THE NEW REPUBLIC
IN THE PAST 71 YEARS, THERE IS MUCH WE CAN BE PROUD OF BUT EQUALLY BE DISTURBED ABOUT. WHAT WE NEED IS A RADICAL NEW AGENDA TO FAST-TRACK GROWTH FOR INDIA@75
Four years short of India@75, we assess our achievements and failures and examine the agenda for the future
Wthe people of India, having solemnly resolved to constitute India into a sovereign, socialist, secular, democratic, republic and to secure to all its citizens: Justice, social, economic and political; Liberty of thought, expression, belief, faith and worship; Equality of status and of opportunity, and to promote among them all, Fraternity assuring the dignity of the individual and the unity and integrity of the nation.” With this Preamble of noble objectives, India as a nation formally adopted the Constitution on January 26, 1950, declaring itself a Republic. Now, 71 years later, as we celebrated the day with a dazzling display of India’s might and cultural diversity (though marred later by rampaging farmer protests), it was time not just to look back and assess what we have achieved so far and where we have fallen short but also to look ahead and see how we can do things better and faster. For the Covid-19 pandemic has forever changed the country and the world as we knew it. Life and our well-being never seemed as fragile as they do now. The pandemic may have ushered in the age of anxiety, but it has also bred a new determination and sense of urgency to realise the nation’s full potential at the very earliest. To paraphrase Jawaharlal Nehru, a moment comes, which comes but rarely in history, when we are forced to step out from the old to the new. Such a moment has now come.
There is much that we as a nation can be proud of but also much to be disturbed about. We lifted close to 271 million people out of multidimensional poverty in the past decade, but we still have close to 70 million poor people, more than any other country. We have achieved enormous selfsufficiency in food-grains and have enough buffer stocks to feed our people even if we faced two successive droughts, yet a recent survey shows that we have a high number of children whose growth is stunted because of malnutrition. We have managed to provide potable drinking water through provision of handpumps in all village squares yet only a third of the households get piped water in their homes.
There are many other areas where the contrasts are as stark. We achieved open defecation free (ODF) status last year through a massive central government programme to provide toilets to every household in record time. But when it came to healthcare, our doctor patient ratio remains among the lowe,
est for developing countries. We have over 102 dollar billionaires--the fourth highest tally in the world—yet when it comes to per capita income, the $1,876 figure puts India in 148th position out of 193 economies. We have close to 1.17 billion cell-phone users, second only to China in number, yet 400 million people, or a third of the population, do not have an internet connection.
So, despite progress, we have many more divides to bridge. Yet, the pandemic has demonstrated how resilient we are as a nation, uniting and putting our best foot forward in a crisis. As the Republic races towards India@75, we must treat all our shortcomings as exigencies and move swiftly to solve them. Amitabh Kant, the CEO of NITI Aayog, says first and foremost among them is improving India’s ranking in the human development index, particularly in health and education. For some inexplicable reason, our spend on these sectors as a percentage of the GDP remains abysmally low at less than 2 per cent each. Budget 2021 is an opportunity to set things right and infuse funds in these two sectors.
Yet what matters is not just how much money is allocated but how well it is spent. That includes finding out-of-the-box solutions. In health, for instance, Dr Devi Shetty, founder of Narayana Health, points out that the tremendous shortage of skilled health workers can be met by getting existing hospitals to train personnel through internships or short-term courses even as new facilities for training are being set up. In education, the pandemic brought instant acceptance of online education. Virtual universities and schools could soon become the norm even as we build new brick and mortar institutions to meet demand. The telecom sector is a good example of how private enterprise aided by government facilitation led to a communications revolution in the country. Just three decades ago, we had to wait in queue to get a telephone connection. Unlike the US and other advanced countries, India has the advantage of not being stuck with legacy infrastructure and can leap-frog its way to development.
