Increasing poor-rich divide

By M L Kotru

You cannot fault the Government ? How dare you ? Don't you see how globalised we have become. Glitzy malls, toll roads that somehow seem only to be adding to our travelling woes, luxury cars, multiplexes et al. Why, we even have the promise from next year of our own version of formula -I car racing; and under the latest dispensation of Sharad Pawar's Board of Control for Cricket in India our cricketing heroes will be auctioned, not exactly like ‘Id ka bakras’, to the highest bidders of the new fangled Indian Professional League. Even our golf clubs are not to lag behind other upwardly mobile nations; we have just given ourselves the grand spectacle of an Indian Master's championship at our own Delhi's very exclusive Golf Course, next door to the tomb of Hazrat Nizamuddin.
All indicators that we are set to overhauling the great economies of the world. Does it really matter if the stock exchanges have taken the worst beatings these past few days. Look at the brigher side. The economy, the Government and its experts assure us is on course, set to achieve the targets set for it. Forget the odd aberration here and there the ‘‘fundamentals’’ are very sound. The poverty reduction measures, the rural employment guarantee schemes are in place, the credit lines already are about to be opened to end the farmer's misery- what more can you expect from a coalition Government, a coalition of disparate interests, wherein it is not possible for the single largest party, leading it, to implement its own ‘‘programme’’.
It's another matter what its programme was or is. The glossy manifestos presented by the political parties that last time we went to polls countrywide had, of course, promised us heaven and much more. Short of sending us to the moon. That, you know, is expensive business but we can rest assured that very soon at least one Indian, with cash to spare, will take a pleasure trip into space, who in the process may even taken a closer peep at the moon. So, even the moon is reachable. As long you can pay for it !
No room for pessimism. Hopeful signs are all there, in an abundance. Look at the Finance Ministry statistics- and we are in the midst of the budget season. Look at all the money that has been allocated in the past three years to alleviate the lot of our massive farming community. The wide variety of loans they can access. Again, it's another matter, why the money doesn't seem to be reaching the farmers or why thousands of farmers continue to commit suicide unable to repay past debts, owed to moneylenders or to the banks, some of the latter wearing the co-operative banking tag. A plethora of platitudes, the congenital doubters might say.
But try to be honest for a change ! Look at the increasing number of billionaires which Forbes, the magazine that keeps the tabs on them, lists this time over for us. The number of dollar billionaire in India has increased from a meagre eight in 2006 to 40 in 2007. What more evidence do you want of ours being among the most prosperous nations in the world ? Never mind that the country itself is blessed with a billion plus population. Take heart from the Forbes list. Forty Indian dollar billionaires out of a population of a billion and more.
The fortunes of the vast majority of our people, the needy, have sharply plummeted, including the quality of life, education, health, nutrition even as the top 40 billionaires of the country have seen their wealth taking a quantum leap in the last six months, according to the human development index. Their wealth has grown a phenomenal 30 per cent during this period. The poor you might say haven't become poorer, yet the truth is that they haven't either been able to shake off their poverty. This is as relevant to the masses living in the country's hinterland as it is to those living in semi-urbanised or urban centres.
Ask the woman living in a Delhi or a Bombay slum and you will realize that it takes to have a square meal a day. Not two meals, just one. The prices have put everything, from ordinary onions to wheat flour, out of their reach. The TV gloss and imagery apart, life for the average Indian, forget the cash-rich babus working for the Government or their richer cousins working in multinationals and corporations, in the IT industry et al, continues to be an ordeal. You don't need statistical genius to bring home this stark truth. No amount of sophistry can help you in wishing this truth away.
