economy

There are 4 posts tagged economy.

Narendra Modi – The Enigma

Some people, by the mention of their names, spark arguments and controversy like someone has just thrown oil to a burning fire. Narendra Modi is one of those names. The controversial but highly celebrated Chief Minister of Gujarat has been in the news ever since he came to power, either for the communal riots of 2002 or for the various development projects he has undertaken which has turned Gujarat into the state driving the Indian growth story. There are two kinds of people in this world, one for whom world opinion and the ‘right‘ way of doing things matter, and the other who do what they feel is right, irrespective of debates or consequences. No points for guessing which kind of person Mr Modi is.

Under Modi, Gujarat has become an economic dynamo. From becoming the Chief Minister in 2001, when Gujarat was suffering from the aftermath of a massive earthquake and its economy was shrinking, Modi has transformed Gujarat into a state with the highest growth rate among all Indian states. Some of the plans or schemes he launched are Krishi Mahotsav, Chiranjeevi Yojana, Matru Vandana, Beti Bachao, Jyotigram Yojana, Kanya Kelavani Yojana, among others. Read about them to know what all these are and what results have they produced.

The Vibrant Gujarat Summit

The Vibrant Gujarat Summit

If these scheme names doesn’t mean much to you, let me provide some figures. Gujarat has 50,000 km of fibre optic network, 2200 km of gas pipelines, 1400 km of drinking water pipelines to 7,000 villages, and 24 hour uninterrupted power in rural areas. On the human development side, Gujarat is turning Kutch, a desert, into a green land. The school dropout rate from Std 1 to 5 has dropped from 20% to 2% in the last 10 years. Sex ratio has increased from 883 girls per 1000 boys in 2001 to 920 girls in 2011 due to the Beti Bachao campaign.

Almost all industrial houses have their plants (or are planning to open) in Gujarat which contributes 22% of India’s exports and attracts 25% of all investment coming in India. Many industrialists have publicly expressed their support for Narendra Modi, with Ratan Tata even saying that “You are stupid if you are not doing business in Gujarat”. Recently, the US also endorsed Gujarat as the driver of Indian economic growth and the best example of governance and development. Many are vouching for a strong leader like him for the Prime Minister’s post in 2014.

It is not to say that Gujarat doesn’t have any problems. Like the rest of India, people in Gujarat are also poor, hungry and deprived of basic human amenities like sanitation, health care and availability to easy credit. The disease of corruption is also present in Gujarat like other Indian states. But in all these areas, the graph is only going downwards. In the last 10 years, there can be no doubt in anybody’s mind that Gujarat has changed only for the better. And I hope it continues to do so.

However, no discussion about Modi can be complete without a mention of the 2002 riots in which over fifteen hundred people were killed, most of them Muslims.  The riots, which started after the burning of Sabarmati Express, continued for over four months with muslims and their owned businesses facing the bulk of the damage. These riots have always been politically controversial, with many terming it as genocide and believing that Gujarat government and Narendra Modi gave a free hand for these riots. Well, considering the scale of the riots, it is very difficult to imagine them without state support. There could be riots for a few days which the state might be unable to control, but over a period of months, whom are you kidding? It just would not be possible without the support of the police and the government.

Gujarat is emerging as a global automobile manufacturing hub with companies like Ford, PSA Peugeot and Tata Motors opening up their facilities here.

Gujarat is emerging as a global automobile manufacturing hub with companies like Ford, PSA Peugeot and Tata Motors opening up their facilities here. (photo courtesy Associated Press)

Having said that, proving the role of the State in such events is very difficult. There are cases pending before courts, but there has been no proof against Modi or the Gujarat government. Again, as I said, even if he was involved, it would be almost impossible to prove it considering the state of the public offices in this country. I am not trying to absolve Narendra Modi of the responsibility for the riots but trying to stay neutral by pointing out that nothing has been proved. What if he is really innocent and the state has no role? Even I don’t think that is the case, but what if?

Coming to the issue of riots, Modi is not the first politician to be accused of communalism.  The 1984 anti-Sikh riots in Delhi have been the worst riots we have seen in recent times, with over 3500 Sikhs killed, thrice the number of those killed in Gujarat. And that was under Congress rule, and under circumstances (the Indira Gandhi assasination) which would leave no doubt about the role of state in those riots. But again, as I said, nothing has been proved and it would be very unlikely if any Congress politician is ever convicted.

