The promise is that India would transform into a developed nation by Year 2047 – when it completes 100 years of self-rule, past the 89 years of the British Raj and exploitation of its abundant resources. Politicians are given to bombasts, but the “real scenario can be different,” as economist and former RBI governor Raghuram Rajan stated this week. Several of his observations, widely published in the media, are important and reflective of the ground situation that politicians try to hide.
If India maintains the present about 7 per cent annual rate of growth, “we could likely beat Germany and Japan,” and emerge as the world’s third largest economy after the US and China. But, the question as Rajan poses is, what does it mean to be developed. If it means a per capita GDP of $15,000, development to that level would be a far cry. The present push would not suffice. As he stresses, the growth here is mainly confined to the infrastructure sector – highways, ports and the like. Industrial sector, which can provide jobs to millions, was largely stagnant through the two Modi terms. The Make In India initiative, at best, produced only moderate results. The problem, as Rajan notes, is the failure of the government to remove the bottlenecks. It would not do to boast that the right conditions prevail. A key to this is improvements in the Ease of Doing Business, through reforms. Reforms under Modi were mostly a casualty, unlike the UPA periods when Manmohan Singh running a coalition government effected major changes in economic and other fields. Singh, along with Narasimha Rao, started the push from the early 1990s, dumping Socialistic principles and creating the right conditions for economic growth. Growth, for a period, crossed 9 per cent. It nosedived thereafter and is currently at 7 per cent. To improve the industrial climate and ensure large-scale setting up of industries across the country, the government must “engage with the businesses to understand their challenges on the ground.” Major issues are freewheeling corruption and red tape at the bureaucratic levels.
The Licence Raj, dumped in the early 1990s through the Economic Liberalization push by Rao and Singh, is now back with a bang. For instance, those who try to make a small investment even in the form of a harmless, humble ‘home stay’ in tourism centres, would require to obtain several “clearances” – which are possible through bribes and plagued by red tape and undue delays. Consider the struggle for an aspiring entrepreneur to start a real business, even though the PM’s Mudra bank loan scheme is of help to them. Without industrial development, the problem of joblessness would persist, and the money circulation in markets would not improve. As Rajan stresses, the government must learn the ground situations and keep taking corrective steps.
