How To Rewrite The India Growth Story

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Tarun Das
Former Chief Executive, CII
Sunil Munjal
Joint MD, Hero Motocorp
Jayati Ghosh
Economist
Subodh Bhargava
Chairman, Tata Communications
Harsh Mander
Social Activist

In the run-up to the annual Budget, the media has been awash with worried talking heads. Alarm dominates every conversation.

Undoubtedly, the economy is in a mess. Undoubtedly, it needs resuscitation. And ironically, the contours of both this particular mess and even the restoration are well known.

The anxiety is about the falling GDP, slowdown in industrial development, halt in investments, drop in individual spending, drop in revenue generation and fiscal pressures.

The correctives desired are more reliable laws, clearer decision-making, jumpstarting access to land and cheap resources again, renewed investor confidence, more efficient government spending, rationalisation of taxes, lower interest rates, long-awaited introduction of Goods and Services Tax, market-linked fuel pricing and perhaps more FDI.

But what if the current downturn is not just an occasion for gloom, but a big opportunity?

Since 1991, the economic conversation in India has run on just one shortsighted track. There has been a loud, selfenclosing idea that only mega private-sector growth could pull India out of the stagnant mess it was in. Perhaps, there was truth in that claim then. Certainly, India does need robust investments, new industries and manufacturing units.

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But this should be only one — and a small part — of a larger, much more complex approach to India’s economy. Yet, selfdefeatingly, for almost 25 years, no other strand has been allowed even a toehold entry into mainline conversations on the economy. The fact that almost 94 percent of India lives, operates and sustains itself outside the purview of the GDP. The fact that many years of blistering 9 percent growth has led to very minimal employment generation (a recent Planning Commission report, in fact, said it had led to completely jobless growth). That fact that while our macroeconomic policies are wholly focussed on driving people off the land and out of traditional livelihoods, it is impossible for our cities and industrial jobs to absorb all these millions and millions of people. The fact that if indeed all these millions of self-employed, selfsustained people were to stop doing what they do, India would be faced with such a mega crisis, no resuscitation would work. The entire story about India’s potential as an economic superpower was based on its demographic dividend, but we have been paying absolutely no attention to that demography. The fact that 9 percent growth — in the way India had constructed it — was bound to hit its head against the walls of economic conservation, sustainability and people’s rage.

IN 1991, India needed a courageous, radical rethinking of its economy. It is certainly time for that again. Economist and Nobel laureate Amartya Sen has said it’s important for emerging markets like India to “decide where to emerge”.

He couldn’t have put it more succinctly. Economic growth in a country as vast and complex as India is not, and cannot be, just about industrial growth. There are dozens of other kinds of economic activity waiting simultaneously to take wing, which can boost India’s overall prosperity: tourism, crafts, small and medium enterprises, fishing, dairy and agriculture. But for that to happen, India’s elite needs to do two things: unclasp its imagination and acquire a survival instinct. It needs to understand its own prosperity is inextricably linked with that of 94 percent of the country.

To give these ideas a hearing, to see if any of them are finally breaking through into mainstream thinking, for this week’s cover story, TEHELKA invited a fascinating cross-section of stakeholders to sit across a round table and discuss India’s economy.

As CII head for 30 years, and one of Prime Minister Manmohan Singh’s informal advisers, Tarun Das has been an influential proponent of the economic model of the past 25 years. As Joint MD of Hero MotoCorp, Sunil Munjal has rallied on the growth story but admits the industry made mistakes. And as chairman of Tata Communications, and manufacturing institutions, Subodh Bhargava has been a crusader for capitalism but with clarity in laws. In 2002, Harsh Mander left the IAS to work with the unheard 94 percent. And as a reputed left-leaning economist, Jayati Ghosh has also been its dogged spokesperson.

The key question we put to each of them was whether they felt it was time for some fundamental rethinking. Their answers were both startling and heartening. At one point, Munjal said, “You have invited the wrong people for this discussion because we all think so alike.”

