-Dr. S. Vijay Kumar
Here, ‘Development Model’
means ‘Economic Development Model’. Some economists usually call ‘Economic
Models’ as ‘Economic Growth Models’. But, here I call as ‘Economic Development
Model’, because economic growth is a narrow term when compared to
economic development. ‘Economic Growth is the increase in the amount of goods
and services produced by an economy over a period of time’. Whereas economic
development is a broader term and generally ‘refers to the sustained, concerted
actions of policy makers and communities that promote the standard of living
and economic health of a specific area (country) along with the increase in the
amount of the goods and services produced by an economy over a long period of
time’. Thus, economic development may also be referred to as
both the quantitative and qualitative changes in the economy. Such
actions can involve multiple areas including development of human capital,
social inclusion, health, safety, literacy, and other initiatives.
Economic development may also be defined as “ a process
whereby an economy’s real national income increases over a long period of
time”.
Economic development differs from
economic growth. Economic development is a policy intervention endeavor with
aims of economic and social well being of people, where as economic
growth is a phenomenon of market productivity and rise in GDP. Consequently,
“economic growth is one aspect of the process of economic development and
involves quantitative changes in the economy”.
Economic Growth and
Economic Development can be explained with a best example, let us compare the
body of a person with the economy. When a person’s body grows with the increase
in his age without corresponding increase in his brain may be referred to as
growth, while the development refers to progress in his intelligence with the
growth of his body.
Thus, economic growth refers to
simply growth in the goods and services in an economy over a period of time.
Whereas economic development includes growth plus institutional and
technological changes for the betterment of an economy. Economic Growth
being a narrow term and economic development being a broader term and as it
encompasses growth, I prefer my model as ‘Development Model’ instead of ‘Growth
Model.’
My economic development
model reviews the economic, political, infrastructure reforms and suggests some
ideas for the rapid economic development of India. This model,
being a simple one and thought provoking, understandable even to a lay man,
does not involve any mathematical applications like other growth models.
VIJAY SARABU ECONOMIC DEVELOPMENT MODEL
Economic Reforms:
Economic reforms means
changes in economic policies of a Government for the betterment of its country.
This can be explained by taking India as an example. Before 1980s, Indian
economy was a closed economy. That means, a State controlled economy. The initial attempts at liberalization in the 1980s combined
expansionary fiscal policies with selective reduction in tariff barriers, and a
managed floating of the Indian rupee and since 1991, as a part of economic
reforms, the nature of intervention has shifted progressively from micro
economic regulation to macroeconomic management through fiscal and monetary
policies. Market forces are assigned an increasing role in allocating resources
and in determination of prices of most commodities and services. India
has embarked on a far-reaching economic reform program covering trade,
investment, monetary and exchange rate policies. Highlights of the economic
reforms include, a major liberalization of trade policy covering progressive
reduction in the customs tariff rates. The import licensing system has been
dismantled and quantitative restrictions on imports have been phased out two
years ahead of WTO schedule. As a part of reform measures, India joined WTO on
1stJan. 1995, while China joined on11th Dec.2001.
China, a communist country initiated economic reforms including the focus
on outward orientation in 1978. The establishment of the socialist market
economy was reiterated as the goal of reform in the early 1990s. Thus, both
India and China which were ‘Closed Economies’ became ‘Open Economies’ with the
implementation of economic reforms.
The main of economic reforms is
inclusive growth. Inclusive growth means “growth process which yields
broad-based benefits and ensures equality of opportunities for all,” it stands
for “equitable development” or “growth with social justice”. Now, the point is
whether the fruits of economic reforms reached the common man in India? The
answer is no, because even after 64 years of independence, the gap between
‘haves’ (rich) and ‘have not’s (poor) increased. There is huge money in the
Swiss Bank in the form of black money (more than 1.4 trillion dollars. One
trillion is equal to one lac crore). This
shows how corrupt are our rulers, politicians, and bureaucrats). If our rulers are
really patriotic, sincere and committed, they must immediately bring trillions
of dollars of our money in the Swiss Bank to the country. The money, thus
brought must be invested for creating public capital assets (Major & Minor
Irrigation Projects, Steel Plants, Large Scale and Small Scale Industries of
Public Interest & Export Oriented Industries and in Infrastructure like
Power, Rail, Roads, Water, Education, Hospitals and in Agriculture and in
other Public Services) there by eradicating poverty by creating employment
opportunities to the people. Money must not be given to the public freely in
the form of subsidies, but instead provide facilities i.e. infrastructure like
power, safe drinking water, education etc for cheap rates. But, nothing should
be given freely.
