Hope in the horizon, obstacles in the vicinity (Part II)

Thus in true sense, amongst the drivers of the economy, it is the service sector which is getting all the growth for India. India is woefully short of adequacy in manufacturing and agricultural sectors. This is not a revelation but an accepted truth across the nation.By and large this has been because basics such as healthcare, drinking water and infrastructure has not been distributed equally and in overall terms are in-adequate.

Thus the state and central governments need to prioritize on building roads, providing safe water and health care, meeting the power needs of the country, work on irrigation projects for year round water supply to farms and bring business revenues under the tax net.

India has had a political record where good governance and populist measures have not gone hand in hand. It is time to realise that Good governance translates to longer terms at offices if you are working right and working at the basics. Else the divide between the elite class in the cosmopolitan (India 1) and the masses (India 2) will keep increasing. An India 1 and India 2 story is amusing but dangerous in its long term effects where there will be constant constraints at growth and we will not be able to realise the full potential of India. It also risks a civil unrest. Getting these two Indias together will fire the growth engine. That would ultimately take India to its glory story 10-15 years in the future.

Hope in the horizon, obstacles in the vicinity (Part I)

Historic changes in the world order have more been the outcomes of events such as the World Wars, Cold War, Atom Bomb, Iraq Conflict,9/11, Taliban, Serbia - Croatia etc. The uprising thats shaken the world this year is not as violent as any of the earlier events. However, the change ushered will be as dramatic or more. Yes, we are talking of the Financial crisis which has made headlines through the second half of the year and from the looks of it will be visible through a large part of 2009. Many of the western economies are under seize and there is a domino toppling effect is being felt world over from Australia to Africa. The reaction predictably is that of disbelief, shock, awe and despair. Billions have been lost to stock exchange crashes, industries are fumbling on bankruptcy, Retrenchment and job cuts are regulars on news headlines and economies are in doldrums.

Many governments world wide are giving of special packages to industries and banking sectors to support them collapsing. Economists and politicians are divided on opinion as to how to overcome the crisis. A $700 billion aid sanctioned by US treasury has been follwed by largeese by other government treasuries (predominantly the Europeans). In the deep dark hour, two economies, that of India and China are being looked at with some hope. While Recesseion cannot be ruled out given the global nature of trade and forex inflows and outflows, these economies are some what insulated from the spine breaking consequences. True that they have their share of problems in terms of Inflation, Infrastructure and others, but their ascendance to higher pedestals and status in the world economy is unmistakable.

From an Indian Stand point, China is far ahead of India in economy terms. The Dragon has started flying even while the tiger takes baby steps forward. However, the walking tiger is also huge encouragement.

However a few things that India needs to address (and is addressing it as well)

1. India's ascendance has been lopsided in terms of service economy. Software and brainware is where India scores higher than China.

2. Manufacturing, however has not been India's forte. That is where China whacks us and most of the westernized economies of the world.

3. There are improvements in the Agricultural sector, but the pace is frustratingly slow.

I appreciate the Government's efforts in terms of supporting Infrastructure. The basics of roads, railroads, electricity and sanitation needs to be in place as early as possible. Sadly our improvement in these aspects has been much behind schedule. "Bharat Nirman" (see pic), a congress project has been a failure due to lack of political willingness and corruption. Irrigation and health services have improved but the gap between India and other nations (Even African nations) is woeful. According to a study in the year 2000, Israel had 100 times less arable land than India and its produce was 10 times more in terms of yield. Similarly, according to a recent article, manufacturing units in Tax haven Tamil Nadu are operating lesser shifts not because shortage in demand but because of inadequacy in power supply.

Development Areas & Metrics Target (2005 - 2009)/Achievement (2005- 2008)

Irrigation (Area in Million Hectares) 10/5 (50% achieved)

Drinking Water (No of Habitations) 603639/385353 (64% achieved)

Roads (No of Habitations Covered) 66802/20871 (31% achieved)

Roads (Upgrade & New Connectivity) 340316/146905 (43% Achieved)

Housing (Houses in Millions) 6/5.04 (84% achieved)

Electrification (No of Villages) 125000/48176 (39% achieved)

BPL Households 23/2.29 (10% achieved)

Telephone Connectivity (No of Villages) 66822/51973 (78% achieved)

(to be continued)