too the oil-rich countries. So too the historic and strategic advantages for China. India has luckily tagged on to IT revolution, now outsourcing boom and we must make the most of it, before others catch up. I mean certain historic, strategic opportunities don’t remain the same, don’t come in any predictable way. So, my first point is that India as it is now placed in an advantageous manner and let us speed up. Let us deploy the IT advantages across the States. Let there be an e-governance plan for the whole country and let us move fast.
My second point is that let us recognize certain social realities. We can’t create equality in any populist way, be it the DMK or the CPI (M) ways! So, let us create a non-exploitative society, where we allow private sector grow in all possible sectors. Bengal needs huge industries, the State couldn’t attract any investments so far. So, land allocations for industries must be on all parties consensus, the Congress and Trinamul Congress shouldn’t spoil the current positive environment there.
My final point is that we have to compare the States and see which State or States are proving models for others. Seen in this light, it is now Karnataka and AP which provide lots of development models. Yes, there are social issues, issues of inequity etc. But from our own experience we find the AP entrepreneurs, farmers, along with Maratha farmers who show lots of dynamism and a positive mind to take risks and enter into new entrepreneurial ventures. Not so, in other States. Comparatively, the Southern States are more reliable for doing business. In North Indian States we find still the old mindset, unreliable mindset, so much promises that they don’t keep, be it small enterprises or keeping one’s words and also resorting to more bureaucratic and more litigious and even to the point of cheating.
Of course these are all personal impressions, the point is made just to give a current update of how economic development is helped or hindered. In doing business and promoting entrepreneurship, wealth creation activities, what is needed is trust, mutual trust and certain amount of open-mindedness. A welcome attitude on the part of everyone involved, banks, govt. depts. etc.
Business-friendly environment we have to create. As per the World Bank report India is still ranked poorly in helping people to start businesses. We have to create lots of small businesses; I am opposed to monopoly capitalist ventures, so I am not impressed by the hallabullah of Reliance or the Tatas. It is the Small is Beautiful I am in favor of! The world if flat, as Thomas Friedman has famously observed and made us all to wake up to compete on equal footing thanks to Internet!
So, we have to debureaucratise our governance, there is high corruption in India and this affects India and the Indians’ aspirations to become economically well-off nation and people.
So, economic growth is not a magic or a mantra. Economic growth is all about our attitudes towards how well-off every one of us is willing to work hard to lift ourselves out of our economic wants! Wealth creation is also both material and non-material! We have to trust others in the business ventures. There is so much rule-bound mindset in India. Certainly, there is still so much trust in the government. This has to be changed. No government in itself can’t create wealth! Government’s job is to regulate, to provide for public security, law and order! It is the people who have to create the wealth.
I have, I hope, drilled enough of practical wisdom about economics and wealth creation and banishing of poverty!
Extreme Right and extreme Left keep poor poorer!
Just now I was reading an interview with Paul Kennedy in the Financial Times about his 1980s classic, The rise and fall of the Great powers. It talks about the international developments in a historic context. Even now, an American slowdown can impact India, as it is now widely feared by economic experts in USA and Europe. But for India we have a chance to grow economically fast just at this point of time. This is just the historic moment! So, we shouldn’t waste the opportunities. But we have some peculiarities, we have many Rightist parties, chauvinistic, regional and casteist and communalist.
Readers can compile their own lists too the extreme Leftist doctrinaire myopia, as in W.Bengal.The result is that the poor get marginalized, poor remain poorer. Blatant populism is just an illusion. It doesn’t lead to sustained economic development or well-being.
I wonder how many among the party leaders or the incumbent Chief Ministers know this rare opportunity for India to grow. It is the duty of economists and other experts to tell our politicians. It is the extreme the extremists of the Right and the Left, try to waste the opportunities available for everyone, including the poor, to advance, that would be thousand pities!
An entrepreneurial environment contributes a lot for a state to promote self-employment and business enterprises. Unfortuntely, in many states, there is still a negative mindset. The Gen/Next hasn’t been taught a sense of work ethic. Populist politics had injected an inferiority complex, the unemployment allowance for educated unemployed, is one instance. Instead such monetary help should be for promoting some work ethic, only those who take up some work or apprenticeship must be given such subsidy.
India, as per the World Bank, ranks 134 among 175 business friendly countries. Though the current Company affairs minister says he had computerized the process so that at the click of a button you can register a company! Good news! The registration of companies has doubled! Only self-employment schemes could generate wealth and raise economic growth.
Corruption, law and order!
Corruption is a curse in many states. Now all politicians declare crores as their wealth before the EC! Only in Karnataka, there is a Lok Ayukta and doing a very good job. All states must create this institution. Only then, there will be incentives for starting private ventures and do business without fear. Law and order also matters. Too much government intervention, too many tax inspectors are all old mindset! Unless people aspire honestly for earning through legitimate means, there will be corruption, political nexus that hinder hard work by entrepreneurs.
View from the countryside
The big bang and the ripple effects!
The new development strategy needed for rural India’s faster development Infrastructure, roads, communications matter more than any other investments! So many of the Central govt social schemes already in retreat? The Right to Information Act faces opposition from bureaucrats!
