Inflation Can Only Be Tamed With Growth And
Modernisation
It is heartening to see the Modi Government
off to a spectacular start, quickly adopting a multi-pronged approach to growth
and development, rather than the earlier administration’s obsession with
inflation alone. It is worth noting,
among all the attention paid to big business, industry, security, defence,
education, health, reformation of the judiciary, alternative energy, joining of
rivers, roads, bullet trains, freight corridors, highways, public-private participation etc. that the new Government is laying a great deal of emphasis on measures to
benefit the rural poor.
And this is to be done, not by way of
subsidies and sops, but by engendering and sponsoring growth, modernisation,
opportunity, broad-band and physical connectivity, plus a comprehensive
upgrading of infrastructure.
It can safely be said that no President of
India before Pranab Mukherjee has had the privilege to make quite such a bold
statement of intent to the joint houses of parliament in the 67 years of our
sojourn as an independent nation.
Inflation, both general and in food prices,
in the previous regime, had a good deal to do with its huge and mismanaged fiscal and current account
deficits, the sharp rise in the cost of imported petroleum products, combined
with a total neglect of all the growth drivers. That is why, because of the mix
of domestic and international factors that were outside the abilities of the
UPA Government to counter, that inflation stayed up, despite very tight
monetary measures taken. Strangling an economy growing at nearly 9 per cent in
GDP when UPA inherited it from the earlier NDA Government, was a colossal
blunder in strategic terms.
Because, without promoting growth, the
economy soon grows sick, and can even die. See what happened to the once
thriving city of Detroit, once the hub and centre of the American automobile
industry. As a country, one of the potentially strongest in the world, India
too has been driven into stagflation and decline. There is no time to lose in
reversing the economic drift spiraling ever downwards, and Prime Minister
Narendra Modi knows it.
The Modi Government’s emphasis on rapidly
modernising rural infrastructure, extensive irrigation and water management, the
expansion of the energy sector, inclusive of hydro, thermal, solar, wind and
nuclear power, combined with targeted information technology, is going to
transform the agriculture sector and lead to great efficiencies. The reorganisation
of the farm support systems, credits, storage, materials handling,
transportation, food processing, cold-chain development etc. will improve
yields and eliminate criminal wastage in a nation where the poor still go
hungry.
All this together, along with modern
retailing, will bring down food prices for good. It is the strength of
comprehensive action, working on all the lacunae at the same time, that can and
will work.
This approach has never been tried before,
with piece-meal initiatives taken at best, and that is why the Indian
agriculture sector has not benefited ever since the Green Revolution increased
outputs dramatically, and made us food self-sufficient. There was a spate of
mechanisation after that in some states to be sure, the introduction of
tractors and combine harvesters and the like, and then we ran out of steam and
ideas.
That is, till now. The President’s address
outlined a ten year plan to modernise the country on all fronts with the agricultural
sector playing an important part. The neglect of this vitally important
contributor to the nation, in a predominantly agricultural country physically, has
declined in the reckoning when it comes to contributions to the GDP, or the
prosperity of the people whose effort feeds us all. Today the share of
agriculture, including forestry and fisheries, on which at least 600 million
Indians, some 51 per cent of the population, depend for their livelihood, has
declined to only 17 per cent of GDP.
Modi has declared his Government will bring
urban facilities to rural areas, even as the other 50 odd per cent of Indians
are now city dwellers. His Government plans to build 100 new ‘smart’ cities to
take care of the great rural-urban divide. Waste land will be identified,
mapped and tapped for the purpose.
The other major difference in tone and
tenor, on all initiatives coming thick and fast from this brand new Government,
is epitomised by the motto ‘skill, scale and speed’, devised by NaMo himself. India
has never dared to think big in the past, nor thought of competing with China
in any manner, but this is set to change. Speed too has never been the
strongest suit of the Government of India, and it has long been known that our
national skills need updation and upgradation too. The NDA plan to introduce
IIMs and IITs and AIIMSs in every state is not only audacious,but long overdue.
There is little doubt that the Modi
Government, dynamic, willing to innovate and do things differently, will succeed
in all its endeavours. Early days though these
are, people both in India and abroad are clear that optimism is once
again in the air, and India has been woken up from its dormancy and dissatisfaction.
(839
words)
May
10th, 2014
Gautam Mukherjee
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