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    View: Things to do for the economy

    Synopsis

    There are many things wrong with India’s economy that need to be fixed. Politics is the biggest area of reform.

    ECONOMY---BCCL
    Indian industry is not as inefficient as our trade deficit with China would suggest.
    There are many things wrong with India’s economy that need to be fixed. Politics is the biggest area of reform.

    Let’s name the elephant in the room, and gently coax him out, so that we can see some of the things that jumbo occludes. If social schism goes up and casts a permanent pall of violence, latent or in intermittent, explosive action, the economy can no longer prosper. Sri Lanka is living proof.

    The country has had enviable levels of social development and should have been the leading nation of South Asia, but has lost more than three decades to a Buddhist chauvinism-induced revolt of its 15% Tamil minority. The Citizenship Amendment Act-National Register of Citizens combination and other gentle ministrations aimed at India’s Muslim minority promise to shred social cohesion, without which sustained prosperity is difficult.

    Education. In a period of rapid technological change, the idea of teaching schoolkids skills is tomfoolery. Skills get obsolete with technology. The auto component industry of Pune, Manesar, Hosur and Coimbatore will die when electric motors replace the internal combustion engine. ITI diplomas in automobile engineering will be worth zilch. Children must learn to learn throughout their lives. Learn they are heirs to the entirety of human knowledge — from how to make fire, how to fuse two atoms of hydrogen to produce energy, and quantum computing to understanding evil and why some music and some fashion work while others don’t.

    How can India’s most precious resource, its crores of children, adolescents and young adults, be actually educated, taught to be lifelong learners, instead of being merely sent to school and a free meal? It is a tough challenge, essentially because of the politics in which education, schools and teachers are embedded, but must be addressed.

    How do we make healthcare an effective, pooled and pre-paid part of everyday life, rather than a calamity that throws an afflicted family into the jaws of poverty? Building a political economy around insurance is the wrong way to go about it. That is the route the US took, to end up spending 18% of GDP on healthcare, to get the same results as Europe that spends half as much. Government spending on public health is just 1% of GDP in India. How to spend scarce tax rupees on healthcare must be thought through.

    Healthcare and social security in general can no longer be the responsibility of a single department or ministry. Clean water and air, without which good health is not possible, depend on cropping practices, industrial regulation, pollution control, environmental protection and law enforcement.

    India is in competition with China for the world’s diabetes and heart disease crown, as people move from hard labour to service sector jobs that warp the spine. Tackling this part of health calls for urban planning that creates playgrounds and parks, stadia and pools, playing courts and pitches.

    Social security is an umbrella term that encompasses care of expectant mothers and children, unemployment allowance, disability payments, old age security, skills training and reskilling, housing and healthcare.

    In a rapidly urbanising and, therefore, migrant, society, housing for all is about as useful as charkha-for-all in lieu of clothing. Mr Biswas might have a house of his own in the village, but when he comes to the town, looking for better work, what he needs is affordable rental housing. That calls for rational rent laws, an end to the artificial shortage of urban land, rapid connectivity and intelligent urban planning to create mixed-use, densely populated, yet ghetto free habitats. In other words, social security and healthcare must be reimagined as governance, and parcelled out to different parts of the government sensitised to their new priorities. This is politics.

    India’s power sector is in crisis, as 15% to 55% of its output, depending on the region, is not paid for — entirely on account of bad politics that trains people to expect power for free or impunity when they steal it.

    Indian industry is not as inefficient as our trade deficit with China would suggest. Industry routinely inflates project costs to create a war chest with which to pay off the neta-babu-political thug nexus, besides paying for that getaway to Thailand. The inflated cost structure makes for pricier output. Handsome returns from inflated project costs disincentivise attentive management. To fix this, political funding must cease to come off the books of companies.


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    ( Originally published on Dec 14, 2019 )
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