The Prime Minister, who as Narasimha Rao's Finance Minister, has been given much credit for the globalisation of Indian economy, did in fact wonder in the company of some reform-minded economists some months ago, whether his Government's industrial policies were encouraging crony capitalism or crony capitalists, if you will. His passing reference to the rise of cronyism in the economy created excitement among his friendly audience of the day. Their concern though was mainly that the private business houses were getting precedence over the public sector. Which is an altogether different, ideologically motivated consideration. But the fact that emerged from that conversation is that even the Prime Minister was perhaps concerned about the phenomenon.
Of course, the Prime Minister's advisers and his Finance Minister will deny and suggestion of the rise of the new phenomenon, the crony capitalist. And guided by their own reading of the situation and by the vibes from the stock-exchanges, they will vehemently deny there is anything wrong with the ‘‘fundamentals’’. Statistical jugglery will take over from thereon and a layman like you and me will probably be expected to accept their word as gospel truth even as you share the concerns of the poor man, the debt-ridden farmer, the housewife unable to keep the home fires burning, the aged and the infirm left in utter neglect.
Meanwhile, the media blitzkreig will continue. Full-page ads with the mandatory multicolour photographs of our underserving leaders will glare down at you from the top of the page ads selling halftruths. In the case of the TV networks the ‘netas’ do not really have to work hard to be seen on TV screens with boring repetition.
The competition is so fierce and regulation so limited. Network ‘A’ will one day tell you that Prime Minister Dr Manmohan Singh is its ‘‘ Indian of the Year’’ to be followed by networks ‘‘B’’, ‘‘C’’, ‘‘D’’ each with its own Indian of the Year. And men so named wallow in the two minutes of glory it brings them on the idiot box.
Prime Ministers may not normally visit TV studios to participate in discussions but trust the innovative brain of the TV managers to convert an awards ceremony into an impromptu interview with their man. Neither party protests for there is always that synthetic poll which rolls along at the bottom of your TV set telling you, even as the farce of the programme is on, that 83 percent of the people agree with the Prime Minister's view (still in the process of being expressed), 15 percent disapprove and two percent do not care. The instant poll has become a menace which should somehow be put an end to.
Or, unless it be that the polls are another version of the so-called reality shows where the TV networks and the cell operators share the moolah raked in through listener-response calls. Staggering amounts are raised in the process. And then you have a TV channel which took no less then a day or two, split nicely into half-hour presentations, more than half the time given to advertising, tell us what kind of person is to Lead India. With underworked or retired celebrities available in abundance there is no dearth of judges, who usually take little less than the prospective leader (no more than two to three minutes, each in shortened spells) to tell us who our leader should be.
It works to the advantage of all- the politicians, the celebrities, the contestants, the cell companies and, of course the TV networks. And don't ask me how some of the networks which operated on virtual shoestring budgets until not many long years ago are now flaunting balance sheets showing returns running into a few thousand crores each.
They are all the products of the globalisation package, their coffers abuzz as the consumerist middle class, comprising nearly one tenth of the population, goes on a buying spree.The poor and lower income groups, accounting for most of our population, must meanwhile look in wonder as the skycrapers continue to overwhelm them and their environs. If they wish to build their own little shack, a home, they cannot access the banks who in any case have put house building loans beyond the poor man's reach. The banks, being in the business of making profit, perfer to advance larger sums, with larger returns, to the builders. And the builders have hordes of the new-rich members of middle class out there vying for more fancy houses at seven to eight-figure price tags attached to each such unit.

