There are increasing talks that we
are going into recession and bear stock market phase. I strongly disagree with
this. The slowdown that we are facing now is not a structured lowdown or recession
like the one that started in western world in 2008, where demand declined
because everybody was having full stomach...But we...we just can’t demand even
after having empty stomach. Our problem is only of policy framework.
This empty stomach is itself an
opportunity to reap the benefits of demographic and geographical dividend which
our country has. We are having the highest young population in the world (after
10-15 years china will also grow old due to one child policy), we are
the best English spoken people among our Asian peers, our young ones are coming
out of the clout of low confidence and low self image to demand equality and
dignity and to stand up against anything they find wrong and unethical.
We are having most fertile lands,
almost all the climates sufficient to crop huge varieties of crops, rivers,
huge untapped mineral resources, 7000Km long coastal line (we are best placed
to import/export from varieties of choices).
We are having empty stomach only due
to policy flaws which are normal for a huge democratic country like ours where
language/culture/life style changes after every 100 km. Also no growth happens vertically
in absolute, there are occasional ups and downs. These occur to absorb the
shocks of any misallocation of productive resources, to absorb any excess
supply (mainly due to over production during initial growth phase).
So what we need is to align our
policy framework with our objective of inclusive growth. Like for example, our problematic
import of oil/gas. First if we want something than we must have the capacity to
give something in return and if we are not having something at that point of
time, then we have to borrow but we have to make sure to create the environment
to return the same along with some markup or interest. To import such huge
quantities of oil we must focus on agro export, which is our strength...but
look at our situation. Avg land holding in india is around 2-3 acres, in USA it
is 400 acres. We have made some idiotic laws of maximum land holdings of around
50 acres which completely defies the benefits of economies of scale which USA
enjoys. Our farmers are uneducated with old agro techniques which passed unto
them from their fathers.
We terribly lack the policy for the
benefits of all. Our much hyped food security bill will only increase
inflation. At present due to Minimum Support prices announced by Govt to meet
their targets of food security, everybody in Punjab/Haryana is harvesting
Wheat/Rice madly. The result, huge reserves of wheat/Rice with govt to rotten and
no land for sowing pulses/vegetables/oilseeds and these are the main culprits
of high inflation for last 4 years. Also the benefit given to poor in the form
of cheap (but low quality) wheat/rice is wiped out by high inflation in other
food articles like pulses/vegetables/oilseeds.
More due to lack of infrastructure
development for agriculture like roads connecting villages, high quality warehouses,
cold chain systems we are wasting almost 40% of our Vegetables/Fruits and
10-15% of grains, which equals to total consumption of the same by UK. We can
reduce food inflation by huge margin only by saving these wastages let alone
the growth in productivity. Hence the need is to provide support to cold chain/warehouses/Road
rather than announcing non sense bounties like free laptops, free
water/electricity, bailing out Indian Airlines (better convert it to local 3
wheelers carrier).
Avg truck speed in india is 30-35
KM/H against Global avg of 70-80 KM/H. In china, length of national highways is
20 lakh Kilometre against our 70000 Km. Our Freight trains charges highest
freight charges in the world but lowest passenger fare in the world.
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