That itself was a great sign of hope. There is much that we could not cover in this. But it was never meant to be the entire conversation: only a new conversation starter.

EDITED EXCERPTS FROM THE DISCUSSION 

Why is there such pessimism about the economy and its downturn?
Tarun Das There are many reasons actually, but if I have to sum it up, we became too complacent as a country. After the 2009 election, we thought 9 percent growth was our birthright, forgetting that we had lived in a 3 percent era for more than 40 years. The world was in a crisis, but we assumed we would remain untouched. We took our eyes off the ball.

Secondly, the public sector is a huge part of our economy, but we have almost deliberately brought it down. One of the key solutions to jumpstart the economy should be to reactivate this sector, including NHAI, DMIC, railways and water, and create a new momentum on construction, and therefore, employment.

Money matters Maruti Suzuki workers at the Manesar plant strike for better wages Photo: Garima Jain
‘Let industry first pay appropriate wages, respect forest laws… let us talk about market-led economic growth after that’ – Harsh Mander

Sunil Munjal I agree with Tarun about the complacency. We handled the 2008 crisis so well that we assumed everything was hunky dory. The assumption was that our demographics and the momentum we had built up would take care of everything. But policymaking from 2008 to 2012 has left a lot to be desired.

We have made two big mistakes. We forgot the economy needs constant movement. It needs attention for at least the next 30-40 years. We have a unique problem of 250 million people who don’t get two square meals a day. The only answer to that is growth. We need to create jobs. The regulations we have — be it the Industrial Disputes Act, our labour policies, the Contract Act, the Land Acquisition Act — they all discourage large industries from coming up in India, which, in turn, discourages large-scale employment.

Isn’t this a bit of a smokescreen? One always hears the argument about industry creating employment. If that’s the case, why have all the boom years led to jobless growth?
Munjal You are right, 94 percent of India is self-employed. Of the remaining 6 percent, it is the less than 1 percent unionised labour that has driven our policy for many years. This policy is scaring people away from hiring. When people set up a business, they want more automation so they can get the least number of people to do the same job.

In fact, isn’t it the intrinsic logic of big industry to have heavy mechanisation rather than be labour-intensive? So, how can it generate millions of jobs?
Munjal We need high efficiency to compete globally. That’s the only way to ensure we generate jobs, which creates savings and therefore consumption. It is a virtuous cycle we are aiming for. It’s a mistake to assume big industries create jobs anywhere in the world. It’s the mid-size, small and ancillary industries working in tandem with big industry that create jobs.

But there’s another interesting phenomenon that gets overlooked. Many industries that resisted the government’s social programmes in the early days have now realised that these can help in building up a market. Some of these programmes have been very sensible. The NREGA, for example, has allowed millions of people to have a job and earn money. It is true, dole is not a good idea in the long term, and farms and factories in states like Haryana, Punjab, Bihar and Uttar Pradesh, where labour used to come from, are not able to get labour now. This means the cost of doing business in India has moved up.

Historically, labour wages have always been so exploitative, how can one complain about labour getting a baseline minimum wage now? Why not rethink one’s business plans and balance sheets in a way that factors in those fairer wages.
Munjal There’s absolutely no doubt about that. There is definitely a good aspect to it. People are able to live at home with their families now and that is a wonderful thing. But the downside is, by giving people dole you are telling them they don’t need to acquire skills. We haven’t used NREGA for providing skills to people and it hasn’t even created the kind of rural infrastructure it should have. That’s a shame.

We will come back to this issue of social spends and whether it constitutes ‘dole’, but first Jayati, what is your reading of the economic downturn and what have been some of the key mistakes made by this government in its approach to economic growth? Should it be trying to jumpstart the same model or rethink some fundamentals?