Economic reforms in India are more helpful
to the rich. We cannot blame the economic reforms for this. But, we can blame
the rulers, who frame the policies, but failed to implement them properly. For
example, ‘Dis-Investment Policy’ (Dis-Investment Policy means to sell the loss
making PSU shares to the private companies, thus there by diverting the investment
to productive purposes) is used to fill the fiscal deficit. The government not
only tries to sell the loss making PSU shares, but also efforts are on even to
sell the profit making PSU shares. What does that mean? Even the best
performing public companies are sought to be sold to meet the budgetary needs
of the government. It is more or less comparable to the selling of the family
assets to meet the day to day expenses of the family. In the name of economic
reforms the rulers are making money. The recent best example is ‘2G Spectrum
Scam’ (2nd Generation of
reforms in Tele- Communication Sector) which resulted in crores of loss to the
exchequer. In this Scam, Mr. Raja and others are sent to Jail. Economic Reforms in India helped more the Industrial and
IT Sectors rather than Agricultural Sector, there by effecting its performance
badly. Here, I explain how
the agricultural sector in India was badly effected in the process of economic
reforms.
Agricultural
Sector:
One of the
excluded sectors during reform period was agriculture which showed low growth
and experienced more farmers’ suicides due to fake and terminal seeds, low
prices and inadequate agricultural policies. The post- reform growth was led by
services. Commodity sector growth (agriculture and industry) has not been
higher in the post reform period as compared to that of 1980s. Particular worry
is agriculture sector which showed lower than 2% per annum in the last decade.
There is disconnection between employment growth and GDP growth. In other
words, employment is not generated in industry services where growth is high.
On the other hand, GDP growth is low in agriculture where majority are
employed. Today, even after 64 years of independence agriculture sector
bears 60% of population with low earnings, while industry and services together
bears 40% with high incomes. Thus, there has been lopsided approach to
development in India in the last two decades. Governments are more interested
in pleasing the corporate sector (e.g., SEZ policy) rather than
helping agriculture sector which bears 60% of the burden. Even today about 60%
of the cultivable land is in the hands of 10% of the landlords. The rest of 40%
of land is in the hands of 90% small and marginal farmers basically produce
food for the country. Though, the land reform laws advocates the
distribution of the government lands to the landless poor, 65% of it has been
illegally given to ineligible rich. The lack of political will of
Indian rulers led to deliberate non-implementation of land ceiling laws in the
country. Further, the small and marginal farmers are pushed to
peripheries without getting any benefits from the state. In other words, the
state subsidies on agriculture are to support the capitalist farmers who
cultivate for market not for people.
The penetration of terminator
seeds into various crops, high usage of pesticides and chemicals and the state
subsidy for such crops is devastating not only the land fertility and also the
peoples’ health. Self production of seeds by farmers for their own requirement
disappeared. In its place, MNCs and Corporate Sector entering to the seed
market and agricultural biotechnology. India accepting agriculture within WTO
is disastrous in the lives of farmers and the vulnerable communities.
Hitherto the farmers have not been getting fair price for their produces.
Now as a result of AOA, the government of India is importing Pam oils as
against the interests of the farmers produce groundnut and coconut oils in the
country, import of China rice and American wheat further kills the interest of
farmers to produce the food. According to one estimate opening up of
agricultural trade has risen overall agricultural prices by 22%, whereas the
producers got only 2% hike in the price. Thus, the producers nor the consumers
getting the benefit, but the middle men are grabbing the profit. Our New
Agriculture Policy is planned in such way that our farmers are going to be
agents of MNCs/TNCs and private sector is going to be savior of Indian
agriculture. The new agriculture policy of government of India is aimed to gear
up the production only for export than the local consumption hence the subsidy
means supporting the corporate agriculture. The subsistence farmers will
not be supported anymore rather put in pressure to sell away their lands to the
big land lords or MNCs. The imperialists on one hand setting up to control the
production and distribution of agricultural commodities, on the other hand
flooding the country with cheap agricultural products. While the imperialist
governments offering huge subsidies, the Indian government removing all
subsidies and benefits for the peasantry.
