It is that India which is ranked 128th in UNDP Human Development Index and it is that India where suicides are a norm than exception where one won’t find policemen on duty to prevent suicides. It is that India which is still devoid of many the basic necessities and yet it is each of those places where there is an economic boom waiting to be unleashed. The problem with most of rural India is that very lack of economic catalyst which can kick start commercial activities. It is imperative that probably no economy in the long run can sustain or continue with its growth story if more than half of its people continue to be unhealthy and uneducated because at the end of the day, what the market economy essentially requires is quality manpower who would also supplement as quality consumer. And it is for this reason that it becomes imperative to spend properly on not just health and education but also quality infrastructure. Once that is done, the invisible hand of the market economy would do the rest in terms of igniting an economic bustle. And once that is done, then India’s captive economy would be so big in terms of catering to its own requirement that it would not bother if the rest of the world is going into recession or not.
To understand this point better let’s take the example of Delhi NCR. When Delhi started getting saturated, the adjacent areas of Faridabad, Gurgaon, Ghaziabad and Noida became the focus. Each of these places was at one point of time barren and arid land with no roads or other amenities worth talking about. What started with a standalone Maruti Plant in Gurgaon followed by the GE Call Center has today unleashed the potential of Gurgaon as an economic hub. DLF also contributed much to this. The same was the case with Noida, Ghaziabad and Faridabad. And each of these cities has continued their stretch the way Delhi did long time ago. Coupled with an extended Metro, new upcoming airports and expressways, the National Capital Region itself is becoming a captive economy. If only this could have been emulated for the whole of India through connecting each of the village with the respective district city by quality roads and making sure that each of them have access to quality education and sanitation.
The rest would be history then. If India’s per capita consumption can be taken to that of even half of what an American consumes in a year or if rural India starts consuming the way urban India does then India’s intrinsic economic potential would become too big to be withered by a recession here and there. And for that to be a reality, reform of agriculture is a must. Quite often one tends to forget that India’s growth story is only about 40% of its population because the rest 60% is still dependent on agriculture which is limping on a pittance of less than 1.5% growth. Therefore, without liberalizing agriculture and organizing it (like the Chinese did decades ago), captive economy and immunity from external recession will remain an illusion.
One has to remember that during the era of closed economy too, most of the PSUs in India too used to trade with each other. In that respect there might be some similiarity with the Tatas but in case of the PSUs, each unviable company used to trade with another unviable one and more often than not never paid for it. Most of the time transactions were through transfer pricing. If that happens then a captive economy would never become an immune system from external recession and that’s why most PSUs became sick for lack of payments in time. For India, the best way now is to make a US of itself. If it happens the captive market would be bigger than the global one. Then perhaps, instead of us, Americans would worry as to what would happen to them if India goes into recession. Truly a strong captive economy fuelled by an onslaught of aspiring entrepereurship not restricted to big b-schools or urban centres can only take India to the echelon of a $38 trillion economy by 2050 as stated by The Goldman Sachs. Remember no American FDI or American market can take India there, only a strong captive economy created by Indians in India for India can.
To understand this point better let’s take the example of Delhi NCR. When Delhi started getting saturated, the adjacent areas of Faridabad, Gurgaon, Ghaziabad and Noida became the focus. Each of these places was at one point of time barren and arid land with no roads or other amenities worth talking about. What started with a standalone Maruti Plant in Gurgaon followed by the GE Call Center has today unleashed the potential of Gurgaon as an economic hub. DLF also contributed much to this. The same was the case with Noida, Ghaziabad and Faridabad. And each of these cities has continued their stretch the way Delhi did long time ago. Coupled with an extended Metro, new upcoming airports and expressways, the National Capital Region itself is becoming a captive economy. If only this could have been emulated for the whole of India through connecting each of the village with the respective district city by quality roads and making sure that each of them have access to quality education and sanitation.
The rest would be history then. If India’s per capita consumption can be taken to that of even half of what an American consumes in a year or if rural India starts consuming the way urban India does then India’s intrinsic economic potential would become too big to be withered by a recession here and there. And for that to be a reality, reform of agriculture is a must. Quite often one tends to forget that India’s growth story is only about 40% of its population because the rest 60% is still dependent on agriculture which is limping on a pittance of less than 1.5% growth. Therefore, without liberalizing agriculture and organizing it (like the Chinese did decades ago), captive economy and immunity from external recession will remain an illusion.
One has to remember that during the era of closed economy too, most of the PSUs in India too used to trade with each other. In that respect there might be some similiarity with the Tatas but in case of the PSUs, each unviable company used to trade with another unviable one and more often than not never paid for it. Most of the time transactions were through transfer pricing. If that happens then a captive economy would never become an immune system from external recession and that’s why most PSUs became sick for lack of payments in time. For India, the best way now is to make a US of itself. If it happens the captive market would be bigger than the global one. Then perhaps, instead of us, Americans would worry as to what would happen to them if India goes into recession. Truly a strong captive economy fuelled by an onslaught of aspiring entrepereurship not restricted to big b-schools or urban centres can only take India to the echelon of a $38 trillion economy by 2050 as stated by The Goldman Sachs. Remember no American FDI or American market can take India there, only a strong captive economy created by Indians in India for India can.
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