ECONOMIC HIGHLIGHTS
New Delhi,
18 August 2005
Indian Economy At 58
TOWARDS MODERN INDUSTRIAL NATION
By Dr. Vinod Mehta
The past 58 years have been quite fateful for the
Indian economy. Starting almost from a
scratch, India
has been able to lay foundation for the development of a modern industrial
economy. It has, however, not always
been a smooth road and that we have still to realize many of the promises which
we had made when we embarked on the path of planned industrial
development.
On the positive side we have been able to achieve
self-sufficiency in food, bring down the number of people living below the
poverty line, develop and diversify the industrial base and accumulate a
reservoir of scientific and managerial skills, especially through the
development of scientific research and management educational institutes. On the negative side we have not been able to
provide free elementary education to all the children below the age of 14 as
per our Constitutional requirement; we have yet to realize the goal of doubling
per capita income by 1975. We have yet
to provide housing and healthcare to people at the lower end of the society.
If we compare our performance with some of the Asian
countries which started on the course of development along with India almost at
the same time, we find ourselves being left behind with regard to a number of
socio-economic indicators. Today Asian
countries like China, South Korea, Malaysia,
Indonesia
have not only achieved a high percentage of literacy among its population but
also have been steadily enjoying a rising growth rate along with rising per
capita income. Compared to India these
Asian countries have emerged as major players in two or three important
commodities or services in the world market.
One may legitimately argue that the countries
mentioned above have had little respect for democratic polity, especially in
the earlier phases of their development, while India has been continuously
following the path of democratic polity. But still the country erred somewhere
on its way towards economic development in the last 55 five years. When India gained independence the
Soviet path of economic development through planning was very important as it
had assured not only the development of an industrial base but also high rate
of economic development to most of the socialists countries. Again after the second world war the Marshal Plan,
developed by the USA for the
reconstruction of war ravaged Europe also made
its mark on the minds of Indian leaders and economists.
Therefore, the country started on the path of
economic development through planning in an earnest and in a very forthright
manner. The industrial sectors which
involved massive investment and long gestation periods, especially in the
capital goods sector, were provided impetus through the public sector
investments. India saw the establishment of
modern steel mills and other heavy industries for the
first time.
But after having established the public sector in a
big way we did not pay any attention to the efficient running of these
units. Because of large-scale political
interference an unholy bureaucratic stranglehold these public sector units
instead of either ploughing back its profits for the modernization of its units
or to contribute to the exchequer they started eating into the revenue
resources of the Government. Now for the
past 13 years all the attempts at disinvestment in these units have miserably
failed. The latest casualty has been the BHEL. The Government has also shelved
disinvestment plans in the 13 other profit-making PSUs.
We also erred on the side of giving too much
protection for a very long time to our industries. In the earlier phase of economic development
the nascent Indian industries needed to be protected from foreign competition
as they were not in a position to face competition. However, this protection was envisaged only
for a few years. But as things developed
over the years the Indian industry faced vested interest in the continuation of
these protectionist policies as it ensured them monopoly profits in the
domestic market.
Things have changed a lot in the past few years. The licence raj has been abolished and
competition within the industrial sector has increased. Still we are nowhere
close to industries in terms of efficiency compared to industries in countries
like Korea or Taiwan. We are
capable of manufacturing more than 80 per cent of the products we need for our
domestic market but the quality is so bad that even after 58 years the
consumers of both consumption and capital goods still find the foreign made
goods more attractive.
The monopolistic tendencies and an urge to work only
in an uncompetitive market is still very much reflected in the attitude of our
people engaged in the financial sector, like banking and insurance. This again is the kind of attitude which this
country has developed over the past all these years and is finding it very
difficult to shed it even though it realizes that it is paying a very heavy
cost both in the domestic and international financial markets in terms of the
lost business opportunities. Even though the insurance sector has been opened
up and cap on FDI in private banks has been raised, the pace of reforms is very
slow.
In the agricultural sector though we have achieved
self-sufficiency in food yet we have to go a long way in achieving
self-sufficiency in the production of oil seeds and pulses. Even though 70 per cent of the population is
still dependent upon agriculture.
Nothing has been done in the past fifty eight years to push the
development of agriculture sector including agro-based industries to
international standards.
After the Green Revolution, which was limited to only
a few states in the country, nothing remarkable can be said to have been
achieved in the production of various crops.
In fact the restrictions imposed on the movement of agriculture products
especially the grain has worked against the high growth of the agricultural
sector as a whole. It has been observed
that the agricultural policy has never gone beyond ensuring self sufficiency in
food. What the country needed was that
along with self sufficiency in food production, a big technological push was
provided to the production of all other agricultural crops which are in demand
not only in the domestic market but products which also fetch good prices in
the international agricultural market.
Today when we have entered the 59th year of our
independence, we must pause, think and make a critical assessment of our
economic policies and come out with a package which is in keeping with today's
developments the world over and which can ensure faster economic development
and more jobs so that the citizen could be ensured a good standard of
living. The perception of India across the
world has changed. India
is no more being perceived as a developing country but as an emerging economy
which will be a relatively well developed economy in the next 15-20 twenty years.
– INFA
(Copyright,
India News and Feature Alliance)
|
Archives 