Coming to the question of opposing Narendra Modi based on the 2002 riots, we should ask ourselves that have we stopped voting for Congress after the 1984 Sikh riots (which were much worse). Obviously not! But why? Is it just the case that 1984 is long forgotten while the wounds of 2002 are still fresh in our minds. I think both the acts can never be pardoned, and the nation is paying a heavy price for both of them. As much as these riots are indisputable facts, another fact is that there is no better performer than Narendra Modi in our political structure. Time is not stuck in 1984, and neither it is in 2002. Time has moved on, and so has Narendra Modi. And so must we. I am not calling him clean, noble, honest or anything but just seeing in him a bold leader who might be the best among all the villains.

And all this is not because of his political lineage, or his religion, or how charismatic he is, but because of the results he has produced. It is said that all tomatoes that are eaten in Afghanistan are produced in Gujarat and all potatoes in Canada come from Gujarat farms. In one of the most arid lands in the country, this one man had the courage to interlink the rivers and the result is that the Sabarmati never goes dry now. To sum it up, he might not be the ideal choice, but I think he is our best bet.

Why India’s urban development is important for the nation?

Sometime back, I had written an article on “Why India’s rural development is important for the nation?”. Now, through this article, I want to stress why our urban development is as important too. We have come a long way since independence in terms of urban economy growth. Urban economy now contributes upto 70% to the nation’s GDP, while this figure was 30% in 1960. In the last 50 years, all over the world cities has risen to become hubs of economic activity and certainly future growth is going to come from our cities.

But unfortunately, the growth and expansion of Indian cities has been unplanned and haphazard. Our cities today face challenges in meeting the demands of infrastructure and resources. The demand for clean water exceeds the supply by about 30%. Waste management systems are almost non-existent, and if they are there, heavily over-stressed with over 40% waste going uncollected. Eco-friendly waste disposal methods are only a dream and even government agencies and engineers are totally unaware about their technicalities. Around 22% of urban population lives in slums and around 25% is below the poverty line. Traffic congestion and pollution has increased like never before.

Infrastructure growth is one of the biggest challenges India faces today

Infrastructure growth is one of the biggest challenges India faces today

Clearly, we need to change not only the way our cities are managed, but also how they are planned. Planning for future cities and management of current cities only will result in livable cities which will have decent quality of life and equal opportunities to all citizens. Firstly, we should provide fast and low cost infrastructure for residents like housing, hospitals, schooling, transport and commercial centres. There should also be a provision of how to grow this infrastructure as cities grow in the future.

We must encourage high rise and high density cities to accommodate the continuous migration from villages to cities. While we have seen growth in apartments in cities like Noida, Gurgaon and Bangalore, most of them are for the upper middle class. There is an urgent need for builders to build affordable low cost housing solutions. The government can help the builders by providing tax rebates as incentives.

A normal scenario in all Indian cities

A normal scenario in all Indian cities

If we improve our roads and transport standards, our cities can grow horizontally as traveling time will reduce. Transport is like the backbone of a city. Poor transport limits mobility of its people which in turn hamper economic growth. Road capacity must be enhanced but it is not enough in itself. Road transport has to be supplemented by development of mass transit systems like metro rail, mono rail and bus services. Road widening and introducing separate lanes for buses is an important step which is required today in almost every city of India. Other transit systems like metro rail should be integrated with bus services like Hong Kong and Tokyo, as this will reduce travel times and improve efficiency for business and economy.

Undoubtedly, there is a lot to do to improve urban infrastructure, and huge amounts of money will be required to do this. It is impossible for the government to all of this by itself. It is therefore imperative private sector be involved heavily in infrastructure development activities with the government playing the role of a regulator. In Thailand and Malaysia, even sanitation systems are managed by private operators. Why can’t the same model work here? A lot of policy changes will also be required to change how local governments and municipal bodies work. The Mayor of a city is elected by councillors, and is powerless. The mayor should be elected directly by the people and should be given powers to manage and run cities efficiently.

Are we providing equal opportunities to all?

Are we providing equal opportunities to all?

To make sure all these systems work in a transparent and efficient manner, we must introduce ratings of municipalities of different cities, and some sort of comparative performance measurement system for officers. All this information should be in the public domain and open to scrutiny by the media and public. E-governance needs to be introduced and systems such as MIS (Management Information Systems) can be used to collate all information and improve efficiency of all services. How we manage our cities today will decide how our country will shape up tomorrow. We need to turn our cities into truly sustainable engines of growth for the whole country.

The Truth about India’s Young Population, and how it can be a boon or a bane?

Today, over 35% of our population is below the age of 20. By 2020, it is expected that 325 million people in India will reach working age, which will be the largest in the world. This will come at a time when the rest of the developed world will be faced with an ageing population. It is estimated that by 2020, US will be short of 17 million people of working age, China by 10 million, Japan by 9 million and Russia by 6 million. At the same time, India will have a surplus of 47 million working people. Even when compared to developing countries, Brazil’s working population is set to grow by 12%, China’s by 1%, Russia’s will decline by 18%, while ours will grow by 30%. This is the reason Goldman Sachs predicted that only India can maintain a 5% growth rate until 2050.

