"In fact, you couldn't
give me anything to make me go back to being a teenager. Never. No, I hated
it."
—J. K. Rowling (English,
1965-)
Word for the day
Literatim (adv)
Literally. Letter-for-Letter
Malice towards none
Mainstream media loves to
designate every election in the country as the litmus test for NaMo. They have
even extensively covered elections to Delhi University Student Union and Local
Bodies in a number of states, hoping whatever.
They may please note my RWA
is holding elections early next month:)
First random thought this morning
While all the parties to the Ayodhya dispute are eagerly waiting
for the Supreme Court's judgment, no one is apparently ready to take verdict
that goes against them.
This means what?
(a) No one actually
believes that this matter could be decided by the court.
(b) No one is actually
interested in this matter getting resolved. The pending court case is just a
delaying tactic.
(c) Both (a) and (b)
(d) None of the above
Choose your economic model
It is widely expected that the vehicle that transited most
economies from underdeveloped to developing to middle income is fired by two
engines - real estate and exports. Technology advancement and higher
productivity have mostly played a supportive role in (a) enhancing export
competiveness; and (b) raising affordability levels of households for buying
houses.
For most larger economies the improvement in social indicators
inclusiveness, sustainability, equity, quality of life etc. appear to have
followed the economic development with lag (often in decades).
To keep things simple, I therefore like to assess the efficacy or
otherwise of any economic development model on these two basis.
As the economy begin to open up in 1991, Indian exports started to
rise noticeably. The growth however gained tremendous impetus from 2004
onwards. A lot of this I would like to contribute to the brave reform efforts
made by the NDA government led by AB Vajpayee during 1998-2004.
Developing industrial and trade infrastructure at unprecedented
pace through privatization of most core sectors was hallmark of that
government. The technical capabilities developed, though under compulsion due
to international sanctions post 1998 nuclear tests, during that period also
aided the exports growth in engineering, technology and pharma sectors.
Stronger currency, stronger fiscal and stronger current account
resulted in sharp decline in interest rates in the subsequent years. Low rates,
higher employment level, rising wages, better connectivity and accessibility
all combined to lead a strong growth cycle in real estate.
The subsequent government however could not manage the growth
well, especially in terms of regulating the credit, resource allocation and
managing fiscal balance. Fiscal profligacy (high subsidies and unproductive
welfare spending) for political advantage soon frittered away the low rate
advantage. The global financial crisis also played an important part as exports
slowed down and capital flows were affected.
The consequences are half dead real estate sector, exports moving
in slow lane, humongous pile of nonperforming assets, poor investment growth,
stagnant real wages and falling employment level.
In past three years, the incumbent government has made some
progress in sorting out these issues. Unproductive subsidies have been
rationalized (even at the cost of political advantage), inflation has been
mostly reigned, resource allocation has been mostly regularized, NPA mess has
begin to sort out, real estate sector now regulated is coming out of slumber,
export decline has been arrested, and may begin to look up.
But I would like to add here, it is the Vajpayee model of development and
not the Gujarat model of development (if there is any) that has succeeded. The
learned economist Dr. Manmohan Singh's model of development is seriously
questionable, in my view. Comments are welcome.
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