Govindraj Ethiraj: What`s our growth idea for 2008?
DOUBLE EDGE
Govindraj Ethiraj / New Delhi January 8, 2008
Ma Jian, the acclaimed author of Red Dust, an autobiography placed in China in the early 1980s, worked as a photographer with the foreign propaganda department of the All-China Federation of Trade Unions.
In one of his final battles with his superiors, before embarking on a three-year, private journey across China, the rebellious Jian is hauled up for taking photographs that do not quite reflect the party brief.
“I must inform you though,” Chairman Liu, his office supervisor, says, “that for the second half of the year, the emphasis of our propaganda is on light industry, not heavy industry.”
The shift in thrust from heavy to light industry came a few years after Deng Xiaoping’s 1978 call for “Four Modernisations”, private enterprise and foreign investment. Xiaoping’s next big idea was perhaps the Southern Tour where he, as he travelled to southern China, said how “some areas must get rich before others” and that the wealth from the coastal regions would be eventually transferred to aid economic construction inland. Which has not perhaps happened in the way it was planned but the Special Economic Zones have left a permanent stamp on global economic history.
As 2008 sets in and India’s Union Budget (for lack of any other event of economic import) looms, I wonder, as I do every year, what, if any, our fresh growth ideas are for the year ahead. The answer actually stares right back, there are not any that spring up. And that is worrying.
Actually, if one were to look back at 2007, for all their flaws, the Indian SEZs (in implementation phase) were perhaps the biggest growth idea for the year. As it happened, the big idea went sour as protests erupted in state after state. The citizens of Goa dealt the most telling blow to the idea of SEZs literally on New Year’s eve, getting it scrapped outright. At least for now. And not all of the protesting Goans were peasants.
While the Commerce Ministry may rightfully lay claim to the idea of SEZs, their implementation lacked the fine understanding of individual regions and people’s priorities within them. As columnist Swaminathan S Aiyar wrote recently, SEZs are only working well in few states like Gujarat and were never perhaps meant to work elsewhere.
Looking forward, I would wonder whether there are any variations to the 1990s liberalisation idea that we could anticipate. Resumption of disinvestment or privatisation could have been one theme but lacks both political and market expediency. In any case, what it would mostly do is transfer resources from the market to the government and little else. Either way, no one seems to care any more!
As things stand, the government is likely to focus more on how to manage tax receipts and set new targets rather than think of any fresh growth and employment generation ideas that look several years ahead. Maybe there are some thoughts but I do not recall their clear articulation.
So the danger is that the government stance on growth will be reactive (as it has often been) to what the private sector accomplishes, sometimes by accidents of opportunity. Indeed if anything, the government’s reaction to a Corus or Orient Express situation in 2007 was almost comical, almost like it was waiting for something to happen to jump up to make its pro-market presence felt.
In quick conclusion, we have entered a new year largely bereft of ideas and are likely to bob along with the currents rather than set a direction. Translated, it means that India Inc will set the larger agenda for growth, which in many cases will be driven by what the capital markets will be willing to fund. In some cases, global M&A opportunities will decide business trends. For an economy that is supposed to take on China et al, it’s a little discouraging.
Allow me to digress, but only a little. Infosys co-chairman Nandan Nilekani is writing a book on ideas. I must admit the idea approach was somewhat inspired by what he said in a recent interaction in Kolkata. Nilekani categorises the whole matrix of development and growth into three sets of ideas. The first is ideas in execution, the second ideas in contest and finally the ideas for the future.
Nilekani says that ideas in contest cover the big debates on higher education, rights & opportunities and job creation. Ideas for the future are a little different. As we enter an environment of virtuous economic growth, says Nilekani, we should start focusing on ideas that revolve around high growth but with low carbon. The second theme is about health and wellness and gearing the population to better living, so to speak. The third is about entitlements and preparing and creating a social security environment with medicare and the like.
Nilekani’s approach looks at India over a 10- to 15-year framework, if not more. I frankly was hoping for something that will tell me that our economic satisfaction in 2008-09 will not be derived just from strong corporate quarterly growth leading coupled with stronger liquidity flows from global markets that will keep stock prices high.
As I wait, for some lateral reason, I am reminded of Ma Jian’s original work brief, which his bosses felt he was not delivering on. It was to photograph and document the “Spare Time Activities Of Chinese Workers,” to be presented to foreign delegations as a souvenir of their trip to China.
In fact the number of PHC's is too low. Have assumed that there will be PHC to cover 20000 people but actually these will be heavily overworked. We must plan for a PHC for every 5000-6000 population - means 86400 PHC's. These will have trained male & female nurses, doctors will on attendance 4/5 days a week & patients needing inpatient care will be referred to a nearby hospital. This is the Voluntary Health Services-Chennai model that has worked very well for over 40 years!
A rough cost of these goals would be $750 billions OR Rs 3,000,000 crores! This is huge BUT GOI & State Governments have to start NOW to complete these fundamental needs of a civilised society by say 2023 latest or plan to incur Rs. 200,000 crores per year. Cost will come down with appropriate tax exemptions of construction & equipments. PC talks of India becoming a middle income country by 2020 - more important for INDIA to be fully literate with full housing & health facilities. Planners ..??
Do the poor come out of BPL by giving them TV sets? Our illeteracy ratio is 45%, Merrill Lynch-CapGemini states there are 360 millions with incomes below $1/day, more than 50% of the populace cannot access basic health ,we are the 2nd most unsanitised nation in the world {the Rs. 12000 cr being spent will not achieve the MDG even by 2015}. Prof Indiresan, former Director, IIT Madras has suggested some solutions in his weekly BL column - India Vision 2020. These are worth implementing - contd..
"The first is ideas in execution, the second ideas in contest and finally the ideas for the future". Fair enough.What about the basic agenda for uplifting the BPL? When do we plan to achieve full literacy including for girl children {a la Modi in Gujarat}, complete primary health - requires 21600 PHC's at a cost of Rs. 25.00 lakhs each to construct & equip, 135 million housing units {one each for a family of 4 @ 250-300 sq.feet}? Will these NOT create jobs by the millions....contd
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