SEZs and Stakes for All

The government’s announcement of review of the policy on rehabilitation of land-losers in SEZs indicates the complexity and contention involved in land utilization and industrialization in a densely-populated, poor country like India.

Challenges in Agriculture

The union government’s announcement of the Rs.17,000 crore rehabilitation package for farmers in the 31 suicide-prone districts of AP, Karnataka, Kerala and Maharashtra focuses attention on the plight of agricultural sector in a fast-growing economy. Emphasis on irrigation, interest waiver, watershed development, seed replacement and dairy industry is welcome.

Employment, Poverty and Productivity

The impact of economic liberalization on poverty levels in the country has been vigorously debated by economists and politicians over the years. The data seems inconclusive, and scholars often seem to arrive at conclusions suspiciously close to their own ideological proclivities. The broad consensus appears to be that poverty is declining; it is difficult to conclude that all the decline in poverty is attributable to liberalization and rapid growth; and the decline in poverty is less than what the free market enthusiasts hoped.

Short Term Political Price vs Long Term Public Good

One of the great challenges in any society is increasing administered prices, or reducing subsidies in a politically palatable manner. All democracies wrestle with the problem of reconciling the clash between the short-term political price a government has to pay for temporarily unpopular decisions, and the long-term social good which results from such decisions. Political parties and governments are always mindful of the fact that unpopular decisions, even if they are in the long-term interest of the people, may cost them their power.

Growth and Delivery of Services

The redoubtable Economist (June 3rd – 9th, 2006), in a special report on Indian business, asks the provocative question: “Can India fly?”.  The answer is that it has taken off; but its people could fly much higher without the fetters imposed by poor policies and incompetent government.  Most objective observers share this cautious optimism.

The policy issues are mired in politics and populism.  But Indian entrepreneurs and workers have a way of boosting production and productivity despite policy errors.  The real problem areas are infrastructure, education and healthcare.

Democracy – a Source of Strength or Weakness?

Prime Minister Vajpayee’s China visit brought to the fore the inevitable comparisons between the economic performance of both nations. In some ways, this obsession with China over the years has become an important driver of change in India. In some quarters, the success of China is portrayed as evidence of the comparative advantage of authoritarian regimes over struggling democracies like India.

Services Sector – Myths and Realities

Over the past few years, there has been a major debate in India on the relative importance of services sector vis-v-vis manufacturing and agriculture. Economists say services now account for nearly 50% of our GDP, and their growth at 8 to 10% per annum is outpacing both industry and agriculture. Some claim that the rise in service sector's GDP marks a structural shift in the Indian economy and takes it closer to the fundamentals of a developed economy.

Big Picture and Attainable Goals

Now that Gujarat elections are out of the way, the nation can get back to the business of the more pressing, long-term, important issues of economic growth and alleviation of poverty. For several months now, our whole energy and attention were focused on the tragic event of Gujarat, and more specifically to the political fallout of the vicious battle for power. Happily, the doomsdayers were proved wrong. Gujarat people voted peacefully, and communal violence has not spread to the rest of India.

Crisis of Confidence

While the world revels in finding a solution to every problem, we relish in identifying a problem for every solution.

Perfection of Means and Confusion of Ends

For over half a century, economic prosperity has been the goal of post-war world. Even by 1939, the United States emerged as an economic giant, and the war only enhanced its economic strength and global power.  Western Europe was devastated by war, but with American support in the form of Marshall plan, there was rapid reconstruction and recovery. Japan too resumed its place among the prosperous nations quickly, thanks to the high levels of human development achieved even by late 19th century.