The topmost priority for the New Republic should be to find jobs for the millions who remain unemployed. The pandemic only exacerbated the situation, with close to 90 million people rendered unemployed. If Indian farmers are vociferously opposing the new agriculture laws passed by the Modi government, it is because they remain skeptical about the ability of the promised reform to keep them gainfully employed. That’s one reason why over 50 per cent of the workforce is still employed in agriculture though it accounts for only 17 per cent of the GDP. The answer, therefore, lies not in making new laws but in providing the requisite infrastructure, including cold chains and food parks, that could help them process horticultural produce and earn steady returns for farmers as they do from grains. If agro-processing for both domestic markets and exports is to take a quantum leap, then the government should pull out all the stops to set up facilities and provide funds to make it a success.
However, to provide jobs on a massive scale, the focus has to be on boosting the share of the manufacturing sector, which has remained stuck at 16 per cent of the GDP. With the pandemic disrupting the global supply chain, forcing countries and companies to seek reliable alternative sources, Indian companies have the opportunity to move into sectors such as pharmaceuticals, automobiles or food processing, among others. That also means shoring up our micro, small and medium enterprises (MSMEs), who are by far our largest employers but have been hit badly by the pandemic and face a credit squeeze. The banking infrastructure remains weak and among the immediate things the government needs to do is to strengthen our financial system and ensure greater flow of credit to entrepreneurs. This is also an opportunity to make our micro and small
The topmost priority for the New Republic should be to find jobs for the millions unemployed
industries more productive, efficient and modern rather than forcing them to survive just by evading taxes.
No country has developed without a sustained growth in exports. The stagnation of Indian export growth in the past few years is because 75 per cent of our goods cater to a section of the global market that has shrunk to 25 per cent of the total. World exports have grown rapidly in cutting-edge advanced technology, including electric mobility, 5G, battery storage, electronics and genomics. Instead of sunset sectors, India needs to focus on those where the dawn is just breaking. The central government needs to define its Aatmanirbhar Bharat policy clearly and ensure that instead of harking back to the protectionist regimes of the past it enables Indian industry to be globally competitive. What India needs to rethink is its policy of not joining major trading blocs while rival China signs up with the Regional Comprehensive Economic Partnership (RCEP) that consists of Indo-Pacific countries and also with Europe despite their protests over its muscular behaviour. These trading blocs account for over half of the world’s global trade. With India’s exports barely 2 per cent of the total, it can ill afford to follow an isolationist policy,
To get out of the recessionary rut the Indian economy has fallen into, the Modi government needs to come out with a New Deal similar to the one Franklin D. Roosevelt laid down for the US to pull it out of the Great Depression. Budget 2021 is a wonderful opportunity to spend big on building world-class infrastructure in the country. But rather than see the return of Big Government and shoring up PSUs, the New Deal should be driven by the private sector. As in air transport, where efficiency levels shot up after the private sector was allowed in, the Railways are ripe for a massive dose of privatisation whether in maintaining railway stations and track lines or in increasing the number of routes for privately-run trains. In short, India@75 must be private sector-led for economic recovery to take place swiftly. The government must also strive to restore the 7.5 per cent annual growth in GDP, which will require massive investments from both the government and the private sector.
Since India is a federal country, the next big reform should unfold at the state level where the compliance burden and logistics costs for entrepreneurs remain high. In power supply, for instance, India must be among the few countries where the cost of industrial power is twice that for domestic use. This must change for states to become the fulcrum of India’s growth. What the farmers’ agitation has also shown is that radical reforms need to be brought in not via the ordinance route but through democratic debate, engaging all stakeholders and through the political process, for it to succeed. In the following pages, we assess some of the key sectors of development and prescribe the agenda for rapid change. What is evident is that for the New Republic to prosper, democracy must flourish and we must adhere to the ideals we had committed ourselves to in the Preamble of the Indian Constitution, especially the four pillars of Justice, Liberty, Equality, and Fraternity.
Rather than focus on sunset sectors, India needs to focus on those where the dawn is just breaking