Arvind Singhal: Calibrated approach

In recent months, the government and bureaucrats have added a new phrase to their lexicon: “calibrated approach”. This phrase finds its way into just about every situation where the issue at hand requires clarity of vision and boldness in approach but the actual reaction of the government and/or the bureaucracy is to just wade in pools of uncertainty, stay frozen in inaction, and demonstrate its timidity while allowing vested interests to strike back. India needs approaches which are all “calibrated” towards delivering quantum change simply because we have already lost decades on account of fuzzy ideology, political expediency, and meaningless debates.

The most recent misuse of this phrase is in the context of the debate relating to opening of the retail sector to foreign investment. While the motive behind the issuance of the discussion document (by DIPP) is laudable, the government should — if only for its own survival — come out with a policy that is calibrated to liberate this very important sector completely from the clutches of middlemen and price-gouging small, independent retailers who have contributed in no small measure to the consumer food-price inflation, and create an investment environment which tackles the almost criminal wastage of food and other perishable products on account of system inefficiencies in the supply chain from farm to fork. While political pundits are much better placed to comment on the prospects of a UPA-III, its coming into existence would seem most unlikely if the government fails to take firm steps to rein in the runaway inflation and create jobs and more income at the grass roots level.

Fortunately for India, the window of opportunity is still open, though perhaps it won’t remain so for very long. The India story is still very strong globally, and the image of the Indian prime minister and UPA-II is still relatively positive — at least outside India, even if it’s rapidly eroding within the country. The world’s factory’s manufacturing prowess has come under unprecedented stress in recent months, prompting global companies to seek new manufacturing/manufactured goods supply locations outside China even as China itself makes conscious efforts to move to production of higher value-added goods, and its domestic consumption growth remains very buoyant. With early indications of a good monsoon, the government should have some more room to manoeuvre. Finally, with the Opposition still in disarray and the largest opposition party’s leadership continuing to put their feet into their mouths, the government probably has its last chance to come up with fundamental, bold reforms which can deliver short, medium and long-term gains to India and most probably to UPA-II itself in the backdrop of the 2014 general election year.

The sectors which require approaches calibrated to deliver maximum impact and most changes include agriculture, education, manufacturing, retail, real estate and construction, and health care. In case of agriculture, land reforms leading to consolidation of land holdings and encouragement of non-farmers to get into farming (whether individuals or cooperatives or private companies of Indian or foreign origin) are probably the most needed changes. In education, the government has to acknowledge the practical necessity of making it “for-profit” if it wishes to bridge the huge gap between current capacity (and quality) and the current and near-term demand, especially in the domain of higher education. Further, the government has to have a far more determined resolve and a budgetary allocation almost on the scale of the NREGA focused entirely on vocational training so that the hundreds of millions who are under-employed or unemployed can find income-generating jobs while alleviating the trained workforce needs of Indian manufacturing and services industries. In manufacturing, the government has to come up with progressive reforms on the labour front while making hundreds of thousands of additional (and infrastructurally developed) hectares available across India to set up new manufacturing facilities for small, medium and large enterprises. In retail, the government must free the sector from financial ownership-related constraints and instead, it should only focus on coming out with a suitable policy framework which allows for an equitable co-existence of small and large retail businesses while encouraging competition and efficiency. In real estate, the government has to make Defence and its own PSUs and departments give up thousands of acres of prime real estate in urban centres for the development of new schools, colleges, hospitals, sports arenas and shopping and commercial space, while boldly increasing the FAR on the lines of land-deficient cities like Hong Kong, Singapore, Manhattan-New York and Shanghai. And finally, in health care, policy support must come to encourage creation of millions of new hospital beds and hundreds of thousands of additional doctors on a war footing, else by 2030 itself, India will face a health-care challenge of insurmountable proportions.

Hopefully, our political leadership will calibrate their ideological and policy approach to the critical needs of the nation rather than petty, misguided self interests.

arvind.singhal@technopak.com