Our Republic's General Budget for 2009-10 is now in the public realm. Debate around it has been far from secular, pitting commentators along predictable political lines. That said, while repetitive, this periodic posturing is not sans moments of insight. As sample, tune in to the laborious constructs of presumably neutral mainstream media (certainly chunks of its English-speaking contingent) to discern an overly friendly disposition to the Congress-led coalition (Padma awards do drive some value after all)!
Talking Budget, calls for a New Dawn were almost universal in the backdrop of an unexpectedly euphoric win and Opposition in utter disarray. Early noises via 100-day vision documents from sundry ministers were fairly path-breaking too. Measured against such epochal demands, Pranab Mukherjee's eventual business-as-usual pronouncements seem destined for footnotes, not glorious acclaim. The flip argument could be that nation-building is less about spectacular agenda than solid action, hence closer the FM's low-risk 2009 design. Let time tell if this workmanlike Budget was a winner.
Need of the hour, therefore, is to fix touchstones for our economic policy, leading me to my biggest peeve: the Aam Aadmi vs Big Business nonsense that circulates as truism (my last post). In the prevalent operating context, two axioms come to mind as pivots for Reform. First, increased goal-focus which implies turning the spotlight away from tasks to outcomes. For instance, Telecom is a poster child of how policy interventions can positively impact the economy at large (despite absence of China-like monolithic continuity in decision-making, a few highly visible recent coalition politics compromises, and some of independent India's biggest corruption scandals). Let me illustrate the multiple levels this can be seen in action, by a sample:
This brings us to the second (trickier) postulate: growth is incomplete without redistribution. We are no strangers to sectoral imbalances or geographic inequity, but limited percolation of the spoils of Reform could bring the entire edifice down. This is not to disregard the need for a laggard manufacturing sector to pick up pace, agriculture to step beyond Monsoon's shadow, Hindi heartland to achieve Gujarat velocity growth, or better infrastructure in general. However, these pale into insignificance compared to the damage potential of broader discontent. Doubting Thomases here could start by noting that a third of rural India (by GoI's own admission) already lies in the Red Corridor, under Naxalite writ.
General disaffection of a chunk of its population from the Reform process, thus, is one of New India's stark realities. A simplistic hypothesis for this deepening unrest is built around heightened awareness (a la Maslow's Hierarchy of Needs). For instance, growing up in mofussil India of the 70s, one encountered few visible objects of wealth to pursue. Model refreshes of the ubiquitous Amby, case in point, were too disingenuous for laymen to discern and covet: it remained an immanent part of the milieu. Thanks to a misplaced Socialist slant in policy, choice was limited: products were inelegantly sarkari or retrogressively shoddy, often both. Not so today when the flashiest in the world is out competing for your wallet, lifestyles that TV broadcasts direct to your home.
This has clear implications for Reform. As the desire for the good life (alluring decadence even) is stoked to an all-time high, then means must be abundant for the game to be above board. For a nation with a relatively weak tradition in entrepreneurial wealth creation, it is not easy to ensure opportunities are adequate, despite intent. This is the principal argument for Redistribution as stated goal.
By definition, both axioms above are long term. However, Capital is a bugbear (typical of Emerging Markets) immediately. Our policy mandarins, busy congratulating themselves for managing the global meltdown's impact (an unintended by-product of delayed liberalization) need to be cognizant of this. With 9% gone, at least in foreseeable future, and Divestment war-chest stuck in a morass of political confusion, funding equitable growth remains an open question (an anchor scheme like NREGA by itself will need INR 100K Cr to sustain). Far more than improved experiences with Market vs the State, it is this prospect of mounting government debt that may yet force Mr Mukherjee to push for a more effulgent dawn.
Talking Budget, calls for a New Dawn were almost universal in the backdrop of an unexpectedly euphoric win and Opposition in utter disarray. Early noises via 100-day vision documents from sundry ministers were fairly path-breaking too. Measured against such epochal demands, Pranab Mukherjee's eventual business-as-usual pronouncements seem destined for footnotes, not glorious acclaim. The flip argument could be that nation-building is less about spectacular agenda than solid action, hence closer the FM's low-risk 2009 design. Let time tell if this workmanlike Budget was a winner.
