In respect of meeting the exploding demands of exponentially multiplying numbers of the people, especially in the developing world, planners and policy makers are at the end of their tether. The easiest part of their job is to prepare vision documents and draw up road maps, filled with fancies of what and how much should be in place at what points of time to meet the emerging needs.
Take any area of growth. You will always find that a simple process of addition and multiplication taking account of the population, gaps, optimum per capita need and a generous built-in buffer against shutdowns for maintenance and repairs, inflation, unforeseen contingencies and the like will flash the resultant figure on the screen of the calculator in a split second.
For instance, if enough power is to be generated for domestic and industrial consumption at a given growth rate as per India’s projected population by 2030 on the scale now within the reach of countries such as China, the installed capacity to be created comes to 8,00,000 MWs at 8 per cent growth rate as against slightly less than 2,00,000 MWs on the ground at present. It is a minute’s job to calculate the resources needed for the additional 6,00,000 MW on assumption of today’s cost of construction at Rs 6 crore per MW.
Similarly, for revamping the entire infrastructural sector, according to the Planning Commission, the investment is to double to $1,025 billion in the Twelfth Five Year Plan (2012-17), from $514 billion in the Eleventh Plan. In fact, Goldman Sachs puts it at around $ 1.7 trillion in the next 10 years.
As for urban renewal, McKinsey Global Institute says India will have to find and spend $1.2 trillion by 2030.
Such calculations are becoming ends in themselves. Indeed, governments, planning bodies and think-tanks no longer limit their perspective to the customary Five Year Plans. They have moved on to rolling plans, and even 20 to 50-year Plans. Certainly, they induce a pleasurable sensation, a kind of euphoria, that comes from an activity akin to indulging in joyful reveries. Their power-point presentations at seminars and gatherings of investors and business persons make an exciting impact.
It is when the figures of the documents are sought to be translated into concrete facts that a daunting question hits one between the eyes. Where are the resources to come from? The time-frames and cost-estimates envisaged for each sector will prove chimerical unless the resources are assured.
This seemingly simple proposition has several implications and ramifications: The sources of the resources will have to be identified in advance and lined up. The resources available should match the requirements. They must flow according to the time sequence and action-modules incorporated without any hiccup or hitch, and without sacrificing quality or standards. There should be strict monitoring to guard against time and cost overruns.
It was in this context that I was most interested to come across a review by Prof Ken Favaro of a book Build, Borrow or Buy by professors Laurence Capron, of INSEAD, and Will Mitchell, of Duke University’s Fuqua School of Business in the s+b Web site. It is essentially meant for companies, and to that extent its applicability to macro national domains is limited.
Their gist is that to jack up growth, and for it to be healthy and commensurate with expectations and entitlements, resources — financial, technological, manpower — should be fielded in the right way at the right time. The three fundamental “pathways” it proposes are: Developing the needed resources internally, or “building” them; contracting or partnering to obtain resources, or “borrowing” them; and acquiring, or “buying” them.
The problem is not with these unexceptional postulates, but with putting them into practice, especially as part of a national effort to achieve the needed level of growth encompassing all sectors of the economy involving competing demands and confusing priorities.
In sum, not planning, but finding resources for what is planned is going to prove the most intractable challenge for India. In addition to modalities such as private-public-partnership, divestment, foreign direct investment, special purpose vehicles and the like, it is high time India’s economic strategists also thought of putting to use a part of the foreign exchange reserves to mitigate the looming resources crisis.