Growth Without Development

On January 10, 2010, In Economy, By

Month after month, the Government of India impresses upon the country with high growth rate figures. Current growth rate is said to be in the range of 9-10%. Very impressive indeed, Middle class is well off, the government salaries have increased, most businesses are showing double digit growth and all seems to be well. Nobody even seems to be effected by high rates of inflation.

But then why are our social sector figures so pathetic:

  • If the daily income per head is less than $2, then the family is described as poor and about 80 percent of Indians are poor.
  • Around half of Indian children are malnourished. The proportion of underweight children is nearly double that of Sub-Saharan Africa.
  • 41.6% of its population is living below the new international poverty line of $1.25 (PPP) per day
  • Only 40% of the population is illiterate and only 15% of the students reach high school
  • India ranks 171 out of the 175 countries in the world in public health spending.
  • The 2007 report by Transparency International ranks India at 72nd place

When it comes to showing growth figures we compare our self with US, EU, China etc but when it is the question of education, health, poverty we are bunched with sub Sahara contries,Nepal & Pakistan etc. It is a very shameful fact but our policy makes seem to be least effected by it.

The current way of development is only widening the economic inequity amongst the people. And it is because the high growth rate is oriented to benefit only a section of people.

(more…)

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India Calling

On November 23, 2008, In Economy, By

It is the thought going through all NRI’s today. As employment opportunities dry up in western economies and rising crime makes life unbearable. Most educated NRI’s are thinking of coming home. In a sombre status of global economy, India can boast of a sound financial system, international standard schooling for kids and a relatively booming economy.

In this latest article in New York Times an NRI shares his enthusiasm for all things Indian:
http://www.nytimes.com/2008/11/23/weekinreview/23anand.html?ref=weekinreview
Some of it is old cliché. Ignore that part and be proud that today India is being portrayed in positive light. At least in International media!

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How can India prepare for the Global Recession

On November 16, 2008, In Economy, By

The world is presently going through an economic crisis. The problem began with
US banks who gave high-risk loans to people with poor credit histories. These loans were then bundled into portfolios, high yield securities and sold to investors globally. As the news of US banks collapse tricked in, every country initially thought they were not affected by it. But soon the whole world realized that the global economy is very interdependent. Growth has slowed down considerably, world is in recession and already few countries have been declared bankrupt.

India has also been affected by the global slowdown. There has been a huge outflow of funds. Stock market has collapsed, exports are down and there is news of job cuts & layoffs across several sectors. The Indian government goading over 10% growth has suddenly been caught unawares. However there is a ray of hope also. We are still not completely integrated with the global economy – especially the badly hit banking, finance and insurance sectors. Some of the steps that we can implement in order to insulate our self from the global recession:

• Implement cost savings across all sectors and reduce unnecessary spending
• Invest in long term projects like roads and infrastructure
• Reduce Imports and discourage corporate and private capital outflows
• All securities, savings and extra cash be deposited in PSU Banks
• Monitor fund inflows and outflows on a regular basis to discourage currency fluctuations

For the Indian economy managers, there are several lessons to be learned from the global economic crises. Like – Focusing on building a strong domestic economy based on local consumption. Strengthening regulating agencies such as SEBI. And most important – not depending entirely on international consultant’s, agencies and regulators.

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Nuclear Deal or Enron 2

On September 7, 2008, In Economy, Politics, By

Today nuclear deal is being hailed as the panacea for all our power shortage problems.

If we go a few decades back, Enron was considered as a landmark in foreign direct investment and solution to all our power crises.

In a joint venture with U.S. companies General Electric and Bechtel, Enron was to build the power plant. The project was not open to competitive bids and that the deal was too costly. World Bank analysis questioned the project’s economic viability, citing the high cost of importing and using liquefied natural gas relative to other domestic sources of fuels. Even the power purchase agreement was kept top secret. The project was a colossal failure riddled with allegation of corruption and Enron’s highhanded behaviour. Subsequently for the first time ever, the Indian government agreed to underwrite the liabilities of a private company.

Ironically the players are the same. In India, congress government in centre is negotiating with the US lobby. G.E & Bechtel were the partners with Enron. They are also major nuclear reactor suppliers. Fuel and equipment is imported and power is too expensive.

There are too many similarities to ignore. The end result would be the same. Junk equipment worth billions of dollars will be bought at taxpayer’s expense. It will be made tax exempt. Fuel will be imported. People will get power at unaffordable rates and state government will end up subsidizing it.

All in the name of national interest and attainment of power self sufficiency, we are again falling in the trap.

There are so many alternatives to solving the long term power crises. First privatize the power distribution companies. Delhi government has shown tha way. Losses are down by over 50%.Build a network of hydel plants across the Himalayan states. Setup a power trading company to buy surplus power and sell it to the power deficient states.

Why don’t we learn from history?

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