The Hindu Business Line : Is India's growth a flash in the pan?

The future of India as part of the BRIC group seems assured in the light of recent developments. But the powers-that-be must ensure that this trend continues and India maintains its position as a leader of the developing countries, not only in GDP but in human development indicators and the quality of human life.

INDIA MUST maintain its position as a leader of the developing countries, not only in GDP but in the quality of human life as well.

About three years ago, the world took notice of a report issued by financial firm Goldman Sachs that India, along with Brazil, Russia and China (BRIC), would be the giant economic forces in the 21st century. The BRIC report restored a sense of balance to macro-economists, who had all along been fixated on developed economies.

The report, for the first time, placed India in the ranks of the growing giants. A far cry from the begging bowl syndrome of the early 1990s! A legitimate question at this time is: "Is this forecast likely to come true?" A recent news report in Business World (October 23) has it that one of the co-authors of the report, Ms Roopa Purushothaman, a US-born Indian American has been quoted as saying that the Indian economy is doing better than the BRIC forecast growth of 6.5 per cent. At the current pace of growth, India's economy will reach $1 trillion before 2010. She believes these are reachable numbers.

India's economy will be one of the world leaders come 2010. It is also true that economic growth cannot be measured only in terms of GDP or even GDP per capita. Ifsal Ali, the Chief Economist of Asian Development Bank, is quoted as having cautioned that there is irrational exuberance about the Indian economy. High growth figures may cover up structural problems.

We cannot, he says, take it for granted that these high growth rates will last forever, unless there is a quantum increase in productivity. Remember, also, that our per capita income is yet to reach $1,000, while the US is at $30,000.

Further, there are problems with the agricultural rate of growth still sticking to its "Hindu" rate of increase. It is symptomatic of the problem that farmers' suicides are still on the rise, despite all the hoopla about India's growth.

Revitalise farm sector

The plain fact is that agriculture in India is not remunerative and its productivity is still stuck at low levels. The farmers are faced by debt burdens that they are unable to meet. Amidst all the talk of India's forming part of the BRIC group, one cannot forget the tragic reality that farmers are still struggling to make ends meet.

Dr M. S. Swaminathan, the indefatigable visionary, heads India's Commission on Farmers. He is also leading the thrust towards a new initiative on research, development and horticultural expansion. Whether the answer lies in our genetically modulated varieties or not, what we need is a second and more comprehensive Green Revolution than the first.

The macroeconomic reforms of the 1990s will not be complete if we leave this important sector uncared for. The work that Dr Swaminathan has undertaken requires the fullest support from the nation's financial reformers, who should not shy away from extending massive assistance if his proposals demand it. It is critical that the farmer gets the technological tools he needs and the financial instruments that will enable him to use the tools.

Unemployment

While the physical indices of progress, such as the number of cars on the roads, the increasing use of cell-phones, and the exports of goods and services, are all important, one cannot afford to ignore the spectacle of a seriously handicapped rural sector.

Particularly is this problem evident in terms of unemployment. While India has attempted a massive Rural Employment Guarantee Programme to handle this, it goes without saying that such remedies are only `band-aids'.

The real cure to rural unemployment can come only through massive investment in rural infrastructure and enabling the rural population to participate in the gains of a modern economy. It goes without saying that this may involve massive and effective spending on rural irrigation, roads, rural education and rural marketing — none of which is particularly glamorous, but will make a critical difference to the quality of rural life.

We have also to realise that in terms of adequate nutrition, literacy and health facilities, India is still very backward.

A few months back, an unflattering comparison of the state of health services in India with countries in Africa drew angry reactions from official quarters. But that is not to deny that, while we may be the medical tourist destination in respect of certain curative facilities in our metros, health facilities in the rural areas and even in the poorer sections of metropolitan areas suffer from absenteeism, and the lack of adequate patient care and infrastructural facilities.

Witness the recent epidemics of chikungunya and dengue, where the omnipresent mosquitoes took their toll of human lives. Priorities have to be re-addressed and attention devoted to basic health facilities as well as essential infrastructure in terms of water supply and sanitation. All this requires that the Plan being formulated devotes adequate resources in terms of money and personnel to such soft services as health and education, even as it emphasises provision of power, roads, ports and the like.

All this leads up to the question of finance. The Planning Commission Deputy Chairman, Dr Montek Ahluwalia, has rightly stressed the need for funding domestic investment and revenue-oriented schemes, particularly in the health and education sectors. More than anything else, the current stage of India's development is critical. If investment in infrastructure is deferred now, the growth of the nation and well-being of future generations will beaffected.

Fiscal concerns

While it is true that the Prime Minister has put the lid on discussions of deferment of dates for achieving fiscal deficit targets, we need to keep an open mind about this ritual adherence to a deficit limit.

If the fiscal limit means that India will not attain global standards of infrastructure, which are needed to sustain rural industry and agriculture, the premises on which reduction is insisted on must be examined.

Last, but not least, the question of governance. All the gains of the past decade or two and the prospective gains of the coming decade will be lost if we focus only on the pursuit of sectarian goals and are wrecked on the shoals of factional strife between castes, communities and regions.

This requires political statesmanship of a high order. Perhaps, the kind of political coalitions that hold sway at the Centre offer a way out.

The very effort of resolving coalition issues results in a mitigation of conflict. The destiny of India is perhaps to be sought not in a simple, straightforward two-party system but in a more complex, chaotic, yet more organic, regime governed by coalitions of many hues.

The fact that the country has come through this period of coalition politics with a stunning macroeconomic performance is proof of the fact that Indians have a genius for snatching triumph out of difficulties and success out of conflict.

The future of India as part of the BRIC group seems assured in the light of recent developments.

The people and the powers-that-be must ensure that this successful trend continues and India maintains its position as a leader of the developing countries, not only in terms of GDP but in human development indicators and the quality of human life.