Need of the hour, therefore, is to fix touchstones for our economic policy, leading me to my biggest peeve: the Aam Aadmi vs Big Business nonsense that circulates as truism (my last post). In the prevalent operating context, two axioms come to mind as pivots for Reform. First, increased goal-focus which implies turning the spotlight away from tasks to outcomes. For instance, Telecom is a poster child of how policy interventions can positively impact the economy at large (despite absence of China-like monolithic continuity in decision-making, a few highly visible recent coalition politics compromises, and some of independent India's biggest corruption scandals). Let me illustrate the multiple levels this can be seen in action, by a sample:
- Implicit in mobilephone's transition from an aspirational lifestyle product to a ubiquitous one, is a story of enabled livelihoods. Today your plumber is a call away, cutting out sundry middlemen/ contractors, with obvious impact on the value chain
- Connectivity bridged distances that investments in conventional infrastructure (alternative) would place prohibitively out of bounds. That distant aunt is a single-attempt call versus literally shouting over 1000 km Delhi-Patna 'trunk call' or, worse, forced physical travel
- What information availability (push or pull) has achieved is too complex to fully fathom. Central India's soyabean cultivator has the market on his fingertips now, with consequences on input/ output prices, in a fashion unimaginable in the Humble Farmer's reign
- Supply is perhaps the highest on impact (after all, benefits remain theoretical minus access). From chasing the friendly neighborhood DoT-man for an elusive connection, or rectify perennially 'dead' telephones; to being wooed by tariff wars, freebies and retention packages - we have come a long way
This brings us to the second (trickier) postulate: growth is incomplete without redistribution. We are no strangers to sectoral imbalances or geographic inequity, but limited percolation of the spoils of Reform could bring the entire edifice down. This is not to disregard the need for a laggard manufacturing sector to pick up pace, agriculture to step beyond Monsoon's shadow, Hindi heartland to achieve Gujarat velocity growth, or better infrastructure in general. However, these pale into insignificance compared to the damage potential of broader discontent. Doubting Thomases here could start by noting that a third of rural India (by GoI's own admission) already lies in the Red Corridor, under Naxalite writ.
General disaffection of a chunk of its population from the Reform process, thus, is one of New India's stark realities. A simplistic hypothesis for this deepening unrest is built around heightened awareness (a la Maslow's Hierarchy of Needs). For instance, growing up in mofussil India of the 70s, one encountered few visible objects of wealth to pursue. Model refreshes of the ubiquitous Amby, case in point, were too disingenuous for laymen to discern and covet: it remained an immanent part of the milieu. Thanks to a misplaced Socialist slant in policy, choice was limited: products were inelegantly sarkari or retrogressively shoddy, often both. Not so today when the flashiest in the world is out competing for your wallet, lifestyles that TV broadcasts direct to your home.
This has clear implications for Reform. As the desire for the good life (alluring decadence even) is stoked to an all-time high, then means must be abundant for the game to be above board. For a nation with a relatively weak tradition in entrepreneurial wealth creation, it is not easy to ensure opportunities are adequate, despite intent. This is the principal argument for Redistribution as stated goal.
By definition, both axioms above are long term. However, Capital is a bugbear (typical of Emerging Markets) immediately. Our policy mandarins, busy congratulating themselves for managing the global meltdown's impact (an unintended by-product of delayed liberalization) need to be cognizant of this. With 9% gone, at least in foreseeable future, and Divestment war-chest stuck in a morass of political confusion, funding equitable growth remains an open question (an anchor scheme like NREGA by itself will need INR 100K Cr to sustain). Far more than improved experiences with Market vs the State, it is this prospect of mounting government debt that may yet force Mr Mukherjee to push for a more effulgent dawn.
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