Infrastructure development-key to prosperity

By Manish Sharma

Mobility on the infrastructure front will generate host of economic activities which will provide self employment to millions of people and will prove to be the greatest asset in reducing the poverty in rural area. It has been well established by economic data that connectivity is the most important source of enhancing the investment and improving economic prosperity. In the present era of globalization cities are enjoying the effects of connectivity and they have taken off in the present global economy. The economy in the rural area can practically take off by improving the connectivity. Bharat Nirman projected by the UPA Government in India is an ambitious infrastructure programme benefiting the largest number of people in rural areas and improving the prospects of inclusive growth. Improving the connectivity through roads will remain the best option in the coming years to generate enormous economic activities and reducing the poverty. Economic data are available on reduction of poverty by investment on development of roads. The highest priority for poverty removal is given to improvement in roads and investment in agricultural and R & D, irrigation and educational investments are fare behind the roads and agricultural development.
Opportunity Cost and Choosing the Right Choice
Choice in economics is based on comparative advantage. It has been demonstrated in Asia and Africa that development of roads in rural areas is the important source of growth and poverty mitigation than anything else. Subsidies on power, fertilizer and credit subsidies are at the bottom level and do not produce desirable result in mitigating the poverty. Punjab and Haryana have shown the rural economic growth with the help of investment in roads and the returns to road investment were higher as compared to other investments. The success of green revolution and white revolution has been possible with the help of improvement in road connectivity. Telecom sector is a promising one as the connectivity through wireless will enhance the opportunity of productivity in the remote areas. Telecom companies are investing heavily to develop the telecom sector as India provides the most promising opportunity for the expansion of telecom facilities. Global economy has high expectations from China and India as these economies are going to contribute substantially to the growth of global economy and the growth in both the major Asian powers depends on improvement of infrastructural utilities.
Decoupling of economies is a mismatch in the present era of globalization where global economy is going to grow on the basis of coupling of economies. Improvement in infrastructure is possible with high investment by public and private companies as the projected investment in India is over $500 billion. Investment by multinationals and opening the infrastructure investment to FDI will enhance the prospect of investment by private equity firms such as 3i, Blackstone and Citigroup. Some of the private equity firms such as 3i have already invested in infrastructure fund. Rural connectivity has become a high Government priority and the successive annual budgets will provide special allocation of funds for new infrastructure projects. It speaks well for future prosperity. The most important challenge is to revitalize the rural economy for sustainable growth. Financial architecture has to be evolved for greater inclusion and increased global integration.
Next ten years will witness large scale change in infrastructure and it is possible to call it a golden period for infrastructure development in India. India's annual air passenger volume is expected to grow eight times from the present 15 million to more than 110 million. It is possible that GDP growth may surpass 9% provided creative investment is made in infrastructure and gross capital formation in infrastructure is estimated to rise to 8% as a percentage of GDP in the 11th plan period. The national and state Governments will have to plan projects for investment across next five years. Sectoral requirements of funds is likely to be- national highways 2,20,000 crore, railways 3,00,000 crore, energy 5,40,000, airports 40,000 crore, ports 50,000 crore, irrigation 80,000 crore and others 3,45,000 crore. Investments can be made on the basis of the required project pipeline which can be planned by the Government and not by the private sector. The Government has to play a visionary role as entrepreneur in this vital sector. Capital can be utilized in time on the basis of well planned projects. Slackness on the part of implementing authorities would raise cost of projects and would also result in dissipation of the money.
The dream projects may transform the infrastructure suitable for future growth such as the industrial corridor planned by Indian and Japanese collaboration can revolutionize the industrial spectrum. It is possible to imagine that in ten years time infrastructure may turn out to be a favourable bet for investors and like the IT industry it may also attain the status of international recognition. Top global private equity funds such as Citigroup and Blackstone and other institutional investors are planning to invest through spacing fund for financing a stream of infrastructure projects in the country. Investors can hope to get a return of well over 15% in an economy that has been growing annually at an average rate of over 8% during the last three years.
To boost the infrastructure it is interesting to point out that India is the fastest growing mobile market in the world and it is also fast maturing market. India is poised to enter the 3G era and is well placed on using broadband for the masses. India claims to be a knowledge based economy and accordingly it has capability to use technology in broadband. The next generation networks can provide optical fiber and these fiber ends can be connected to all villages by free spectrum and thus the villages can be connected for delivery of voice telephony, broadband e-education, e-agriculture networks. Telecom growth has boosted the economy of Jammu and Kashmir region.
India's retailing sector is poised for dramatic change with the emergence of organized retailers and it is likely to develop a technology intensive growth sector. It is through supply chain advantage that the global companies can offer better customer service and cheaper prices. However, enormous efforts are needed to improve the infrastructure so as to make it efficient in trucking operations. Global distribution efficiency can be successfully achieved by developing the infrastructure. Advanced information system and logistics will improve the supply in Indian market.
Investment and improvement in infrastructure provide answer to India's socio-economic problems and this will generate stable environment for growth and prosperity for largest number of people. (CNF)

Employment scenario in J&K State

By M L Gupta

The Govt services continue to be the 1st preference of job aspirants as it provide social status, job security, least accountability, price index linked salaries and host of other perks like LTC, pensionary benefits generous leave calender and paid holidays. However govt has limitation particularly that of J&K State which is spending 4500 crores annually on salaries of its employees whereas it is hardly generating 1200 crores by way of taxes etc; besides taking away a large chunk of govt funds which otherwise could have been utilized in developmental works. The execessive employment in govt sector makes its working inefficient, highly corruption oriented and provide little job satisfaction. The proverb ‘‘Too many cooks spoil the broth’’ suitably apply to government employees.