But are our youth unemployable?
Economic growth require not just a large working population, but people who are trained and skilled to work in different industries. Many industries have remarked that people coming out of colleges and universities in India are not employable and they have to give them skills training before they start their work. This adds strain on the industry. Our adult illiteracy levels are also a big concern, which stands at 39%. 25 million children are out of school in India, out of a total of 100 million out of school children in the world. We need to work on our policies to make sure those who are still in school and colleges get the best education and be ready for their opportunity when it arrives.

Youngistan - Will it mean a boon or a bane for us?

Youngistan - Will it mean a boon or a bane for us?

Demands of this population
With a huge working population will also come a huge consumption boom, as it has happened in China. China accounts for 20% of world’s consumption of aluminum, 35% of the global demand of steel and coal, and 45% of the worldwide cement purchase. The future demands of China and India’s population will put a lot of burden to the resources of these two countries. How these two countries manage resources like water, cultivable land, oil and energy needs will be critical. The demands on the environment cannot be overlooked either. If we follow the same model as followed by American and European development, environmental deterioration will end up destroying the whole planet. Global Warming is already a big problem. The challenge for India will not only be economic growth, but also make it sustainable and bearable for the environment.

Taking care of our population
Our infrastructure today is no way capable of taking proper care of our ever increasing population. Human development must go hand in hand with population growth. More than 25% of our urban population lives without sanitation and 24% lives without access to tap water. We need 66,000 primary schools and 3000 new health centres every year to cater to our population growth. Food production also has to be increased by 3% every year to meet their needs.

We can’t ignore the ill-effects of population growth
India cannot afford to ignore what will happen with unsustainable economic and population growth. We need to use our technological skills and replace our age-old systems with innovations to reduce the resource burden. We need innovative and sustainable solutions in energy, transportation, sanitation, manufacturing, and agriculture. We are a nation of great talent, and we stand before times which might be our big opportunity to take the leap in the world order but we also face significant challenges. If we take all this into consideration NOW, and frame policies and act responsibly, I am sure we are capable of transforming this huge young population into a boon rather than a bane.

Why India’s rural development is important for the nation?

India lives in its villages, and while the cities have grown immensely over the last 20 years, rural areas have not seen that kind of development. For India’s economy to be strong, the rural economy needs to grow. Rural areas are still plagued by problems of malnourishment, illiteracy, unemployment and lack of basic infrastructure like schools, colleges, hospitals, sanitation, etc. This has led to youth moving out of villages to work in cities. This could be compared to the brain drain from India to US. Our villages need to grow in tandem with cities and standard of life has to improve there for inclusive growth to happen. If rural India is poor, India is poor.

Poverty in Rural India

Poverty in Rural India

India lives in many generations, and visiting rural areas very easily shows that they lag behind cities by decades. While we have latest services and products available in our cities now, villagers are still coping with age old products. It is easy to see the rising disconnect between cities and villages. Some examples are –

  1. While we have international fully air conditioned schools in our cities, the schools in villages still don’t have benches and chairs, leave alone computers. We have a huge shortage of teachers in rural areas, and the school drop out rate is huge.
  2. In cities, we have wide roads, flyovers and underpasses while many villages still don’t have proper roads. Urban-rural road links can play a vital role in rural growth.
  3. Employment opportunities are hardly there in villages which forces youth to move to cities creating imbalance in the ecosystem and leaving the villages deprived.
  4. While we may have numerous hospitals, nursing homes and medical facilities in cities, villages neither have health awareness nor health facilities. See the condition of major hospitals like AIIMS to know how many villagers have to flock to cities for even basic treatments.
Women fetching water from kilometers away

Women fetching water from kilometers away

Apart from the above options, villages need to have –

  1. Proper land reforms to make sure land is held, owned, cultivated, irrigated to make the most efficient use and maximum output.
  2. Rural credit – Banking services need to be popularized and credit should be available for basic services like agriculture.
  3. Electrification – Many villages still receive only 2 to 6 hours of electricity per day which needs to drastically improve to empower the villages of India.
Mobiles have empowered rural India

Mobiles have empowered rural India

Basically, what we need is to empower the rural people by providing them education and proper health care. They need to have infrastructure like electricity and water so that they are free from the cycle of droughts and floods. We need to give them self-employment so that they want to stay in villages instead of migrating in cities. There is a need to empower the villagers, and not just supporting them by food subsidies, loan waivers which end up crippling them. India will grow only when rural India marches hand in hand with cities in the twenty first century.