The economic achievements over the last 20 years have been quite on the lines of the dualism spoken of in Hindu philosophy. Nothing quite has been absolute and there have been qualifications along the way, which really indicate that a lot more has to be done.
1 the country has witnessed various forms of governments with different coalition parties working together. The positive thing is that howsoever the ideologies have differed the country has never gone back on reforms. However, on the converse side, as economies have been reaped on reforms, it is becoming progressively more difficult to push through reforms which are critical today as often political goals have superseded economic conviction.
2irrespective of the way in which one calculates poverty, the poverty ratio has come down. This works also with absolute numbers. A lot has been achieved through the trickle-down route of growth with more employment opportunities being created. However, again on the flip side, we still have extreme poverty in villages which do not have access to basic social services such as health, education, drinking water, etc. We still have starvation deaths taking place and often farmers are driven to suicide when the crop fails. While there is improvement at the periphery, the core remains untouched by development notwithstanding all the schemes introduced by the government.
3there has been a significant change in the quality of living in these two decades. All branded products are available and one need not import them. The middle-class boom is visible across the country and pure capitalist tendencies have also made India Inc. reach out through innovative marketing tools to the bottom of the pyramid. This has been accompanied by significant advances in technology to deliver products with online transactions taking centrestage and eschewing human intervention. However, India continues to rank quite low in terms of competitiveness, governance or doing business which is an unfortunate reflection of the intransigency in mindsets that have not changed to improve the level of efficiency.
4growth per se has been quite impressive across differing political regimes which speaks well of the inherent resilience of the Indian economy. The fact that we are scraping through a growth rate of 4.5- per cent in the worst of situations is commendable. But on the converse side, unlike China which has retained a high close-to-double-digit growth rate continuously for two decades, India has witnessed considerable volatility in growth which indicates that we have still not got a firm, established base, especially in industry which provides the necessary impetus.
5inflation is more serious a concern today and the government, along with the RBI, works hard to ensure that the number is under control. Therefore, India is more price-conscious than it was earlier with steps being taken to counter an oil price hike through tariff cuts or crop failure through imports. Also monetary policy has been proactive with demand pull inflation forces. But, again, when inflation is on the supply side, such as what we have witnessed this year and also earlier in 2007 and 2009, we have not quite got our back-end structures in place.
6RBI and monetary policy have been metaphors for transparency and efficiency in these two decades. RBI has evolved to become one of the best Central banks in the world and being very transparent in every possible action. The pro-responsive approach of the RBI has been iced with forward-looking stances, which is what the textbook would say. However, given the structure of the economy, monetary policy by itself has become less effective with the transmission process becoming sticky and, unlike the US where the Fed’s policy drives all economic actions, the same does not hold in India.
7the government is more cognisant of the fiscal numbers and the FRBM ensures that we work towards being range-bound. The states are almost in consonance with the guidelines, though the Centre has shown commitment but not resolution. On the other side, the quality of the fiscal balances has got upset with a rather helpless stance taken towards fixed commitments such as interest, subsidies and defence which wipe out around 50 per cent of the total Budget.
8the growth of the capital market has been quite remarkable with India becoming one of the major emerging markets, especially for foreign investors. Around $175 billion has flown into the market which is mainly in the equity segment. However, our dependence on these flows and the inability to garner other flows, such as FDI, in similar quantities has made our forex position vulnerable to these flows, as witnessed last year when the tapering announcement was first made.
9while we have opened up virtually all sectors to FDI and have got in significant numbers (around $ 210 billion), we have not been able to get through the last mile with severe roadblocks when it comes to retail, insurance or pensions.
10India is self-sufficient in food grains and has scaled new peaks in production levels across almost all crops. However, our policies have never worked much on enhancing output levels; the only attempt has been through price support, which has distorted the cropping pattern. We still look up to the skies for a good performance and often this sector has bailed out the economy. Clearly, there is need for us to bring back the Green Revolution and ensure that this sector is robust as it supports between 55-60 per cent of the work force. That will be a true achievement that touches the lives of the lowest levels of income, where progress could still be elusive.