Having locational disadvantage the Industrial growth in State had been at lowest. To attract outside investment the state govt. had been declaring various incentive schemes. However the Govt of India's incentives extended to State from the year 2002 of Central Excise refund and income tax exemption for ten years from the date of commercial production have made the Indian investors to make a bee line in putting up industries in the State. Govt Delays in acquiring land for industrial purpose had been the only hindrance in mush rooming growth of Industry in the State after central sops had been declared.

Unfortunately most of these units employ non locals. The state govt. order No. 168-Ind of 2005 dated 30-6-2005 has failed to deter these units. Though these units as per State Govt order are required to have 90% local employees within 30 months of the trial/commercial production, most of them have 90% non-locals. The enforcing agency DICs are unable to effect checks as the DIC employees are mostly in pay roll of these industrialists. They verify the records of industrialists which hardly reflect 20% of the actual employees strength where as industrialists maintain either duplicate records for wages payment or get production through labour contractors who employ mostly non locals. No wonder the industrial areas/growth centres at Kathua, Samba and Bari Brahmana are teaming with outsiders/non-state subjects.

The mushroom growth of Industry in state due to Central govt sops can generate substantial employment if 90% employment of state subjects is enforced fully in all the Industrial units of the state irrespective of the incentives directly involved in production or through contract production. For this purpose the govt directive have to be issued accordingly and a separate enforcement directorate for ensuring 90% employment to state subjects under people of integrity is constituted. Further govt should also announce heavy penalities ranging between Rs 5 Lacs to Rs 50 Lacs for defaulting units. Further seizure of the industrial unit be declared for habitual defaulters. It is hoped that with enforcement of 90% employment of state subjects and adequate growth in industry more than 2 lac jobs can be created for the locals in this sector.

Most of these units are being put up by industrialists from outside who either have similar units already functioning in Haryana, Punjab, Gujarat and Maharashtra etc; or have sufficient technical knowhow and financial capacity. As such the process does not allow the growth of enterpreneurship among locals. The State govt has to come up with an agency which identify, train the enterpreneur provide them technical knowhow arranged through Central govt agencies or consultancy firms at the state govt expenses.

Further since the micro and small enterprises existing in the state is limited to the extent of manufacturing items required by State Govt departments or for local consumption, there has been little growth of this sector whereas at National level this sector accounts for forty percent of the total industrial output in the country. One of the reason for slow growth of this sector has also been lack of large industries in the state which otherwise would have provided an ancilliary base for the enterpreneurs.

Automobile industry is one such industry having large potential for the growth of ancilliary base. However most of automobile units have concentrated around metro cities where ancilliary base has also developed. For developing ancilliary base in the state for automobile units around Delhi the nearest Metro the state govt should constitute a special agency which generate techno-market tie up with large automobile units for the local enterpreneurs and ensure adequate financing of the local units through banks and financial institutions. Further as the automobile uits normally work on day to day inve ntory the state agency has to create own transportation network to move the ancilliary products to captive units on daily basis and retrieve payments on regular basis against supplies made.

The State agency can also look for technical knowhow and joint ventures for manufacture of testing and laboratory equipments in the state which are normally labour intensive and little in volume/weight as compared to cost of the equipments. A large number of testing and laboratory equipemnts are required in pesticides, chemical and pharmaceutical units in the state. Automobile and Machine took ancilliary units would also require measuring guages and equipments for quality control.

An other sector which can generate large employment potential is service sector. Information technology (IT/ITCS) in India has been providing services not only to local firms but have also been exporting to foreign countries. It has been perdicted that domestic IT/ITCS market revenue will touch Rs 110,000 crore in 2008 reflecting a growth of 24% over the 2007 revenue generation. Various state govt had been competing in providing better infrastructure to attract domestic IT/ITCS firms. Andhra and Karnataka had been the fore runners. Little has been doe by the J&K State in this regard. As such the state govt should approach the major player in IT/ITCS like Satyam, Wipro and others to expand their base to this state IT perks of international level should be developed in the state preferably with vertical planning to conserve land. To generate local man power for this sector massive vocational training in various colleges and institutions in the state should be arranged in consultations with top players in IT/ITCS.

Extensive vocational training should also be arranged at district level in traditional vocations/trades particularly handicrafts to generate employment at district and rural level. It is particular to mention that there is not adequately trained man power for minor vocations/trades like plumbing, electricians, motor winders, machinery maintenance etc. Further a highly qualified/expertised cell should also be created to train qualified unemployed engineers in establishing their consultancy groups for providing design & project services to industry.

=

)