A mammoth puzzle: Surprises may crop up in high-growth quest
Finance minister Arun Jaitley’s speech can go only so far in guessing factors that might stem from the realms of politics, sociology, ecology and technology.business Updated: Mar 01, 2015 01:39 IST
In economic analysis, dream budgets have come and gone in India – and new heights have been achieved in the economy which is kissing the $2-trillion mark. But correlations between the two factors are not easy to establish. There is always something that transcends the simple arithmetic of the growth pundits even when they are blessed with the virtues of high-power algebra and forecasting models that have rockstar appeal.
It is wise, then, to look beyond the visible horizon to guess what could happen – at least to be prepared for the unexpected highs or unforeseen lows. Those who do the numbers often fail to realise that numbers are often the effect, and not the cause, of qualitative shifts in the economy.
Finance minister Arun Jaitley’s speech can go only so far in guessing factors that might stem from the realms of politics, sociology, ecology and technology.
Let’s then throw some questions that are not easy to answer:
·Can “Make In India” be derailed by robotics that make human employment less relevant?
·Can a climate change agreement on emission cuts come in the way of industrial plans?
·Can social media-driven governance make people so much aware that political hurdles emerge from the din created by booming mobile phones?
·Can a paradigm shift in energy to solar or wind energy make India’s coal reserves less of the black gold they are?
·Can rising wages in India erode cost advantages faster than China – given the long history of unionised labour?
·Can mobile payments and other forms of technology-driven money such as bitcoins cause huge disruptions in the global economy? If so, how would India be affected?
Each of these questions deserves a long answer. They require the collective brilliance of deep-thinking experts working together.
Is the spanking new Niti Ayog up to this task? Murmurs suggest that the new avatar of the Planning Commission is only a decaffeinated version of the old one – or a defanged one, if you will.
Perhaps the tragic flaw of Nehruvian socialist economics was not the state domination of enterprises – it might have been in the underestimation of the significance of global forces and profound technological changes that made an inward-looking economy look shoddy in hindsight.
For the moment, there is cheer all around that India’s estimated growth rate of 6.5% in 2015/16 could put it ahead of China.
But, with 400 million Indians still below the poverty line according to the World Bank, the growth rate needs a sustained push that might have to grapple with the ifs and buts of the fuzzy questions outlined above.
“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today,” goes a quote by Laurence J. Peter – and this is by no means the only one mocking the practitioners of what is called the dismal science. There is also the unsavoury thing called gestation lag in economic management. Every policy, every measure and every rupee spent takes time to cast its impact.
In the din of time curves and fuzzy factors, one thing is more or less certain: it is India’s young population that holds the key to nearly anything. The next 10-billion-dollar company, the next big patent, the next wave of political upsurge, the next creative policy measure – every one of these factors will be determined by the way one engages the young.
Last year, the United Nations announced that India has 356 million citizens between the ages of 10 and 24 – the world’s largest youth population.
It can be said reasonably that such a huge population will not respond to algebraic equations and sophisticated calculations. Communication may well be the biggest challenge – be it in business or policy-making. With hundreds of millions of mobiles in hands of youngsters speaking several languages, how does one reach across?
One handset maker has just come up with a model that supports 21 Indian languages. The handset is symbolic of what policy-makers and business leaders need to do as they move to shape the world’s fastest growing major economy – which also happens to be the world’s most populous democracy.