Indian Agriculture in
the Post-Reform Period:
The growth in GDP in
agriculture was around 2.2 to 2.5% per annum during 1950-51 to1980-81. It
recorded the highest growth rate of more than 3% in the 1980s. In the
post-reform period, the growth rate declined to 2.76% per annum. Growth in
agriculture GDP which was 4.7% per annum during Eighth Plan (1992-97) declined
to 1.8% per annum during Tenth Plan (2002-07).Thus, there has been significant
deterioration in the growth of agriculture since mid – 1990s. In the 11th plan,
the agriculture sector has achieved the average GDP growth rate of 3.2s’ per
cent.
Farmers Suicides:
The reasons farmers’
suicides are growing indebtedness, increasing risk, sharper decline in absolute
productivity, price uncertainty due to trade liberalization and rise in cost
due to domestic liberalization, decline in credit, and non-farm work
intensified the crisis. Long term factors like decline in farm size, ground
water depletion, deterioration in soil quality etc. have also been responsible
for the agrarian crisis and farmers’ suicides. Because of demographic
pressure, there has been significant increase in small and marginal farm
holdings. These farmers have to face the challenges of globalization. Risk and
uncertainty has also spread to marginal lands. The diversification of
agriculture also raised concerns on food security.
Globalization resulted in the
neglect of agriculture that adversely affected the vulnerable classes of rural
society in their employment conditions, income and consumption pattern, their
education and health status. The small and marginal farmers are affected as
there is a reduction in the fertilizer and chemical subsidies and in the budget
for poverty alleviation programs as well as shift of area under food production
to export oriented commercial crops.
Other related:
Some of the
consequences and impacts of globalization are: exposure of domestic agriculture
to international competition, growth of non-agricultural sector and its impact
on demand for agricultural products, urban middle class life style changes
including diets, rising food imports in developing countries, competitiveness
of diversification of domestic production systems, vertical integration of the
food supply chain. The disintegration of rural economy brought
about by globalization lead to the disintegration of village communities, their
society, culture and religious aspects.
Indian Villages:
According to 2011
Census 69% of India’s population lives in villages. Their livelihood
mainly depends on agriculture and related activities. The village economy had
been independent throughout the ages and even the industrial development has
not reduced its importance. It played a crucial role in the economic
development of India by providing food and raw materials, employment to 2/3 of
work force, capital for development and surplus for national development. The
Indian agrarian structure is dominated by 90 per cent of small and marginal
farmers. The extent of landholding is associated with caste and social status.
The small and marginal farmers and agricultural laborers constitute the vast
majority of rural society.
In the villages, farmers are
not much aware of global economic system. Most of the food crops are converted
into cash crops. Sugar cane farmers are getting advance loan from banks and
MNCs. They used to supply hybrid seedlings, fertilizers and highly advanced
equipments. This equipment utility reduced the human labour force. Hence the
rural people are shifting from place to place for want of labour for their
livelihood. Natural manure is replaced by synthetic fertilizers. As there is a
shift from food crops to export crops, the prices of food items went on high,
and the poor people couldn't buy from their meager income. Similar trend
continued for clothing, housing, transportation, health etc. So people were
forced to consume less of even basic necessities. Agriculture sector is
the primary sector and it plays a crucial role in the economic development of
India by providing food and raw materials to other sectors. Hence, the
fruits of economic reforms must be reaped by this sector, especially the poor
farmers (SFs & MFs).
Political Reforms:
India needs massive political
reforms to achieve full potential of its economic reforms to emerge as one of
the super economic power nations in the world. The economic boom needs to
trigger more political reforms. The fact that political democracy is unsustainable in the long
run without the removal of socio-economic inequalities. When economic reforms
were ushered in 1991, two important claims were made by their proponents. It
was argued that freeing private capital from the encumbrances of state
regulations vis-à-vis its mobility, size and nature of activity – the infamous
‘license, quota, permit raj’ – would unleash entrepreneurial energies and
create economic prosperity. It was also argued that market based reforms would
lessen the discretionary powers of public policymaking over time, removing the
scope for corruption and paving the way for increased efficiency, transparency
and goodness of governance. Two decades down the line, these claims sound quite
hollow. Greater freedom for big capital has surely led to a manifold increase
in the private wealth and power of the rich. But the overwhelming
majority of Indians have remained mired in poverty, hunger, lack of decent jobs
and absence of social goods. And as far as governance is concerned, the state
under the neoliberal regime has increasingly become a vehicle for capital
accumulation by the big corporate players. Reckless speculation on
financial assets and grabbing of common resources like land, forests and
minerals have all become rampant. All this
has combined to toxify the political process, with money power ruling the roost
and democracy gradually degenerating into a bazaar of brokers and fixers.
