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The Govt must do more

Perhaps there are lessons that India can learn from China?s new ?five balances? approach.

india Updated: Nov 07, 2006 00:52 IST

In a speech on Thursday, the Prime Minister expressed the view that if India begins to grow at 10 per cent in the near future, it can eliminate poverty in 10 to 20 years, ensure education for all, and greatly enhance employment opportunities.

In other words, the elimination of poverty, the bane of India, is within reach today.

Since the reforms process began in 1991, Indian private enterprise has done well in both the manufacturing and services sectors — though the former, with the greatest potential for employment generation, picked up steam  later.

Even now, there is great scope for growth in construction, food processing, IT and tourism.

The increasing inter-state competition can enable reform to reach the remotest corners of the country to ensure that inequities are removed, with civil society groups playing the role of a safety net of sorts.

However, none of this will yield fruit unless the government plays its part right. For this, clarity of vision on what the reforms are meant to achieve is imperative — do we just want growth, or do we want growth and employment?

Double-digit growth figures mean nothing if the benefits remain limited to the already affluent — this is economically unsustainable, socio-politically dangerous, and morally unacceptable.

For inclusive growth and development, the government needs to do a lot more — and not less, as neoliberal economics would have us believe. As Jagdish Bhagwati, eminent proponent of free trade and liberal reform, puts it, India cannot rely on hopes of a ‘trickle-down’, it needs a “radical and activist pull-up strategy”.

The areas that most need attention are obvious — employment generation, agricultural, PSU  and taxation reform, competition policy, labour market flexibility, and so on.

So far, change has often been incremental, whereby the government has only done more of the same thing — for instance, continuing to provide wasteful subsidies, like those that actually accrue to rich farmers and hopelessly inefficient PSUs.

Perhaps there are lessons that India can learn from China’s new ‘five balances’ approach. China’s Communist Party, having achieved growth rates of 10 per cent over several years, has consciously sought to balance its priorities and correct inequities by privileging domestic matters over external, interior regions over coastal, rural areas over urban, society over economy, and nature over man.

The dragon has realised that growth, to be sustainable, must be widespread. In India, much ink has been split to discuss — and mostly denounce — the Congress’ re-adoption of its ‘garibi hatao’ slogan.

Thirty years after the slogan was first used, its re-adoption contains an implicit admission of failure.

However, the UPA now has the chance to learn from past mistakes. With the economy in superb shape, and a leadership that is both capable and committed, the auguries for success are good.