"Encourage your own curiosity; pursue the problems based on
that."
—James Mirrlees (Scottish, 1936-)
Word for the day
Makebate (n)
A person who causes
contention or discord.
Malice towards none
Why can't BJP just accept
that AK is CM of Delhi and cooperate with him to improve life of the people
living in Delhi!
First random thought this morning
Adi Godrej group is reportedly opposing the proposed acquisition
of their Vikhroli land for Mumbai-Ahmadabad bullet train project.
So far the opposition to the ambitious project had come from farmers
and opposition parties. This is the first instance an industrialist (that too
someone who always sounded highly impressed by PM Modi) has opposed the pet
project of the prime minister. This may signifies either of the following:
(a) Industrialists want
everything but wouldn't give away even a small piece of land lying vacant for
100years for the development of the country. or
(b) Government has totally
failed in convincing people about the need, necessity and importance of Bullet
train project.
Budget tourists and assembly lines
The primary idea behind the
activity of trading is to let everyone do whatever they can do best.
"Trade" thus allows the people
use their scarce resources in most efficient way and exchange the output of
their expertise with the output of others' expertise. Trade renders every one
better off, as it facilitates the most efficient exploitation of scarce
resources and enables production of goods and services at lowest feasible
rates.
In an ideal world, the objectives
of "Trade" are hence achieved when:
(a) All owners of resources, producers of goods and services, and
consumers of such goods and services are allowed to freely trade with each
other; and
(b) Everyone produces as per their specialization and everyone
consumes as per their affordability.
If trade is restricted, optimum
exploitation of resources would not be possible, and people will be forced to
do things beyond their domain of expertise. This results in (a) irrational
pricing of resources, goods and services; (b) economic imbalances; and (c)
dissipation of scarce resources.
The erstwhile Soviet Block, which
restricted trade with the western world, is a classic example of this
phenomenon. India and China also followed largely restrictive trade policies
till 1980s and suffered slower growth, poverty, and high inflation. Opening of
Indian and Chinese economy may have significantly helped in containing global
inflation through cheaper labor and resources.
Similarly, if people are allowed
to consume more than what they can economically afford, the demand-price
equilibrium of goods and services will get distorted leading to (a) abnormal
pricing of resources; (b) avoidable wastage of resources; (c) poor
sustainability; (d) frequent financial crisis; and (e) socio-economic
inequalities.
The sub-prime crisis that rattled
the global economy a decade ago is a classical example of this "eating
more than you can digest" phenomenon.
I also see consumption of fossil
fuel by Indians as a reflection of consuming beyond affordability. Had
successive Indian governments since independence, focused on harnessing the
abundantly available solar, wind, and hydel sources of energy, rather than over
relying on imports of fossil fuels, the trajectory of Indian economic
development could have been very different.
Similarly, constricting free trade
in agri produce and making the farmers dependent on subsidies and loan waivers
etc. is another trade distortion that may have seriously hindered India's
position in global trade, besides introducing serious discrepancies (almost
irreparable now due to political compulsions) in the socio-economic structure
of the country.
The short point I would like to
make is that to increase its share in global trade to a respectable level (say
5%) from the current ~2%, India needs to focus on its core strengths and
expertise.
If someone asks me "what are
the 10 key strengths of India" in socio-economic context, I would list the
following:
- Food
- Languages
- Religion & Mythology
- Spiritual knowledge
- Traditional arts
- History & culture
- Variety of beautiful landscapes
- Hard working people with better than average IQ
- Abundant sunshine and water flowing through rivers
- Second largest pool of arable land
As a minister for trade and
commerce, I would therefore focus on these strengths to increase my share in
global trade, rather than simply importing crude oil and exporting petroleum
products; or importing raw diamonds and bullion and making jewelry as per the
specification and designs provided by foreign buyers; or providing a base to
foreign manufacturers for assembling mobile phones or motor vehicles from
mostly imported parts; or worst be contended with small number of low budget
foreign tourists!
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