1 the country has witnessed various forms of governments with different coalition parties working together. The positive thing is that howsoever the ideologies have differed the country has never gone back on reforms. However, on the converse side, as economies have been reaped on reforms, it is becoming progressively more difficult to push through reforms which are critical today as often political goals have superseded economic conviction.
2irrespective of the way in which one calculates poverty, the poverty ratio has come down. This works also with absolute numbers. A lot has been achieved through the trickle-down route of growth with more employment opportunities being created. However, again on the flip side, we still have extreme poverty in villages which do not have access to basic social services such as health, education, drinking water, etc. We still have starvation deaths taking place and often farmers are driven to suicide when the crop fails. While there is improvement at the periphery, the core remains untouched by development notwithstanding all the schemes introduced by the government.
3there has been a significant change in the quality of living in these two decades. All branded products are available and one need not import them. The middle-class boom is visible across the country and pure capitalist tendencies have also made India Inc. reach out through innovative marketing tools to the bottom of the pyramid. This has been accompanied by significant advances in technology to deliver products with online transactions taking centrestage and eschewing human intervention. However, India continues to rank quite low in terms of competitiveness, governance or doing business which is an unfortunate reflection of the intransigency in mindsets that have not changed to improve the level of efficiency.
4growth per se has been quite impressive across differing political regimes which speaks well of the inherent resilience of the Indian economy. The fact that we are scraping through a growth rate of 4.5- per cent in the worst of situations is commendable. But on the converse side, unlike China which has retained a high close-to-double-digit growth rate continuously for two decades, India has witnessed considerable volatility in growth which indicates that we have still not got a firm, established base, especially in industry which provides the necessary impetus.
5inflation is more serious a concern today and the government, along with the RBI, works hard to ensure that the number is under control. Therefore, India is more price-conscious than it was earlier with steps being taken to counter an oil price hike through tariff cuts or crop failure through imports. Also monetary policy has been proactive with demand pull inflation forces. But, again, when inflation is on the supply side, such as what we have witnessed this year and also earlier in 2007 and 2009, we have not quite got our back-end structures in place.
6RBI and monetary policy have been metaphors for transparency and efficiency in these two decades. RBI has evolved to become one of the best Central banks in the world and being very transparent in every possible action. The pro-responsive approach of the RBI has been iced with forward-looking stances, which is what the textbook would say. However, given the structure of the economy, monetary policy by itself has become less effective with the transmission process becoming sticky and, unlike the US where the Fed’s policy drives all economic actions, the same does not hold in India.
7the government is more cognisant of the fiscal numbers and the FRBM ensures that we work towards being range-bound. The states are almost in consonance with the guidelines, though the Centre has shown commitment but not resolution. On the other side, the quality of the fiscal balances has got upset with a rather helpless stance taken towards fixed commitments such as interest, subsidies and defence which wipe out around 50 per cent of the total Budget.
8the growth of the capital market has been quite remarkable with India becoming one of the major emerging markets, especially for foreign investors. Around $175 billion has flown into the market which is mainly in the equity segment. However, our dependence on these flows and the inability to garner other flows, such as FDI, in similar quantities has made our forex position vulnerable to these flows, as witnessed last year when the tapering announcement was first made.
9while we have opened up virtually all sectors to FDI and have got in significant numbers (around $ 210 billion), we have not been able to get through the last mile with severe roadblocks when it comes to retail, insurance or pensions.
10India is self-sufficient in food grains and has scaled new peaks in production levels across almost all crops. However, our policies have never worked much on enhancing output levels; the only attempt has been through price support, which has distorted the cropping pattern. We still look up to the skies for a good performance and often this sector has bailed out the economy. Clearly, there is need for us to bring back the Green Revolution and ensure that this sector is robust as it supports between 55-60 per cent of the work force. That will be a true achievement that touches the lives of the lowest levels of income, where progress could still be elusive.
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