Jayati Ghosh I don’t think it was a strategy that could have carried on indefinitely. It was bound to run its course. And it’s getting there. The first mistake was to be focussed solely on GDP growth — irrespective of its quality in terms of its composition, distribution across the population, its impact on environment and its sustainability.

The second mistake was to assume that growth can only come from the private corporate sector, which therefore had to be incentivised at all cost: through fiscal sops, tax holidays, taxes foregone in every Budget, and cheap land, water, labour and spectrum. Today we call it crony capitalism, but actually it was an essential part of the macroeconomic strategy. This strategy required accepting inequalities. We never saw wages and employment as anything other than a cost. We didn’t see it as a market.

Third, we have ignored the needs of millions of small producers, not just farmers but also outside agriculture, who form the bulk of employment and production. We have simply focussed on the big guys. This has led to slow or falling productivity, lack of viability and fragile employment conditions for them. We forgot that the fastest way to raise the average productivity is to raise productivity at the bottom.

And then, even as we heavily incentivised the private sector, we said there’s no money for delivering the socio-economic rights of the citizens — housing, education, roads in villages, health and electricity. We forgot to plan not just for the economy, but for the people. This was bound to come up against constraints and it has: balance of payment problems, ecological problems, social and political instability related to the increasing inequalities of wealth and income.

Subodh Bhargava I’d like to come in at this point. The foremost issue we are faced with today is that of disappointment. To have an entire business and entrepreneurial community feeling sub-par is not great for a nation. I agree with Tarun that there’s been a certain degree of complacency. But from an entrepreneurial point of view, as a private sector player who contributes to wealth creation, Munjal talked of the scare on account of labour laws. He is bang on. The entrepreneur has been forced into hiding; they are hibernating now. The complexity of laws, the complete absence of any rule of law, zero implementation levels — this is what is causing all the trouble.

‘We have ignored the needs of millions of small producers, not just farmers, who form the bulk of India’s workforce’ – Jayati Ghosh, Photo: Getty Images

It’s true industries today have started thinking of a greater degree of automation — even at the cost of penalty — because when there are labour issues, the interventions are so hostile and one-sided, it has caused a huge scare. Look at how those managers were murdered. Overall, confidence is shaken because of the uncertainty of the law. There is just no clarity. Will the government only indulge in populist measures, or will it do something sensible in the arena of wealth creation?

What exactly do you mean by populist measures? Are you opposed to social spending? Isn’t it odd that we keep talking about the demographic dividend, but we don’t want to invest in food security, education, health, basic minimum wages? As Munjal and Jayati just said, almost 94 percent of India lives outside the formal economy. Doesn’t their economic activity count for anything? Don’t they add to the sustainability of the country?
Bhargava I’m 100 percent in favour of NREGA and other welfare schemes if implemented efficiently and effectively. In fact, all of us in industry, I’m talking about larger industries, welcomed it when it was announced. It meant a more robust rural economy, it meant a market for us. But the implementation has been abysmal.

But today, industry itself is also very worried about harassment. There is no rule of law. Income tax people walk into any office, asking questions, collecting papers. People who are corrupt — nothing happens to them. But honest people can’t move ahead because there are such procedural bottlenecks and hurdles. We need simplicity and clarity of laws. Without that, nothing is going to happen.

Another side of the argument can be that the laws are complex because they involve the environment, people and the impact on society. Would you agree there is a lack of consensus building between industry, government and impacted communities?
Bhargava Take a simple example of environment clearances. Land acquisition, mining projects — everything is at a standstill because our policymakers cannot decide which way to move. The point one is making is: give us the law you want. If you want 80 or 90 percent consent from landowners — go ahead, make that the law. But after that, let industry manage its own affairs calculated on the longevity and clarity of that law. Right now, we seem to have no clear objectives on either environment issues or land. Decisions keep getting chopped and changed and reversed. We need to ensure these problems are well articulated before the investments are done.