Government has put the bureaucrat’s suggestions on hold. But how long the Act would be in the present form? When and if the amendments are made, then will the bureaucrats cIt talks about the international and be exposed by the public, as it is now intended? God only knows! Not this government given its limitations in the face of such determined bureaucratic onslaught.
Similarly, the employment guarantee act is also not seen working. There is a slow down. One year after the act, says Mr.Jean Dreze, one member of Sonia Gandhi headed National Advisory Council, that the promised Central Employment Guarantee Council has not been constituted. We wonder whether such a Delhi-headquarted body needs considering the employment guarantee has to be implemented at the decentralized levels. Anyway Mr.Dreze must know better as an insider and a New Delhi based personality.
The point is that Sonia Gandhi is no more seem to be keen to come back to head the Council and therefore what is the point of constituting such a council except to accommodate some retired bureaucrat. Then, the whole spirit of the entire exercise would be lost. That is beside the point. More serious is the fact that the States are not keen to involve themselves in implementing the scheme. The attitude seems to be that every State likes to fashion such a scheme more in populist way, to shore up their own images!
Also we seem to need an entirely new mindset for our countryside. Jean Dreze and his time economists like even the great Amartya Sen have been drilling in us about so many aspects of rural development. The two, Dreze and Sen, have authored so many books together and they have covered almost all aspects of what needs to be done in the empowerment of the poor. Their books also had almost exhausted the data that we need to gather to know the status of agriculture, rural development in such key States like Kerala, West Bengal and Uttar Pradesh.
All that needs to be done is to assess what policies had worked and what didn’t! In fact, it is time to recognize that most of the so-called Marxist oriented policies advocated by Sen and Dreze, the sort of policies that made W.Bengal and Kerala what they are have only made these States remain poor and while other States like Karnataka and AP, even Rajasthan and other smaller States to make remarkable progress, in economics, in new technologies and much more important in the delivery of public services.
All these new basket of delivery of public services are not to be found in the tomes of Sen and Dreze. The point is that what Dreze now advocates, is, in our considered view a bit out of date or out of tune with the sort of mindset that dominates the Chief Ministers now.
Even Buddhadeb Battacharjee in W.Bengal is wooing the big industrialists, the once derided monopoly capitalists, to invest in big industries and then only the needed momentum, the big bang effect such a big investment would make on the rest of the economy. The ripple effects can be felt only after such big invesments materialize! Just now, I read that the employment guarantee scheme in the months it has been in operation hasn’t succeeded in getting the states spend the funds allotted under the scheme! This was news indeed.
The best way to move forward in such schemes, in our opinion, is to decentralize decision making. The message must be: decentralize, decentralize and go on decentralizing the various schemes. In AP, the CM seems to be showing the way. He is reviving the District Planning Boards with the Zilla Parishad Chairpersons heading them.
I find that among the States, the defaulters are the States like TN and Karnataka, ruled by parties with their own narrow selfish agendas. The DMK won’t like to let go its opportunity to dish out populist schemes, all free distribution of freebies like cheap rice, color TV and wasteland to the poor. People don’t want these things but when a government comes out to distribute these things instead of providing sanitation and toilets and even making 1005 power connections, then what can anyone do?
Likewise, the JD(s) in Karnataka would like to be seen as a distinctive party from the Congress. In W.Bengal, the CPI (M) has its own paranoia. With its 70 odd MPs to back up the UPA,it is a party with no vision at all, it is all noise and nothing else.W.Bengal continues to languish in backwardness, in education and healthcare, more so the latter, it is a scandal!
Yet who cares, comrades are comrades, they have their own theories for their own way of keeping the State in perpetual backwardness.
When populism becomes pathological with some politicians!
Yes, the freebies distributed in some States like TN and Karnataka, may be in UP too, are proving to be now embarrassments. The free cycles to girl students in Bangalore are now not used by most girls for various reasons, distance, traffic congestion and repairs! In TN, the “free rice”, that is rice at Rs.2 per kg now finds its way to smuggling on a large scale. Within 100 days of the scheme some 450 “smugglers” arrested under the Goondas Act! Also diversion of other freebies like kerosene, sugar etc. Adulteration of these goods is another menace. Free color TVs? Very likely, it will be just “sound”, no color! The very economic criteria like BPL/APL categories of poor are given up in the distribution of freebies. The latest is the free monthly “unemployment allowance” The Finance Minister Mr.Chidambaram wants bank accounts opened for disbursal of the allowance. This is resented by the students. In UP too Mr.Mulayam Singh Yadav wanted to do this and he had already done this. May be, he could consult the TN counterpart how to manage the scheme!
Subsidy is unavoidable, we feel. But any subsidy must be based on some sound economic criteria and some safeguards. We can see from the TN CM’s moves, sheer cynicism, a reckless adventure, just to teach a lesson! For whom? For whom else? To his rivals and J. in particular!
So, with such fiscal irresponsibility, such poor governance standards, it is no wonder even the World Bank had to withhold aid because it detected corruption in some major States.
Corruption is so high that even the Chairman of the National Human Rights Commission, Justice Anand had deplored that with such high corruption, human rights protection is difficult.
So, the lives of the poor, though improved with so much emphasis on populist schemes, there is still a long way to go in providing certain basic essential services like education for all, healthcare for all etc.