Miyerkules, Agosto 4, 2010

Business Roundtable Discussion.... Unleashing Indian's Dynamism in the State Capitalism.


Since there are no Indian Professors in the university, I was tasked to research the economic dynamism of India. This was presented in the Roundtable Discussion with the local businessmen to update them on the latest economic outlook of India.

Unleashing Indian's Dynamism in the Shift from State Capitalism:

Nowadays, economist are assailed by irresolute thoughts. What, for example, is the right term to apply to current global economic conditions? Is it "depression", "recession", or "recovery"?

What of the euro? Will it flounder or regain its "health"?

As this debates fill the air in finance ministries and economic departments around the globe, India continues its steady GDP growth, now projected to reach 9.4 percent this year, 2010. The government says the growth rate will hit double figures soon.

Although, many people seem amazed that India maintained such rapid growth for so long-ever in the face of the global downturn-surprise is unwarranted. India's proportion of global GDP stood at 25 percent in 1750, but slumped to 1.6 percent by 1900, at the high noon of imperialism. India is simply rising again to reassert its traditional global position.

Can India achieved this?

Many challenges confront India in its path to sustained strong growth,principally that of converting the country's promise into reality. In order to acieve this in a true democracy, India must insure distributive justice.

It must ensure enhanced purchasing power leads to a markedly improved quality of life for all India's citizen.

Currently, India has a window of opportunity, nearly unique in nature. Thanks to a huge demographic dividend. Almost 60 percent of the country's population is below age 30. This advantage is limited in duration, lasting two or perhaps three decades. It it is not used now, it will dissipate.

To seize this opportunity, India first must move decisively away from state capitalism, the remnants of which continue to retard the country's economic progress. India's economic future lies in maximizing it's private sectors dynamism, which demands an acceleration of institutional reform, including privatization at both the national and state level.

But, as the Indian economist and frequent policymaker Vijay Kelkar has put it, "India need to fashion its own sugeneris model of growth and development toward and advanced economy, greater equity and better governance under liberal democracy.

Simply copying American, British or other Western Policies and institutions won't do. Moreover, India is not China; it cannot be -indeed, it must not be. That is why it should not hanker after ersatz export-led or state- directed growth.

India's second great challenge is to resolve its enormous infrastructure shortcomings. India is no longer primarily an agricultural economy; and agriculture accounts for only around 20 percent of GDP. But this not mean that agriculture should be neglected; on the contrary, it remains a way of life for many millions of Indians, who need capital and technology.

Raising farm productivity and income requires improved irrigation, wasteland reclamation, warehousing, marketing, transport development and the free movement of produce within the country.

That's why rapid strengthening of India's physical and social infrastructure is central to its progress.

This leads us to examine India's current fixation with GDP growth as a national pancea. The theory is that the government, as the agent of the people, collect taxes and delivers public goods in return. In this sense, the Indian state has beed rather a poor agent; it collects little and delivers a pittance- and what it does deliver is of grossly inadequate quality.

Yet the Indian state continues to ask for the disproportionately high price from the people. This must change by directly targeting the alleviation of poverty-and ultimately its elimination.

I accepted that the most powerful anti-poverty program is economic growth, but it works only if and when it is accompanied by distributive justice.

Only such "just" growth can eventually be converted into high GNC or Gross National Contentment - a truer index of economic well being. Rather than endless debates about high budgetary allocations, India needs to find practical ways to promote effective, targeted , self adjusting and self liquidating anti-povety programs.

It is not the amount of money allocated by government that matters. The true litmus test of budget expenditure is what actually gets delivered. Only an inclusive appoach to reform can meet people's expectations, and in turn spread contentment.

India does not need more laws. It needs more effective and more accountable governments. It does not need more regulations, but rather a vastly larger canvass for individual freedom and opportunity. India's economy must be freed from organizing principle of state control so that individual enterprise and creativity become its main engine.

India is at the threshold of an era of unprecedented growth. But to cross it, Indians must craft a new idea of India as the flagship of a modern global economy that unleashes the dynamism of all citizen.

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