Munjal I would also like to add another aspect to this discussion — in an attempt to resuscitate the economy, we need to control the size of the government itself. Costs of government needs, the massive scale, all need to go down and get streamlined with renewed focus on essentials to drive economic growth.

Perhaps, there is a lack of clarity because many of these policies and laws are flawed and unjust in their very conception. Take the SEZ Act or the colonial Land Acquisition Act, both were bad-faith Acts on many counts. Corporates and the government start thinking about these issues only when there is resistance and pushback from the ground and then complain that it’s impacting investor sentiment.
Bhargava Resistance from people on the ground? Why pay heed to that? If the government has the responsibility, accountability, authority, it can get its policies vetted by the courts. After that, just go ahead.

How can you say that? The old Land Acquisition Act was a patently colonial and unfair Act. We did not see any captains of industry stand up and say this is an unjust way of acquiring land. In fact, they have been resisting every social justice clause even in the new Bill.
Bhargava I’m sorry. Don’t say that. CII President B Muthuraman, and the entire CII, has been actively engaged and acknowledging that we need appropriate land acquisition methodology and policy, including share to the landowner in future prosperity. Industries are not objecting to it. We just want clarity.

We absolutely agree on the importance of clarity and implementation. But you mentioned labour reform, the murder of managers. Would you concede that industry itself has not displayed any high ground in its approach to labour? Look at the working conditions of labour everywhere — in construction, the big boom industry — does it look like they are being included in the benefits of GDP growth? Why does industry display no enlightenment in these matters?
Bhargava I have come to a conclusion: industry will always have vested interests. I would say: don’t listen to industry. You are the policymakers; you have been elected to the government. Think objectively for the country, for the people, for the poor and give me a policy. Don’t listen to me or pressure groups. In fact, honest entrepreneurs are submerged under pressure groups. You just give me a well-thoughtout policy and stay with it for 10 years and see if the private sector can deliver or not. As for the rest, as far as short-term solutions go, hang those who are corrupt. Others will get the space to come and operate.

Harsh Mander I don’t agree with a lot of this. I feel we need to go back to basics and articulate the real nature of the problem. It’s true, growth rates have fallen; it’s true, there’s paralysis and a problem with governance. But those are givens. The time has come to question the very idea that growth is an end in itself, no matter what the cost. The euphoria when there was 9 percent growth should itself have been problematised. When I was in the Civil Services, the practice may have varied, but there was no doubt in anyone’s head that government existed primarily to uphold the rights and needs of disadvantaged people. Now the idea of a good government is one that enables the fastest growth, regardless of its impacts. That’s a problem.

I went to Raigarh recently, in Chhattisgarh, where I’d been a District Collector 20 years ago. It’s a forested tribal area. What I saw there — from one point of view — could be celebrated. The Jindals have huge power and mining projects there. “Growth” is certainly happening there, but the forests have been devastated and the tribals have lost their land. Is this a sign of the state’s success or failure? I think we need to at least problematise it.

The second issue is all the talk about “demographic dividend”. This is where the real problem with the Indian economy begins. India’s growth story is hinged on the fact that we have a large number of people in the productive age group. But every second child is malnourished. This means half your workforce does not even have bodies and brains that are well-formed enough to fulfill their potential. It mystifies me why economists and planners cannot see that a genuinely implemented Right to Food law, universal healthcare for all, and good quality education would actually be great economics as well because that same workforce would then be healthy, educated, well-nourished, have higher morale and so produce better.

The third big issue is the neglect of agriculture. I have a friend who left a banking job so he and his wife could go back to their village and farm. They say it has become completely unviable to farm today — and they are educated people. They say people have begun to talk about farming in the same way that women talk about being a housewife. They have started to say, “I’m only a farmer.”

And yet, no one is willing to acknowledge this cruel paradox. As P Chidambaram told TEHELKA in an interview a few years ago, his dream is to move 85 percent of India into cities. But he forgets the cities are completely hostile to them.