It is a fact that the economic
crisis has not affected India to a serious extent so far. Yet, the structural
causes behind the crisis, especially rising income inequalities, is as much a
feature of India’s growth story in the post-liberalization period as it is in
the West. The principal beneficiaries of the Indian growth
regime are the big business class and the urban elites. The wealth and assets
of the Indian big business houses have sky rocketed over the past two decades.
The social consequence of this accumulation regime – concentration of wealth,
rapidly increasing inequalities and credit driven hyper-consumerism of the
elite – has also been accompanied by a tectonic shift in the moral landscape.
In a setting where getting rich fast becomes the dominant ethos, bending of the
rules to get rich does not invite much repugnance. Naturally, the moral
disincentive for the abuse of public office for personal gratification also
gets weakened over time. A nexus
of big corporates, ruling politicians and bureaucrats has matured under the
neoliberal regime and made our system more vulnerable to cronyism and
criminality. Corruption in high places has been a feature of our political
system for many decades. It is
in this backdrop that we are discussing political reforms in India today.As a
part of political reforms a strong lokpal bill must be introduced.
Lokpal:
The Anna Hazare movement has
taken up the anti-corruption cause through the demand for a strong and
effective Lokpal institution. The demand for a Lokpal is a legitimate one and
the Union Government has only exposed itself further through its cheap
maneuvers on the issue inside parliament. The passage of an effective Lokpal
Bill remains an urgent imperative. The Lokpal should be a fact-finding body
that receives complaints, enquires, investigates and forward cases to Special
Courts, wherever prima facie there is a case of corruption, for prosecution and
punishment. It should have powers to recommend an enquiry and
investigation suo moto. It should oversee the entire machinery related to
corruption cases at the Central level and should have the powers to recommend
executive action and to approach Courts when these are not accepted. The Lokpal
should be entrusted with quasi-judicial powers and autonomy to fulfill these
functions in an independent, accountable, transparent and time bound manner.
The separation of powers between legislature, executive and judiciary is a part
of the basic structure of the Constitution. The institution of Lokpal should conform
to this basic structure.
The Prime Minister should be
brought under the purview of the Lokpal with adequate safeguards. The office of
Prime Minister along with all public servants was brought under the purview of
Lokpal by the V.P. Singh Government in 1989 and in all subsequent draft
legislations, the Prime Minister has been placed under the Lokpal. A
Parliamentary Standing Committee headed by Shri Pranab Mukherjee had also made
this point while examining the 2001 Lokpal Bill. All public servants of the
Union Government within the definition in the Prevention of Corruption Act,
which includes the Prime Minister, must fall within the purview of the Lokpal.
It is
necessary to recognize that an important source of corruption since
liberalization stems from the corrupt nexus between big business and public
servants. It is necessary for the Lokpal to have the power to investigate cases
which involve business entities and to recommend cancellation of licences,
contracts, lease or agreements if it was obtained by corrupt means. The Lokpal
should also have the power to recommend blacklisting of companies from getting
government contracts and licences. Similarly, if the beneficiary of an offence
is a business entity, the Lokpal should have the power to recommend concrete
steps to recover the loss caused to the public exchequer.
Beyond Lokpal:
The battle against corruption,
however, cannot be won only through the institution of a Lokpal. For this a
comprehensive reform of our political, legal, administrative and judicial
systems is required. There has to be a National Judicial Commission to oversee
the higher judiciary and act against corrupt judges. There has to be electoral
reforms to check the use of money power in elections, which is a major source
of corruption. Urgent steps also need to be undertaken to reform our tax system
to plug loopholes and unearth black money, much of which is stashed in offshore
bank accounts and tax havens. Article 105 of the Constitution needs to be
amended to bring Members of Parliament under anti-corruption scrutiny.
The political system in
India has borne the direct impact of the nexus between big business and
politics. Policies made by governments openly serve the interests of big
corporates and foreign capital at the expense of the people. The unprecedented
use of money power in elections is also an outcome of this nexus. Big money is
corrupting the entire system. Most political parties are selecting candidates on
the basis of their money power and this is now percolating down even to the
panchayat elections. Distribution of cash to the voters is also becoming the
norm in many states.
