Formula For India’s Growth

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growth

Improving the country’s inclusive growth scenario will involve three Es — empowerment, enrichment and emancipation — in that order; Modi is ensuring the first; one is not sure he has the second idea; he surely does not have the third

It may be bad optics to see India ‘languishing’ at the 62nd position in the ranking of the Inclusive Development Index by the World Economic Forum, much behind not only communist-capitalist China’s 26th position and terror-ravaged Pakistan’s 47th. Not only the neighbouring Sri Lanka (40), Bangladesh (34) and Nepal (22) have fared better than us but also countries that hardly feature in the international scheme of things like Mali, Uganda, Rwanda, Burundi and Ghana; there are also Ukraine, Serbia, Philippines, Indonesia, Iran, Macedonia, Mexico, Thailand and Malaysia that are above us. However, hope emerges from that very report. India happens to be among the 10 emerging economies with an advancing trend. And the solution to this is indicated in another report of the day — India’s richest 1% corner 73% of wealth generation, according to Oxfam — provided the policy makers derive the right lesson from it, which cannot lead to a Robin Hood-like, socialistic robbing of the rich and distribution of the bounty among the poor. Inclusive growth or a healthy redistribution of wealth would happen in the country the day a leader, a few or a group of them understand and then educate the people on the necessity for economic freedom. As the poor improve their own lot, rather than freeload, and the middle class turns upper middle, the last group is bound to turn rich in the form of new competitive players in the market. While the Narendra Modi government has carried out no big-bang reforms of the nature of PV Narasimha Rao or Atal Bihari Vajpayee, it is hoped that he has an elaborate plan to ensure that the pitfalls of 1991-96 and 1998-2004 are covered when the industry’s animal instincts are aroused finally. There should always be a critical mass of players in every segment of the market when it is thrown open, with the government withdrawing completely from the segment, remaining there as a mere regulator. The absence of competition creates a monopoly; the absence of a variety in competition creates a cartel. With the decent GDP growth of above 6% as the base, when India grows finally at a percentage point or two faster, Modi has ensured the big fish will not gobble up the small.

At the same time, it must be stated that these surveys suffer from a leftist bias. Nobody wishes his country be another Lithuania, Hungary, Azerbaijan, Latvia or Poland, the top rankers. Those that we aspire to be like must be told that globalisation ought to be a two-way street; staying protectionists while impressing upon us the greatness of a liberal world is unacceptable. When Modi returns from Davos, he must note that reports like that of Oxfam are a communistic hype. A sector that is so intensely competitive in India that its players had to venture into Africa in search of profits when the margins reduced in their base country, telecommunication has shown that a brilliant idea will make a player richer under all circumstances. How Mukesh Ambani’s Jio entered the market so late and yet flummoxed big-wigs like Bharti Airtel and Vodafone, while Anil Ambani struggled since the day the brothers split, is a case in point. A country that cannot appreciate such individual brilliance is doomed. Be it economics, science or spirituality — be it a strategy that makes a market leader, an invention that changes the way human beings live or a communion that sets a benchmark for the believers — a big herd never goes up there altogether. Fortunately nevertheless, the fruits are shared by many: in the form of jobs, ancillary industries and new avenues of income for millions with the growth of an entrepreneur; in the form of people enjoying modern life under the electric bulb or moving around in locomotives or flying; in the form of thousands attaining peace by walking the road illuminated by a guru.

The question is whether Modi has this roadmap of growth before him or his supporters are indulging in an exercise of wishful thinking. If the right kind of capitalism — wherein whoever desires capital is a capitalist, including the poor — comprises the steps of empowerment, enrichment and emancipation, the first is being accomplished remarkably through the Jan Dhan Yojana, Fasal Bima Yojana, Ujjwala, Mudra, etc. There is no exhortation to the aspiring youth from villages and small towns seeking loans to turn affluent yet. The prime minister ought to emulate Deng Xiaoping here even if he cannot garner the moral strength to motivate all Indians, like an American leader would, to pursue wealth. The final frontier, freedom, is doubtful because of Modi’s reliance on bureaucrats and fixation with taxes. Compliance, while being essential for the size of the mainstream economy, must be realised with pleasure, not extracted with coercion. Many holes of transmission loss have been plugged across all subsidy schemes, but ‘yojanas’ can never make India rich. It is time Modi remembered his own joke directed at the then ruling Indian National Congress during the 2014 election campaign: When a tiger confronts you in the jungle, facing it with your gun would work; flaunting your shooting licence wouldn’t.

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