‘When people set up a business, they want more automation so they can get the least number of people to do the same job’ – Sunil MunjalPhoto: Getty Images

And finally, some of you have raised the issue of labour reforms. What does labour reforms mean? It means the right to hire and fire. I was part of a fact-finding committee on the condition of labourers who built the fancy stadiums for the Commonwealth Games. Their living conditions were abominable. Basically big construction companies sub-contract their work to a labour contractor, who goes to the poorest parts of UP and Bihar, picks up people at dirt-cheap rates and brings them here. In 3-4 months, as they start becoming aware of their rights, they are packed off and a new set is brought in.

So, I’m really sorry, but let industry first pay appropriate wages, pay adequately for the land they are taking away, respect forest laws; and let’s talk about market-led economic growth after that.

Would all of you agree with Jayati and Harsh that there have been fundamental flaws in the basic approach to the economy over the past two decades? After all, almost 96 percent of India falls outside the discussion of the economy defined by the GDP. Yet we seem bent on disabling all other forms of economic activity: fisherfolk, farmers, small and medium entrepreneurs, craftsmen, the whole unorganised world of the self-employed. We seem to believe that our singleminded focus on manufacturing and industry will be able to absorb all these millions of people into productive jobs. Is this feasible? Tarun, you have sat on the high table of this particular journey of growth. On hindsight now, would you have approached some of it differently? More importantly, is it time to approach it differently now, reset some priorities, and make it more multi-pronged?
Das
I totally agree with Harsh. In 1991, we didn’t know all this, we were just too desperate to change, to get out of the bankruptcy and stagnation. 2000 again was a very bad time. Our growth came down to zero. So absolutely, on hindsight, we should have done it differently. On the labour issue, for instance, there are too few corporates who take their responsibilities seriously. The Tatas can be a role model; even Sunil here — his father created an enterprise where even the smallest person is treated like a king. But, for the most part, these are exceptions. So Harsh, I agree about the issue of labour. I wish there was healthy trade unionism. We are missing a strong, forward-looking, constructive trade unionism.

I would like to add one more crucial priority to everything you mentioned. I would add housing. Food, health, education and housing. Every person in this country should have a small house.

Going forward, in fact, there is an urgent need to prioritise decentralised, clean energy growth and development. Local resources, local skills and local investments need to be the focus with automatically less need for land.

Also, this country cannot be foodimport intensive. Land for agriculture is essential and must be safeguarded. Agriculture itself needs to grow at 3 percent, which is very achievable.

In manufacturing, too, the small and medium enterprises sector needs a fresh push and strategy. Small is, and can continue to be, beautiful.

In my earlier incarnation, employed in an industry association, my horizon was only focussed narrowly on industry and the corporate sector. That perspective has changed. Industry is central to growth, but needs to adjust its strategies to mesh with social needs. Affirmative action, skills development, education, healthcare, children’s development and women’s empowerment must also be the industry’s concern.

The priority, today, must be on getting rid of poverty and industry must take the lead. This is not only the government’s responsibility. We need to see a far more enlightened industry. This is what India needs and must get. We also need to genuinely include and integrate the workforce and labour into policy and decision-making. Industry needs to understand and accept their aspirations.

Let’s see how things move from here. Since Chidambaram is back in the chair, I can say the paralysis is not there anymore. And this is a new Chidambaram, accommodating Chidambaram, listening Chidambaram.

Munjal I’d like to make a few points here. What we really need in India is for someone to chalk out a 100-year plan. Forget 100 years, at least a 50- or 20-year plan. A 20-year programme and a five-year operational plan. When I went to Beijing during (Atal Bihari) Vajpayee’s tenure, I met one of the key economists at the Bank of China. They had a 100-year plan for China with lots of different attributes. I met him six years later and asked him about that plan. He showed me that in most sectors, they were ahead of the schedule.

