What is a developed country and what does it take to build one?

12 Apr



India is cruising on an economic boom following the reforms that started a decade ago! As a result it is now leading the rat race of attracting the foreign investment – ahead of countries like China, Brazil and Russia. India has some advantage over the relatively non-English speaking and ‘closed’ business world in the other countries. However, the spending pattern seem to be much more planned in their cases and there are a few things that India needs to workout carefully in order to take the country to a different level in the next fifteen to twenty years.

Most of the developed nations in the Americas, Europe and Oceania achieved that status in the 20th century via exploiting the aftereffects of the industrial revolution. Some of the parameters that supported their positive development included low population figures, early democratization, less corruption and education reforms. If India has to get there in that list it needs to work on more topics than the above in a more intensive fashion. Let me try to analyze some of the key issues (not necessarily in the order of priority) that we have and try to identify some solutions for the same.

Population

The population growth in India for the past few years have been at an annualized growth rate of around 2%. While for the developed nations this figure sounds perfect, India has to really work on cutting down this growth rate by half. If we go at this pace, by 2020 we will have 1.5 billion people in this country. There has to be strict measures to bring the population growth rate to around 0.75% annually at least for the next twenty five years. This can result in a manageable figure of 1.30 billion people by 2030, taking into account the current mortality rate. Further on, the growth rate has to be brought down to 0.4 to 0.5% which is optimal for typical developed nations. The drastic guidelines to achieve this target for a better tomorrow, could include enforcing the one-child-per-family rule. An easy way to enforce this is via imposing heavy consumption taxes (Chinese model) to the government, if there is more than one child in a family. Further more, increased school fees, power/water bills etc can be enforced if the size grows further. But this can work only with 40 or 50 percent of the middle class community. For the slum dwellers and illiterates there has to be a special drive to induce awareness and prioritize the rehabilitation of those who are following one or no child rules. If there are religious, social or racial rules that promote more children, it’s time to abolish such rules via constitution amendments. Providing free contraception and free consulting etc are other options. The government could even think of providing additional benefits and tax exemptions for those who plan to go childless. Some of these things may sound unethical for typical Indian culture, but we have no other go.

Literacy & Education reforms

The population issues are directly linked to the literacy rate. The proof is the state of Kerala (my home state), the most literate state in India, that has the lowest annual population growth (~0.9%) and the highest health index. Back in the 80s this particular state government triggered a mass campaign with the help of various non-profit organizations and thousands of individual volunteers to achieve 100% literacy and at the end of one year they were very close to that reality. This is something that other states can easily implement. The need for education reforms comes next. It is about time the state governments set up larger number of free basic education institutes for primary and middle schools.

Public health

Health is indeed wealth for a state, not just for an individual. Health awareness is primarily induced via basic education and if the latter is taken care of, the health index will naturally improve. What the government has to do is to improve the free supply of basic medicines via more channels than just the government hospitals. In addition, the vaccination drives etc, has to be done via more effective campaigns. The public sanitation facilities really need a face lift the availability of good quality drinking water has to be ensured in each and every village of this country.

Arresting corruption

Bureaucracy is synonymous to democracy in many developing nations. Corruption complements bureaucracy very well and this usually begins with the politicians themselves. Most developed nations have managed to arrest corruption at all levels and this makes sure that funds and taxes collected for development purposes reach the targeted audiences or projects. In India, we need to definitely act fast on a few things. It is high time we set some basic qualifications and clean history requirements for somebody to compete the state assembly or parliament elections. Many of our politicians come from criminal backgrounds and to top it all their educational qualifications are questionable.

For India to become a developed nation, we need people with good sense, great knowledge and vision ruling us. Laws need to be enforced to make sure that our
rulers and leaders are acceptable personalities. Recent developments of disqualifying many politicians from competing the UP elections is indeed a great move. To curb corruption, it is also necessary to empower independent bodies like Lok Ayukta (in Karnataka) that has the power to bring corrupt government officials to the law.

Continue the reforms

With a GDP growth rate of above 9% and current approximate GDP of USD 800 billion, India is one of the fastest growing economies in the world today. Right now it has a healthy foreign reserve of USD 200 billion that has doubled since 2003. At the current pace, it is safer to use part of it to pay off some of our long term debts. Also, the measures taken by the current government to boost exports of cotton products, jewelery, software etc should take the country into an accelerated growth orbit for the next few years. Improved tax collection, extra ordinary performance of Indian companies, resurgence of PSUs, alarming growth in profit of the Indian Railways, Indian companies buying out companies in Europe etc are some of the examples of a great developed nation in the making. We just need to and continue reforms and keep up this pace (or even better it) in the next ten years or so.

Infrastructure

If there is one single thing that stands in the way of development in India, it is the infrastructure related issues. We are nowhere near many of the leading developing nations in terms of providing infrastructure to attract even bigger foreign investments. We really need world class road-rail-air connectivity in this country. This has to be supported by uninterrupted power for industries and good sanitation, drainage and pollution-free air and water. These issues have to be addressed with utmost priority and rest of the things will fall into the right places automatically. It is time we concentrated on tier 2 and 3 cities and even satellite towns to build the infrastructure rather than relying on stagnated metros and cities.

Agriculture

In India we have a variety of crops, oil seeds and spices produced in its states. What we have been doing so far was to bank on the huge man power available and do agriculture the traditional way. This is not a good approach going forward. We need to really modernize our agriculture sector by adopting scientific methods and machinery to prepare the country for a better agricultural growth rate for the future. The agricultural products can top our exports chart if we revolutionize this sector and enough funding is made available. ‘Jai Jawan, Jai Kissan‘ is still a great slogan, but I would really like to see the defense budget cut by 20% (for the next ten years) to allocate the same towards agriculture. The agriculture sector growth prediction is not so interesting for the next two years. It stands at around 2% annualized and this is what pulls down the GDP which otherwise is doing great due to stable services sector and manufacturing.

Manufacturing

Maintaining a growth rate of above 10% (as in the case of past year) in manufacturing sector is a great thing but India would be targeting a growth rate of above 14 pc in FY2008. This is indeed a great news though long term target should be more realistic, say 9-10pc. Looks like the current government wants to prove a point by reaching a great milestone in manufacturing while the growing inflation rates and slower agricultural growth doesn’t do any good to anybody.

Change mindsets

More than the scientific ways to maximize growth, what really can take India to the next level is its greatest asset – its people. Historically Indians have been having laid back attitude and we were taught to be lenient and tolerant. This cannot be the case going forward. We need a new generation of people that is aggressive, hardworking, focused and career oriented. This does not mean that our forefathers didn’t do any good to us. They fought their own way and fetched us freedom. The next generation built on top of it and now it’s time for us and the coming generations to maximize the opportunities that lie ahead. This has to be our pledge going forward!

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