A Script For The Future

A Script For The Future

Prime Minister Narendra Modi outlined a vision of  massive rejuvenation and private sector participation in the Indian Railways at his 4^th of July speech at Katra Station. Other reports are making it clear that 100% FDI will be allowed in many areas.

These include freight movement, Japan/China style high-speed trains, coach, track, and signaling equipment manufacture, station revamping,  and  public-private collaboration in operations, of passenger services, both urban and long-haul. Alternate sources of energy such as solar power will also feature prominently.

Modi said that infrastructure development always brings prosperity and entrepreneurship in its wake, particularly when a railway line reaches out further. What a departure this is from the profligate populism and clerical tinkering that has been the approach in the past.  

It is certainly a ‘script for the future’, a phrase used by veteran journalist Prabhu Chawla in another context, to herald the beginning of the turbulent coalition era. Those were long, unfulfilled years, that many thought were here to stay, until they ended abruptly with Modi’s spectacular electoral win. This script for the future is now being written by a strong Government, out to transform the country in short order.

Though it is early days, the Government has made an energetic start. Every initiative is harmonised to boost essentials like the economy, health, education, jobs, national security, reform in the APMC and food distribution, a fresh result-oriented approach to foreign affairs, initiatives on national security, bringing crooks to book and showing others the door etc.. Even our workers in the conflict zones of Iraq are being quietly and rapidly repatriated, using very effective diplomacy without sensationalism.

Alongside, there are unprecedented and determined steps to combat hoarding and food inflation in a down-to-earth fashion. It is hoarding and profiteering rather than food shortages that have been cited for the rise in essential food prices, including those of vegetables, onions, potatoes, grain and cereal. So this Government is opening up the granaries and catching the wrong doers.

Governance is being emphasised, most refreshingly, over politics as usual, much to the frustration of the Opposition.We can expect many improvements to set the country firmly back on the growth path.

The stock markets, convinced this dispensation means business, are poised to power on towards 30,000 on the Sensex from 26,000 levels it has already scaled. The development agenda is convincing to the FII community, and they have poured in over $ 20 billion in recent months.

The Modi Government’s approach is completely different. It wants not just to revive the Indian Railways, a major national asset, from the brink of ruin, but to use it to leverage growth, national security, connectivity, investment, jobs and modernisation.

It is acutely aware than only 5 million new manufacturing jobs have been created between 2004 and 2012, when the need is for 100 million jobs,  at the rate of 12 million every single year.  Modern, expanded and efficient Rail connectivity, from the million people employed by the Railways, amongst a host of other initiatives, will do its bit to attract new industry. But labour-intensive manufacturing, the main job generator, is in bad shape today, and accounts for just 15 to 17% of GDP, with most of its output consumed domestically. This needs to grow exponentially and fast.

By way of contrast, it should be noted that China, much admired by  this Prime Minister, delivers 45% of its $ 6 trillion plus GDP, from manufacturing alone. And it earns trillions of export dollars in surplus as manufacturers to the world.

For India to attract the billions and trillions in FDI, for the domestic market and export, that is essential to implementing the Modi Government’s development agenda, it must be seen to be coping with its fiscal deficit, and demonstrate the formulation and rapid implementation of a high-growth policy. This will mean, at the same time, a doing away with the bulk of our subsidies and the unfocussed welfarism, and the road- map has to become visible in the imminent budgets.

The FDI is fortunately, eager to come. It will boost and energise all the capital intensive sectors starved for funds. These include core infrastructure, obsolete and inadequate, defence manufacturing, oil and gas finds, the railways, heavy engineering, re-engineering etc.  

But this can happen only if the laws, regulations and processes are completely overhauled and made investor-friendly. Prime Minister Narendra Modi is aware of all this, having implemented many reforms in Gujarat to attract FDI, and will be seen, in the coming days, to be doing likewise for the nation as a whole.

Indian public opinion must accept that it needs to compete for investment with other emerging and developing economies. 

The old ways of attempting to control and dictate to foreign investors will have to be thrown out. We will have to be transparent and stable in our policies and vastly improve the functioning of our legal system.        

The all-round revival of the Indian Railways on the cards should be seen as a harbinger of the general and comprehensive approach of this Government. Relatively untapped potential and green-field initiatives, via the development of the Himalayan Region for example, slated to get itself a separate ministry soon, will extend the Indian Railways to the borders of Arunachal Pradesh.

This will consolidate the security of the whole region, supported by the raising of new, well-equipped mountain battalions of the Indian Army. These will be raised from local populations, born-and-bred to altitudes and familiar with the terrain. And the railway will bring new business and industry down the line. Narendra Modi, it is clear, is keen to emulate China in more ways than one.

 (935 words)

July 5^th, 2014

Gautam Mukherjee