OPINION: Behind the amazing growth of Indianomics

OPINION: Behind the amazing growth of Indianomics ensuring distributive justice ?!!

Gorkhs Daju

From Brunei Times
By Hon’ble Darjeeling MP Jaswant Singh

Forwarded by Gorkhs Daju

NEW DELHI, Thursday, July 29, 2010: NOWADAYS, economists are assailed by irresolute thoughts: what, for example, is the right term to apply to current global economic conditions? Is it “depression”, “recession”, or, finally, “recovery”? What of the euro? Will it flounder or regain its “health”?

As these debates fill the air in finance ministries and economics departments around the globe, India continues its steady GDP growth, now projected to reach 9.4 per cent this year. Indeed, the government says that the growth rate will hit double figures soon.

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

Can India achieve this?

Many challenges confront India on its path to sustained strong growth, principally that of converting the country’s vast promise into reality. In order to achieve this in a true democracy, India must ensure distributive justice. It must ensure that enhanced purchasing power leads to a markedly improved quality of life for all of India’s citizens.

Currently, India has a window of opportunity, nearly unique in nature, thanks to a huge demographic dividend: almost 60 per cent of the country’s population is below the age of 30. But this advantage is limited in duration, lasting two or perhaps three decades. If 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 maximising its private sectors dynamism, which demands an acceleration of institutional reform, including privatisation at both the national and state level.

But, as the Indian economist and frequent policymaker Vijay Kelkar has put it, “India needs to fashion [its] own sui generis model of growth and development towards an advanced economy, always promoting inclusive growth, and thus gain the benefits of enhanced efficiency, greater equity, and better governance under a liberal democracy.” Simply copying American, British, or other Western policies and institutions will not work.

Moreover, India is not China; it cannot be indeed, it must not be. That is why it should not hanker after any 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; indeed, agriculture accounts for only around 20 per cent of GDP. But this does 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 new technology.

Raising farm productivity and income requires improved irrigation, wasteland reclamation, warehousing, marketing, transport development, and the free movement of produce within the country. This is why rapid strengthening of India’s physical and social infrastructure is central to its progress.

This leads us to examining India’s current fixation with GDP growth as a national panacea. The theory is that the government, as the agent of the people, collects taxes and delivers public goods in return. In this sense, the Indian state has been 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 a disproportionately high price from the people. This must change, by directly targeting the alleviation of poverty and ultimately its elimination. I accept that the most powerful anti-poverty programme 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: “Gross National Contentment”, a truer index of economic well-being. Rather than endless debates about higher budgetary allocations, India needs to find practical ways to promote effective, targeted, self-adjusting, and self-liquidating anti-poverty programmes.

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

Project Syndicate

[Project Syndicate is an international not-for-profit newspaper syndicate and association of newspapers. It distributes commentaries and analysis (“opinion pieces”) by experts, activists, Nobel laureates, statesman, economists, political thinkers, business leaders and academics to its member publications, and encourages networking among its members.]

Jaswant Singh, the author

Hon'ble Darjeeling MP Stalwart Jaswant Singh - the author & former Finance Minister of India.

Stalwart Jaswant Singh (born January 3, 1938) is an Indian politician and member of parliament from Darjeeling parliamentary constituency.

He is Rajput from Jodhpur in the Indian State of Rajasthan and was an officer in the Indian Army in the 1960s and is an alumnus of Mayo College and the National Defence Academy (India), Khadakwasla.

He served as Finance minister in the short-lived government of Atal Bihari Vajpayee, which lasted just from May 16, 1996, to June 1, 1996. After Vajpayee became Prime Minister again two years later, he became Minister for External Affairs of India, serving from December 5, 1998 until July 1, 2002.

Responsible for foreign policy, he dealt with high tensions between India and Pakistan. In July 2002 he became Finance Minister again, switching posts with Yashwant Sinha.

He served as Finance Minister until the defeat of the Vajpayee government in May 2004 and was instrumental in defining and pushing through the market-friendly reforms of the government. Known for his moderate political views, he is a self-described liberal democrat even though the Bharatiya Janata Party is often described as a right-wing nationalist organization.

He was conferred the Outstanding Parliamentarian Award for the year 2001.

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