Electoral Reforms:
Far reaching electoral reforms
have become a vital necessity, both for safeguarding the democratic system and
checking political corruption. Stringent provisions need to be built into the
election rules against the use of money power and illegal money in
elections. These provisions can be implemented meaningfully only if there
is state funding of election campaign material for all candidates and a
prohibition of private expenditure in election campaign material.
Equitable access for election propaganda in the media, including the private
corporate media, has to be ensured and the law should be amended to prohibit
paid news and make it an electoral offence. Persons charge sheeted for serious
criminal offences like murder, rape, kidnapping, dacoity and extortion should
also be debarred from contesting elections. For a durable solution to the
problems faced by our electoral democracy, the introduction of proportional
representation on a partial list system (PR means that the number of seats won by a party
or group of candidates is proportionate to the number of votes received. For
example, under a PR voting system, if 30% of voters support a particular party
then roughly 30% of seats will be won by that party), which is followed in many
democracies across the world and the power to re-call the corrupt political
leaders should be seriously considered. Political reforms are indeed
necessary to safeguard and deepen stable democracy for rapid economic
development.
Infrastructure
Reforms:
For economic
development of any country infrastructure reforms are very essential. India is
lagging behind in infrastructural reforms that is why its economic development
is at slow pace. Infrastructure sector is characterized by
Natural monopoly
High sunk costs
Non tradability of output
Non rivalness in consumption
Price exclusion
Impart externalities
The following sectors come under the purview
of infrastructure:
Electricity (which would also include
generation, transmission and distribution) and Renovation &
Modernization of power stations.
Non conventional energy (including wind energy
and solar energy).
Water supply and sanitation (including solid
waste management, drainage and sewerage) and street lightning.
Telecommunications.
Road & bridges.
Ports.
Inland waterways.
Airports.
Railways.
Irrigation.
Storage.
Oil and gas pipeline networks.
Infrastructure Of
Indian Economy:
Urban Infrastructure:
It has been found Internationally and in India too, urban development is key to
economic prosperity. The growth of the service sector has further cemented the
need for an efficient urban infrastructure. The rapid urbanization and the
increasing pressure on major cities from the migrant population, has put undue
stress on urban infrastructure resulting in shortage in housing, inadequate
water supply and sewerage, traffic congestion, pollution, poverty and social
unrest. Today managing urban infrastructure is a major challenge for urban
planner.
Post - Reforms
Urban Development:
The reforms concentrated on restructuring and defining the role and
responsibility of urban municipalities. Some of the salient features are:
1) Expand the source of fund for financing urban infrastructure
projects. These include
Urban Reform Incentive Fund
City Challenge Fund
Pooled Finance Development Fund
Tax Free Municipal Bond
2) Improved public private partnerships to
augment private sector participation in the urban sector.
3) Issue municipal bonds to generate finance.
The Constitution Amendment Act 1992
The act provides the state governments power to involve local civic bodies in
improving the condition of the urban poor. The act gives constitutional status
to urban local bodies (ULBs) and advocates a uniform local governance structure
throughout the country. The functions under the responsibility of local civic
bodies are:
Urban Planning:
Regulating land usage and construction
activity.
Planned socio economic development.
Improve quality of roads and bridges.
Regular water supply for domestic, industrial
and commercial purposes.
Public health, sewerage and solid waste
management.
Fire Services.
Protect urban eco system.
Measures to improve living standard of urban
poor.
Rural Infrastructure:
India lives in its villages. Development of rural infrastructure is equally
vital, if not more important than urban infrastructure. Efficient rural
infrastructure is key not only for rural economic progress, but also to
alleviate the living standards of rural poor. Some of the constraints for rural
infrastructure development are poor financial health of the state governments,
insufficient rural development projects and the incompletion of many sanctioned
projects. In order to address the problem, the government initiated the Rural
Infrastructure Development Fund (RIDF) in 1995-96 with an initial sanctioned
amount of Rs 2000 crores with inputs from both the public and private sector.
Some of the salient features of the RIDF are:
It covered the inadequacy of both private and
public funding for rural infrastructure development.
It covered the shortfalls in target by public
banks for agricultural lending.
Deposits from commercial banks to RIDF have
been broad based.
Future Trends:
To sustain growth in the infrastructure of
Indian economy, despite the global meltdown, the government is planning an
investment of US$ 20.38 billion in the next two years for infrastructure development.
