In the last couple of months, the Indian economy has continued its rise, and seen its regular share of criticisms and skeptisms. This morning I read that the Indian economy finally crossed the 9% growth rate last quarter, growing at 9.2%. This is good news, but it puts pressure on the Reserve Bank to slow down the chances of overheating, and they will probably raise the rates again. Just like any other public entity in the country, they are pretty conservative too.
A lot has been said about the lack of government spending on our basic infrastructure, and a lot will continue to be said, because I do not forsee any change in the way netas think about the country and themselves. The one good thing is that for the most part, the government has been letting the private sector spend money where it needs to go.
Andy Mukherjee is a journalist at Bloomberg, a financial news outlet in the United States, and he has written a nice article on the rise of the private sector. He is saying exactly what a lot of people have said before, that India is growing despite its government. There are so many sectors where the private enterprise wants to enter and make a change.
Here is how I think it works - as a social democracy, it is the Indian government's duty to provide the basic services to its people. These include civic amenities such as water, power and housing, law and order and justice. If you look at all of them, you will realize that they have a miserable track record on all of them. I could go on and on about what is wrong with all of them, but that'll take a long time.
So here are these services that the people need and their government totally incompetent to provide them, and that creates a gap in the demand and supply. So earlier with our Socialist tendencies, the government did nothing, and did not allow the private sector to do anything.
But today things have changed. I must give credit to some parts of the government where it is due. Despite the weak PM he may be, Dr. Singh does have the right mind about reforms in all the right places, including the police forces, the courts, the bureaucracy and cutting red tape.
Now we have private sector building our power plants, laying and expanding roads, building sea ports, and flying in our airports. In fact, we have private companies now running our most important airports. In a way it is good to see the netas shake off their distrust for the private individual. For long they have compounded on the false notion that only they know what is best for India and anybody else is just trying to hurt the country. The truth, as we would all agree, has been exactly the opposite. I am pretty sure the common Indian on the street has a lot more patriotism in him/her than a neta sitting in the assembly or the Parliament.
My friend Mayank used to use the phrase, "wealth to the villages" all the time when we discussed the Indian economy. And he is absolutely right. Our biggest concern is to see that the benefits of this capitalism led growth trickle down to the grassroots. Successful western economies such as England and the United States have witnessed this trickle down effect, but unlike India, they have seen active support from dilligent governments. Despite their shortcomings and corruption and politicking and all that, their governments have worked to allow the private individual to grow in his/her own right, cut red tape and allowed them to take over the reigns of the economy, while still keeping control of legislation and all that.
Prosperous nations have programs that benefit the poor, and ensure a just distribution of wealth (in an ideal world that is). England has the dole, US has the social security, India just has some legislation with no action on the ground.
How India's rich are plugging gaps in power and transportation
It's easy, perhaps too easy, to become pessimistic about India's deficient infrastructure.
Everything from potholed roads and clogged airports to frequent power blackouts and creaking urban transportation would appear to be daunting, if not intractable, shortcomings.
Sure, the challenges are humonguous, and the pace of their resolution is slow. The highly indebted Indian government hasn't the wherewithal to make a decisive improvement, which is estimated to require additional spending equal to 3.4 percent of gross domestic product. That's almost three-quarters of what India is spending on transportation, power, water, irrigation, communications and storage capacity in a year.
Private enterprise is playing an increasingly important role. Inadequate public spending is still a huge constraint, yet domestic non-state companies are slowly taking the lead in allocating much-needed capital to some of India's most overlooked requirements.
A glance at the latest Forbes magazine list of 40 richest Indians should prove that point. Except for the "knowledge- economy" czars -- the computer-software and generic-drug exporters who are mostly sticking to what they know -- almost everyone else on that list is investing in infrastructure.
The government's biggest headache is acquiring land; Mukesh Ambani's plan to build a new city a third as big as Mumbai is already dogged by the protests of farmers who feel they are being compensated too little for their land.
The private sector in India is awash with money and has a huge appetite for risk. Infrastructure-related work is already so brisk that it's creating capacity bottlenecks for machinery suppliers, says Ved Prakash Chaturvedi, managing director of Tata Asset Management Ltd. in Mumbai.
Supply-side bottlenecks, across a range of capital-goods businesses, may become a short-term impediment, especially if the economy continues to grow at about 8 percent, the pace at which it has expanded the past three years.
To remove the temporary deficiencies in capacity, the Indian financial system, the brain of the economy, has to step in.
The better banks are reading the hunger for investment demand correctly. ICICI Bank Ltd., India's largest by market value, is raising a record US$1 billion in yen loans.
Give it a few years. The private sector in India will build and operate substantial amounts of physical infrastructure. Quality public-sector projects will remain limited to rare successes such as Delhi Metro Rail Corp. because of the sheer paucity of management skills within the government. Adequate power supply and tolerable transportation networks are within India's reach, and sooner than people realize. Yet the key is with India's entrepreneurs, not its government.
----------------------------------------------------------------------
He agrees, India's growth should be linked to its citizens, and not its government. Recently the government announced that it will welcome foreign universities wishing to set up campuses in India. A couple of big names from all around the world have expressed their desire to do so, and all that is fine, but what is more important is what we do for ourselves. Sitting on the laurels of just 6 IIT's for a billion people is nothing to be proud of. The same with IIM's and the AIIMS's. India does not need more IIT's or IIM's, it needs its other engineering and business schools to rise to the standards of these institutions. And this is where the private enterprise is very important. The government does know how to run institutes of higher learning. IIT's, AIIMS and IIM's are autonomous bodies and are just fortunate to not be on the feeding bowl of an unscrupulous neta. Even then, AIIMS could not protect itself from the politics that these netas play. The Health Minister, Ramadoss, has filled the AIIMS board with his posse, and took on the MD for defying his orders. Thus while we set about making our lives and the lives of the people around us better, we must always remember that India is always at a constant threat from its politicians. This knowledge will serve us better as we try to break the shackles that have been cast on us for the last 6 decades.
No comments:
Post a Comment
Comments are welcome!