Some food for thought
"New ideas pass through three periods: 1) It can't be done.
2) It probably can be done, but it's not worth doing. 3) I knew it was a good
idea all along!"
—Arthur C. Clarke (English Writer, 1917-2008)
Word for the day
Grinch (n)
A person or thing that spoils or dampens the pleasure of others.
First thought this morning
I do not have any clue how various political parties analyze the
election results; which I guess they must be doing, regardless of the election outcome.
I therefore find it reasonable to assume that the forward strategy of various
political parties does take into account the previous elections' outcome.
Logically, the winners would want to emphasize and further
strengthen the factors that in their view worked for them; whereas the losers
would want to correct the mistakes they made.
In the absence of direct access to the strategy rooms of the
political parties, I am constrained to go by the anecdotal evidence available.
In case of the recently concluded elections, the anecdotal evidence
unfortunately suggests that logic is something both the principle parties love
to defy.
Two young Congress leaders, Sachin Pilot and Jyotriditya
Scindhia, worked hard for four years to reinvigorate the broken organizations
of Congress Party in the states of Rajasthan and Madhya Pradesh respectively.
Their effort made substantial contribution in Congress victory. Post elections,
instead of using their experience gained in past four years, and sending them
to the state of UP, both these leaders have been clipped and tied down to
meaningless office of Deputy Chief Minister of their respective states. Given
the substantial Jat population in western UP, and influence of Scindhia in
Bundelkhand, they can probably make a difference for the Congress Party in 2019
general election and 2021 UP election. It is common knowledge that without
doing well in UP, Congress can hardly hope to regain power at the center. They
should actually take a leap forward and try to enroll Varun Gandhi, who has
recently gained popularity amongst farmers in Eastern UP, and is also
marginalized in BJP.
Insofar as BJP is concerned, it seems to be clueless about the
reasons of their poor performance in three states. They are hiding behind the
platitudes like narrow margin of Congress victory, untenable promise of loan
waiver, lies of Rafael. Their star campaigners - PM Modi is busy making
personal attacks on Gandhi family, and UP CM Yogi Adityanath, is still busy
discovering the caste of gods and seers; ignoring the plight of poor and middle
classes. Besides, cow belt, falling wages, poor crop realization and rising
cost of living are going to make BJP suffer in Maharashtra, Jharkhand and
Odisha also. Their social media strategy of taking the entire populace to a
brazen guilt trip for voting Congress in three states is also certain to
backfire.
Factors impeding India's growth
It is heartening to note that many senior economists have come
together and suggested an economic strategy that the government ought to
follow, to overcome the obstacles to the faster growth. The group includes many
prominent names like former RBI governor Raghuram Rajan, IMF Chief Economist
Gita Gopinath, Sajjid Chinoy, an economist with J. P. Morgan in India.
I am not sure how the incumbent government is likely to receive
these suggestions. For, (a) the government's experience to work with market
economists in past 4yrs has mostly failed; (b) the development economists are
mostly left leaning and therefore do not usually find favor with the
government; and (c) recently the government has overtly turned towards the
nationalist economist to find the cure for a multitude of the problems plaguing
the country (Demonetization is one of the more notable outcome of this
leaning).
Given that this group mostly comprises of liberals; it is less
likely to find favors with the government. The reason why they have decided to
put their report in public domain, is perhaps that they want it to fin place in
the agenda papers of various political parties going into 2019 general
elections.
Regardless of the government's preference, or otherwise for this
group, and also regardless of my agreement or otherwise with the views of this
group, it is worthwhile to take note of their suggestions.
The group identifies the following the following as key problems
hindering faster growth in India:
(a) Inequity of
income and wealth.
(b) Environment
challenge.
(c) Inadequate job
creation.
(d) Failure in
becoming part of global supply chain, despite abundance of cheap labor. Even as
global firms seek to diversify away from China so as to reduce political risk,
India is rarely seen as an obvious alternative.
(e) Falling
investment rate though ur external financing requirement (as measured by the
current account deficit) increased appreciably earlier this year, increasing
vulnerability.
(f) Inadequate focus
on macro stability.
(g) Inadequate tax
coverage.
(h) Delay in
implementing reforms that alleviate “supply side” constraints on growth and job
creation, e.g., labor reforms.
(i) Unpredictable
regulatory framwrok that is full of redundant and unnecessary regulations.
(j) Overuse of
protective policies.
(k) Ineffective and
poor targeted government engagement.
(l) Overarching role
of government enterprise in business.
(m) Poor education
& healthcare and thus poor quality of human capital.
As the readers would
notice, the group has pretty much covered the entire spectrum of socio-economic
constraints hindering the faster economic growth of India. The group has
presented many suggestions to overcome these hindrances. I shall discuss their
suggestion with my condiments in next couple of days.
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