Further the government has set aside US$640.8 million for improving the
condition of ports, railroads, highways and airports over a period of 15 years.
The index for the six core industries-crude oil, petroleum refinery products,
coal, electricity, cement and finished carbon steel has shown a growth of 2.9
per cent for March 2009 in comparison to March 2008 According to
the Planning Commission, there exists an investment opportunity of US$ 25
billion by 2011-12 in India's shipping and ports sector, as the country seeks
to double its ports capacity to 1500 million tons. The government plans to
bring private investment through the PPP mode to set up over 300 airports. It
has planned to invest US$ 9 billion to modernize existing airports by 2010.
Power:
Frequent power cuts is hampering our
development process. India’s overstressed power grid is one of the most obvious
signs of lagging infrastructure development. Effectively, the government
is passing the buck on infrastructure to the investor, and generator costs add
up fast. Is the situation going to improve? India’s government has
committed itself to improving the nation’s power grid, but in the world’s
largest democracy, government targets tend towards “Electricity for all by
2012” (a part of many politicians’ election campaigns) rather than “Reliable
power by 2012” or “A well-managed grid by 2012.”
Roads:
To drive on India roads you need three things:
a good horn, good brakes and good luck. India’s roads were mostly small one or
two lane affairs until massive building projects in the past few years, and the
new roads are instantly distinguishable from the old infrastructure. New
roads are not only wider and better paved, but with physical dividers the
traffic flow is far more orderly. A new problem has cropped up, however,
which is that most cars on the road (as well as lumbering trucks and
motor-rickshaws) are designed for slow crawls through traffic and are vastly
underpowered for a decent highway. What this means for businesses is that
any truck shipments will move at, optimistically, 30 km/hr (about 15 mph) even
on good roads, as trucks are not very capable at weaving and passing around
motor-rickshaws, not to mention the cattle strolling freely in the streets.
Air and Sea Ports:
India’s airports are unfortunately lagging
sufficient infrastructure, and they are undergoing much needed
improvements. To take Delhi’s Indira Gandhi airport as an example, the
airport currently is built to accommodate 12.5 million passengers a year but must
deal with 16.2 million (for comparison, Thailand’s Suvarnabhumi airport is
built to handle 45 million). At India’s ports the dual problems are a
lack of infrastructure and a crippling bureaucracy. This differs greatly
from port to port, but in general the necessary upgrades are being made, but
very slowly. The inefficiency issue is harder to fix, and is a reflection
of India’s bloated public sector. The often-quoted statistic is that
Shanghai’s port can turnaround a container ship in 8 hours, but the same ship
in Bombay takes 3 days. Without a doubt, China or Thailand’s ports are
well ahead of India.
Fresh safe drinking water for all people in
India has become a mirage. Multiple factors are converging to ensure that India
will suffer severe shortages of freshwater in the years to come. As the
poor majority of India’s population rises to the level of running water
(drinking water for everyone by 2015, as another political campaign goal),
freshwater usage will spike. India’s industries are finally moving into
high gear, however steel production and chemical manufacturing both require
huge amounts of water. India’s population continues to grow at an
alarming rate, farm yields are declining due to sloppy crop rotation and
pesticide use and more farms are needing irrigation. Global warming has
led to a well-documented reduction in the size of India’s glaciers, whose
snowmelt feeds the country’s rivers, and the water table in the north has
dropped from 60 feet ten years ago to over 300 feet today, nearly depleted.
The poor will, of course, be hit hardest and an investing business will no
doubt be able to afford water and food, as will their workers, however for
manufacturers and other industries that require a reliable source of
freshwater, shortages will become a problem. While now water availability
is not an issue for factories, in ten years the situation will probably be akin
to the power grid where there are rolling blackouts as reservoirs run dry and
must be refilled. Likewise, factories will need to have reservoirs of
freshwater onsite to provide continuous water just as they need diesel
generators now. Another added and, for now, hidden cost to expect in an
Indian facility.
Migration:
India’s rural
population continues to flow towards the urban centers for work and skilled
labor (including knowledge workers) move from the second-tier cities to the
main hubs of Delhi, Calcutta, Bangalore and Mumbai. The national
government is trying to redirect migrants to the second tier cities to prevent
slums from forming, and knowledge industries are increasingly looking at second
tier cities as salaries in the major cities, especially Bangalore, skyrocket.
