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Sustainable and Inclusive Growth


A decadal  economic growth rate of over  7% since 2000, and of recent growth rates of over 9% from 2005 to 2007, has helped india attract global attention as next China in the making.These growth rates have helped india’s trade share in world trade to grow to 1.45 % from under 0.5% just 15 years ago.It has reduced poverty ,increased middle class, and brought a number of Indian companies on multinational platform, apart from foreign multinationals coming to india in rush.And all of this has been achieved with just one trigger of reforms in 1991, and those too just at centre level.Imagine if states too liberalise and centre goes after reform in a more agile vogue, how hig our growth rates  can be and how quick can our ascendency to richness be.

The problem of india so far has been it’s low base to start with almost every aspect and that the so called Hindu rate of growth of about 3%, didn’t really made any substantive addition in absolute terms to that low base for over 3 decades since independence.1980’s saw a period of pick up as india achieved 6% decadal growth rate.1990’s maintained that 6%, 2000’s went to average 7%, and 2010’s are likely to clock over 8% at the least.Growth means ,expansion in budget expendditure to higher and higher volumes, and this expansion in budget means , expansion in expenditure in almost every sector from health , education, infrastructure, agriculture, industry  to defence ,research and space.Just to illustrate it with an example , defence budget  in 2008 amounted to approximately $30 billions, assuming 10% growth rates in defence allocation it would amount to $78 billion by 2018 an amount that is as big as what china’s official defence budget claims to be.So is the case with education expenditure, health and infrastructure.All of these are likely to cross $ 100 billion mark , or reach close to that figure in 10-15 years,thanks to impressive growth trajectory we are on.And it does send waves of optimism amongst indians today.

But the question is who stands to gain from it?.more than 80% of population of indian still reels under $2 a day, or more correctly 40% of population is under new world bank poverty line of $1.25 a day.For them this $100 billion expenditure brings no benefits and if it does they are meagre.$1.25 a day in PPP terms translates to Rs 25 a day.Imagine what benefit can a person earning Rs 25 a day reap from education, health or infrastructure facilities when he himself is undernourished.This leads to policy directive of inclusive growth that Mr PM has been saying again and again and perhaps UPA is emphasizing on.Unless facilities are provided free of cost to these poor their position can emancipate , otherwise these facilities have no meaning to them .Steps are being mulled like free education till 14 years of age , or proposed food security act, or NREGA, or life insurance covers and free health care.But the problem is that although centre has put in huge sums of money in social expenditure the delievery mechanisms is not that effective. As is the case of condition of education, government schools are a waste of resources, teacher’s don’t turn up ,student drop out ratio is high , so is government hospitals where doctors are on strike every few years demanding better pay , letting the patients suffer,the medical equipment, hospital beds are in filthy and outdated condition , gloomy is our infrastructure, how successful is our  100% electrification of villages when electricity seldom comes  10 hours in 24 hours a day in summer season in cities.

Perhaps with our defence sector too all the money pumped in has been a waste , Remember the media rhetoric  after  26/11 of war with pakistan (BJP too was shouting so), we were likely to run out of artillery,ammunition  because of lack of howtizers guns(because bofor ghosts still haunt the governments to purchase new ones), our submarines were likely to be still in docks going refits, proposed aircraft  and aircraft  carrier acquisitions from russia were unlikey to be recieved before 2012, our aircraft fleet exists of ageing MIG 21’s, 27’s and jaguars which crash every month or so.Our missiles have still not been inducted and are undergoing tests,but fortunately one’s on the other side are pakistan , they too are just bombastics and perhaps in worse  condition than ours  .The same stupid media is repeating the rhetoric of china incursions despite  knowing that we can’t compete with chinese military today.

These dollars should go into the pockets of those poor and not be eaten on their way by bureaucracy then and only then can they enjoy facilities .There’s no use in building golden quadrilaterals or more AIIMS or IIM’s or IIT’s to them till they keep earning Rs 25 a day.These are likely to be used by middle class and riches, the poors would still languish .only way they can emancipate is if they earn more and be provided free basic facilities of education, health and food so that their incomes doesn’t get consumed on these .And that implies more jobs for them, skill development of them , what NREGA is trying to do, but since the volume of population to be addressed is colossal ,it is certainly going to be difficult to yield the desired objectives.It can win congress elections for its initiative but on ground , it will remain a failed job.

The solution is development of low tech , mass scale manufacturing sector by private entrepreneurs for exports.Poor have nothing to gain directly from IT sector because of their low skills, but they can certainly produce toys, towels, toilets or shawls, shoes  etc.Rural India has to move towards manacturing sector based on export .Then and only then can poor earn more than $1.25 a day and also increase india’s share in world trade.Globalisation of trade and services is the brightest chance of indians to raise their standard of living, we are moving towards it , but alas we are sluggish still.

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