That’s what we need here. A long-term vision; a plan that will outlive us. Instead, we do everything through the frame of immediate crisis management. When you make such small-term plans, by the time you finish, you are already run over by fresh circumstances.

One more crucial priority should be to look at non-farm economic activity. I’m not saying non-agro, but non-farm, using local skills that are already available.

Right now, our situation is bad, but it’s fixable. Partially, as Subodh said, we need simple laws that everyone can understand and very, very strong regulations.

Eviction notice A farmer pays the price for protesting against land acquisition in UP
‘Land acquisition and mining projects are at a standstill because our policymakers cannot decide which way to move’ –  Subodh Bhargava

There is another crucial thing that never gets discussed. We have to distinguish between genuine mistakes and malintent. Just now there’s too much fear of doing anything. In our company, we always encourage people to venture into new directions. Even when they are not successful, we pat them on the back for trying. If you punish people for failing, even when they have tried hard or with good intent, nobody will try the next time.

Other crucial steps just now would be to clear several large projects every 60 days. These big projects create millions of jobs. When they are finished, they facilitate other jobs. Building roads, for example, is crucial. Of course, all of them need a very strong monitoring process.

Others on this table have mentioned housing. The Reserve Bank of India should have facilitated the housing sector. It would be the biggest industry. In the process, everyone would have had a dignified life and home. You know how many industries are connected with this? We have calculated 154, but someone told me the other day that it’s 300.

Finally, we need to announce at least 100 new cities in India. While we improve the rural areas, it’s very important to build the new cities.

Ghosh A lot of this new urbanisation is happening anyway through the conversion of census towns into cities, and villages into towns.

Munjal But Jayati, that’s the problem. It is happening without any plan.

Mander But Sunil, new cities for whom? I think the vision for these new cities must include housing and planning in general for street vendors and the working classes. If you are going to push villagers off their land, at least plan for them in the cities. Actually, even if you neglected them, it would be OK. Instead, you are actively at war with them here. Everything they do is illegal — from sleeping to going to the toilet to conducting any economic activity to accessing electricity and water. And we say we want them here.

Munjal Yes, I agree.

Bhargava That was originally the concept of SEZs, which the CII had articulated. It must be a new city, with social and civic infrastructure.

We have already mentioned some of the drawbacks of the SEZ Act — the fact that it stipulated only 30 percent of land taken over was to be used for manufacturing while the rest was basically for realestate profiteering; there were no clear provisions for compensation or rehabilitation of those whose land was being taken, etc. So, what have been the lessons? Is there any new thinking happening within the industry?
Bhargava Firstly, don’t paint the entire corporate India with one wide brush. Fundamentally, I agree with what Harsh and everyone else has been saying. We need to articulate these social and other base targets over which economic growth has to be built. We talk about inclusive growth, but there’s no clear-cut roadmap, no sequential targets put down anywhere. I also agree that agriculture is the most affected area, and whether it is FDI in retail that solves it or some other approach, I have been saying for 15 years that we need post-harvesting infrastructure for the rural economy to grow.

Just to return for a moment to the idea of social spends. There is always a lot of resistance to these programmes. One always hears a clamour in the media and from industry captains to cut what they call “populist measures”.
Bhargava No. That’s not true. The industry is not against welfare subsidies, let me say that categorically. All we are saying is that it must be dispensed efficiently and effectively.

That’s a big admission.
Das In fact, NREGA has been very good because people are staying at home.

Ghosh And that too with less than 1 percent of GDP. Imagine if you invested more.