Investments in
Infrastructure Projects:
Today, many projects, be it power, port or
road projects are in pipeline but are stuck up due to some or the other
reasons. There are many people who are willing to invest in our projects, but
unless they feel confident that our projects will get approval, have uniform
and stable policies they will be not invest in our projects. With low
confidence among investors it will be difficult to convince them to invest in
projects. We need to take some policy measures, give some incentives, display
real ground work to show that the government has the intent before people will
get that confidence back. Figure of USD 1 trillion has been set as the
investment target for the 12th Plan. Is it not an unrealistic ambition to ask
the private sector to participate and contribute to the lion's share of this
target? Power and telecom sector were major achievers five years ago
but today, both the sectors are stuck and other sectors are yet to catch up
with large ticket investments. With low confidence, it will be difficult to
attract investment easily both from private sector in India and abroad.
Inadequate public investment in the
post-reform period had an adverse impact on the economy. It led to serious
under-investment in critical infrastructure sectors such as power generation,
roads, railways and ports. For example, the addition to power generation
capacity in the public sector during the Eight Plan was only a little over half
the target. There were similar shortfalls in capacity creation in roads and
ports. These shortfalls would not have mattered if capacity in the
private sector had expanded, but this did not happen either. The end result was
that total investment in infrastructure development was less than it should
have been, leading to large infrastructure gaps.
Most striking, is the quality of
infrastructure, which is abysmal. This is true in all areas: roads, ports,
power, and telecom. For instance, India ranked 69th out of the 75 countries
ranked on telephone lines per 100 inhabitants; 73rd on road quality outside of
major cities; 57th on port facilities and inland waterways; and 47th on the
quality of air transport infrastructure.
The research and development nexus is very
weak, with little collaboration between business and academia, and little
success in commercializing or adopting new technologies. This poor outcome is
ironic in view of the praise for India's science and engineering prowess.
Labor markets are ineffective, perhaps the
most ineffective in the world. Put briefly, India shows the advantages of a
vast labor force with a skilled engineering and scientific community. It also
shows, however, deficiency in both the hard infrastructure, such as roads,
ports, and power, as well as the soft infrastructure of public administration,
labor market practices, and financial market depth. With the opening up of the
Indian economy, the country's information technology industry has been the
biggest beneficiary.
The economy was able to achieve higher
economic growth in the post-reform years despite inadequate investment in
infrastructure because there was some slack in the system,but there can be
no doubt that rapid growth will be difficult to sustain in future unless
investment in infrastructure can be greatly expanded.
Some Ideas:
Multinational Corporations:
Due to globalization food items are being
exported to India in the form of increased consumption of meat, western fast
food, sodas and cool drinks, which may result in public health crisis as
speculated by certain researchers. The rich biodiversity of India has yielded
many healthy foods prepared from locally available organisms. But the
marketing by MNCs with large advertisement campaigns lead the people to resort
to their products.
Human Development Index (HDI):
The Human Development Index shows wide gap
between developed and developing countries. According to UN report released on
2nd Nov. 2011, India ranks a low at 134 among 187 countries in
terms of Human Development Index (HDI), which asses long term progress in
health, education and income indicators. According to Swaminathan, “more people
are watching T.V, talking on phone and communicating on line
(Internet), but it is true that there has been an increase in poverty
also.” Increase in growth rate has no much significance when it cannot
help the poor. The economic reforms in the right direction only will help for
the overall development of a country.
Sustainable Development (Eco – friendly
Development):
In the process of economic development, the
environmental problems have been ignored or less concentrated. Now, the need of
the hour is to concentrate on sustainable development. Sustainable development
means, “Meeting the needs of the present generation, without
compromising the needs of the future generation.”
Sustainable development aims at the creation
of the sustainable improvements in the quality of life for all people and this
should be the principal goal of development policy. Accordingly, the main
objectives of sustainable development are:
(1) Accelerating economic growth (2) Meeting
basic needs (3) Raising living standards (4) Helping in ensuring clean
environment free from all types of pollution (5) Maximizing the net effects of
economic development (6) Preservation and enhancement of the stock of the
environmental, human and physical capital (7) Inter generational equity and (8)
Overall strict control on gross exploitation of the natural resources of each
country.
