Focus on strengths
Prima facie it appears that the Nehruvian model of industry led
growth has largely failed in evolving a strong structural base for the Indian
economy in past more than 6 decades. Consequently, we still continue to be an
economy largely dependent on labor & resource arbitrage and trading. We
have failed in making significant progress in the areas such as technological
advancement, productivity gains, innovation and localization.
In our view, we have focused too much on our weaknesses and
tried hard to overcome by importing technology, energy, intellectual property,
capital and consumption patterns. We have also failed in exploiting our
strengths and allowed outflow of precious resources both natural and human.
Current account deficit, which has emerged as one of the key
concerns in past 5-6 years, is a direct consequence of our failure to make
necessary adjustments to the growth model adopted post independence. We
suggest, the government should work out a mission scale program to reverse the
flow of trade to pre British era. The following programs for example, could
improve the balance of payment substantially and structurally by 2025:
(a)
Energy deficiency had been one of the primary
reasons for India’s fiscal and trade deficits. Failure in implementing an
integrated energy policy has been a major failure of policy making.
It is widely recognized that “roof top solar panel” has the
potential greater than the one seen in mobile telephoney in past one decade.
Reducing energy intensity of water and developing a world class public
transport infrastructure on priority basis, especially in tier II and III
cities, and strict legal enforcement of energy efficiency should be considered
(b)
Indians spend approx USD25bn annually on education
and related overseas travel. Creating 5 special education zones with liberal
VISA, forex, taxation and real estate ownership rules, and allowing foreign
institutions to freely set up campuses could reverse this flow. Students from
India, far-east, middle-east and Africa who find it difficult to get VISA for
US/UK etc. or find that expensive could also benefit from this.
(c)
India holds tremendous potential for tourism.
However lack of proper infrastructure had traditionally constricted the growth
of this sector. On the other hand Indian outbound tourists flow is rising.
Developing some world class self contained international tourism centers, e.g.,
on lines of Macau, Disney, Las Vegas, etc. with liberal VISA, Forex, taxation
and real estate ownership rules could reverse these flows.
(d)
Vindavan, Tirupati, Varanasi, Ayodhya, Gaya,
etc. all have potential to be as desirable, venerable and popular destinations
as Mecca, Vatican and Jerusalem. Converting these centers of Indian religion
and culture into self contained special zones with international airport and
annual event calendar could get substantial forex revenue.
These projects also have the potential to generate large scale
productive employment opportunity for local talent, besides contributing to
economic growth and true globalization of Indian economy.
Learning from Switzerland, Israel and China we can focus on our
strengths and locally available resources for faster and sustainable growth.
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