‘Small and medium manufacturing sector needs a fresh push and strategy. Small is, and can continue to be, beautiful’ – Tarun Das, Photo: Getty Images

Mander Before we move on from this, I would like to not lose sight of one strand in the earlier discussion, which is that even if we believe in private sector-led growth, let us remember that the private sector is also the street vendors. Every time the issue of multi-brand retail came up in Parliament, I kept thinking, what about the tiniest retail? If deregulation is our conviction, then that should apply equally to the street vendor. They provide such significant economic service: cheap retail, a large degree of employment. But there is zero deregulation. Mumbai, for instance, has about 2 lakh street vendors. The municipality just arbitrarily fixed a ceiling saying they will licence only 14,000. If you make an overwhelming majority of small independent entrepreneurs illegal at the stroke of a pen, how can this country sustain itself? So all I’m saying is if you have faith in the private sector-led model, at least include everyone in the private sector. That’s another big gap in the economy and the way we think about it. Why? Because she realised she was not getting things done. We need many more people like that now. The complexities are too much. Healthcare has to be handled, education has to be handled, housing has to be done. I’m saying, reopen the box. Think out of the box. We have to have a blood transfusion of people into the management of this country.

Das I just want to say before I go that I really value this opportunity to be with people I respect. There are a whole lot of things we agree on, there are some minor points on which we don’t. But there’s one more critical thing we have not spoken enough about: governance. I’m not seeing any change in that happening. I don’t have faith it will. I think we need to scrap the current system of administration and induct competent people from outside the system who will not have the power to make policies, but will be empowered to execute. We know what is to be done but we just don’t have anybody to get things done! There are people in India — we don’t need to import people — who know how to get things done on time, within budget, and who are honest and willing to do public service. We need an army of such people. I go back to Indira Gandhi in the 1970s. She brought people from outside. The Mantosh Sondhis (Heavy Industries secretary in 1971), the V Krishnamurthys (founding chairman of Maruti Udyog Ltd), the Vasant Rajadhyakshas (chairman of Hindustan Unilever from 1968 to 1973 and a member of the Planning Commission). Why? Because she realised she was not getting things done. We need many more people like that now. The complexities are too much. Healthcare has to be handled, education has to be handled, housing has to be done. I’m saying, reopen the box. Think out of the box. We have to have a blood transfusion of people into the management of this country.

Ghosh I agree, but sometimes you don’t need even that. Chhattisgarh and Tamil Nadu are great examples of how one can innovate and be efficient even within the system as it exists today. Their PDS, anganwadis, primary schools — everything is working really well. On my part, I’d urge a much greater focus on public provision of essential physical and social infrastructure and a greater focus on employment creation of good quality. The focus that has been missing is a focus on a decent life and dignity for the citizen.

Back in 1991, the State was definitely strangling a lot of activities; the Licence Raj needed to be fixed. But we also needed to see people as a resource, not a cost. You have to see wages and employment as a market, not as something that you bring down. The top layer can look after itself but the bulk of production in India requires massive government intervention and assistance through credit — not microcredit, but real, proper institutional credit at rates that Ratan Tata can also get. People at the bottom require basic infrastructure like electricity, access to markets, knowledge of new technologies. You have to give that to the street vendor; the women who are tipping shoelaces for Nike shoes. You have to do that across the spectrum of production in our country. Without that, it’s a miracle that they are actually surviving.

I know this guy who used to work at the JNU mess, a very good cook, who wanted to start a catering business. I ran from pillar to post trying to get him a Rs 1.5 lakh loan. Finally, I just gave him the money myself. No bank was willing to give him a loan. The only way he could access that money was at 48 percent interest a year. How can you succeed with that kind of interest rate? So, what are we doing to all these potential entrepreneurs?

There’s amazing strength and resilience in the informal economy, despite all this. If you just give a little bit of basic assistance, you don’t have to do anything else, really.

Mander To the question you asked of what fundamental rethink we need towards the economy, I’d say if you want to build private sector-led economic growth, remember who the private sector includes. And let us also as a country decide on a floor of human dignity. For me that floor is reasonably clear: No person should sleep hungry, no child should sleep under the open sky, nobody should die because they lack basic healthcare, old people should not have to work till the last day. Let us debate this and agree on it. I would draw the poverty line there: what does it cost a family to live a life of agreed human dignity? That should be the starting point we all commit to.

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