Policies for Sustainable Development:
Environmental problems like air pollution,
water pollution, soil degradation, deforestation, loss of bio-diversity, etc
are caused by such diverse factors population growth, poverty,
industrialization, agricultural development, transport development,
urbanization, market failure etc. Such environmental degradation harms human
health, reduces economic productivity and leads to the loss of amenities. Therefore,
the damaging effects of environmental degradation can be reduced by a judicious
choice of economic and environmental policies and environmental investments.
The important policy measures for sustainable
development are as follows:
1. Reducing Poverty:
Reduction of poverty should be the foremost
priority of the Government. It should select those projects which provide
greater employment opportunities to the poor. It should expand health, family
planning and education that will help reduce population growth. Supply of
drinking water, sanitation facilities, and slum clearance should be given top
priority.
2. Removing Subsidies:
To reduce environmental degradation at no net
financial cost to the Government, subsidies for resource use by the private and
public sectors should be removed. Because, subsidies on the use of electricity,
fertilizers, pesticides, diesel, petrol, gas, irrigation, water etc lead to
their wasteful use and environmental problems.
3.
Clarifying and Extending Property Rights:
Lack of property rights over excessive use of
resources leads to degradation of environment. This leads to overgrazing,
deforestation and over exploitation of minerals. Therefore, clarifying and
assigning ownership titles to private owners will solve environmental problems.
4. Market based
Approaches:
Various market based approaches should be
adopted to protect environment. Market based instruments in the form of
emission tax, pollution taxes, marketable permits, depositor fund system, input
taxes, differential tax rates, user administrative charges, subsidies for
pollution abatement equipment etc should be extensively used to protect
environment.
5. Regulatory Policies:
Regulatory policies are the other weapons for
reducing environmental degradation. Regulators have to make decisions regarding
price, quantity and technology. They decide the technical standards,
regulations and charges on air, water and land pollutants.
6. Public Participation:
Public awareness and participation are highly
effective to improve environmental conditions. For this purpose various formal
& informal education programme, environmental awareness programmes,
advertisement, public movements, aforestation, conservation of wild life etc
are to be organized on a large scale.
7. Trade and Environment:
The Government should formulate an environment
friendly trade policy covering both domestic and international trade. It should
encourage the establishment of less polluting industries, adoption of cleaner
technologies, adoption of environment friendly processes etc to control
environmental degradation.
8. Participation in
Global Environmental Efforts:
Participation in
various international conventions and agreements on environmental protection
and conservation can also help to minimize damages of environmental
degradation. They include the Montreal protocol, the Basel convention, the Rio
Declaration, the Agenda 21, the Earth summits, etc.
9. Renewable energy:
Policies should be framed for the use of
renewable energy like solar and wind in place of coal and petrol. Atomic Energy
Agency predicted that renewable energy would overtake natural gas to become the
second largest source of power generation worldwide within two years, and that
global wind and solar generating capacity would increase by more than 30 per
cent.
Corruption:
Here lie the
root causes of corruption in India. The mega-scams that have occurred in the
recent past – the 2G spectrum allocation scam, the Commonwealth Games scam, KG
basin gas, Gaali Janardhan Reddy Mining Scam and Y.S. Jagan Money laundering
Scam in A.P etc – show how thousands of crores worth of public resources have
been illicitly cornered by a section of big corporates, bureaucrats and
ministers. While corruption in high places has been a feature of our political
system for many decades, what has emerged as a dominant trend in the
post-liberalization period is a thorough distortion of the policy-making
process at the highest levels of the government. A nexus of big corporates,
ruling politicians and bureaucrats has matured under the neoliberal regime and
made our system more vulnerable to cronyism and criminality. Everywhere
corruption is ruling the country. Without bribe no work is done in India.
Rulers themselves are involved in several Scams. Stringent laws must be
enacted and implemented scrupulously without any exception. Then only country
will progress rapidly.
Poverty:
Even after 64
years of independence poverty is at rampant. There are many poverty alleviation
programmes by the government of India, but they are not implemented with true
spirit. Money is swallowed in different stages. The result is poor becoming
poorer and rich is becoming richer and thus leading to economic inequalities in
the country. Simply framing the poverty alleviation programmes by
the government do not serve the purpose; ultimately their strict implementation
only will serve the purpose for the progress of the country.
Morality:
Lastly, but not
the least morality among the rulers, politicians, bureaucrats, and the public
is very much essential for the all round rapid economic development of the
country.
Conclusion:
I strongly
believe if my economic model is implemented with letter and spirit, certainly
India would emerge as a strong economy in the world.
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