A few stray thoughts, on the eve of Diwali...

Yesterday morning, I noticed that the front page of The Tribune carried a photograph of the Prime Minister (who also happens to be the Chairperson of the National Planning Commission) along with the Deputy Chairman of the Planning Commission and the accompanying news item mentioned that the next five-year plan is to aim at achieving 10% annual growth for the Indian economy. According to it, the growth should bring in its wake a whole lot of new employment opportunities.

Well, the learned men that they are, they must know what they are talking about, I thought.

Later in the day, however, as I watched a news channel on television, a couple of stories presented an interesting set of facts. The first was about the ostentation that those with money to spare indulge in, during festivals, while 69% of India's population still lives under the Poverty Line and the second detailed the conditions prevailing in the Vidharba region of the state of Maharastra, where impoverished farmers continue to resort to suicide, as crops continue to fail for the third year in succession. What the erudite staff of the news channel did not mention and what I am yet to find out are the reasons on account of which crop-failure has been occuring consistently for so long. They did mention that there were floods in region, in the past year, but provided no useful information regarding conditions prevailing in the preceding two years. In any case, that is besides the point.

What I do not understand is whether the so-called 'rapid economic growth' will provide succour to any of these citizens who comprise 69% of the populace or whether the benefits will largely go to those employed in or those who have invested in the Information Technology (IT) and IT Enabled Services industries, besides others like Retail, Pharmaceuticals, Automobiles and those producing goods of conspicuous consumption perhaps.

As far as I know, the economy is said to be undergoing 'explosive growth' even at present and yet, people continue to struggle to make both ends meet.

By the way, is India actually going to achieve a 10% annual rate of economic growth anytime in the near future and if it does, is that going to be sustainable for a reasonable length of time?

I believe the recent increases in the growth rate have been fueled mainly by the services sector. Now, there is nothing wrong with that, except that healthy economies generally have a well developed manufacturing sector and therefore good basic infrastructure, before that happens. However, the Indian economy, which used to be mainly agrarian until not so long ago, witnessed only a few years of increased contributions by manufacturing before services took over. So, it almost 'jumped' from being an agrarian economy to one with services being the largest contributor to its growth.

The services sector has prospered mainly because of the outsourcing of services from Europe (primarily the UK) and North America, where India has an advantage on account of a vast pool of workers who have reasonably good English comprehension skills and who are willing to work for a fraction of the wages that workers charge in the West.

The basic infrastrucure is still rather poor and the manufacturing sector, as mentioned before, has not developed to the extent that it should have, in order to attain a stable rate of economic growth. This, in turn, leaves the economy far more vulnerable to global economic cycles than it otherwise would have been.

Besides, I am not sure if those who draw projections of growth based on the present scenario consider the effect that competition from countries such as China is likely to have on the outsourcing business, in the coming five to ten years. I hear China has been concentrating big-time on building up an English-speaking work-force on a scale that is unimaginable for those who do not know much about any of this. Once that happens, I doubt if India could ever match the kind of costs and the quality of work-force offered by China. Incidentally, this is also likely to apply to the 'Knowledge Process Outsourcing' industry, which, presently, is being touted as "The next big thing!". If the 'basic-graduate' manning the Chinese call centre will speak English, then so will the Chinese engineer, the doctor, the programmer, the financial analyst, the equity analyst and the market analyst!

Not to be underestimated either are the countries like the Philippines, Pakistan and the African countries where English is taught at school and college. These are, in fact, already making substantial progress in the outsourcing arena.

To top it all, the government is now 'committed' to increasing the quantum of reservations for 'backward castes', even in admissions to highly technical courses of study. This is more than likely to play havoc with the level of competence of the work-force.

I do not know what big-shots in the government and in industry are going to do about any of this. I can not, however, seem to put out of my mind the images of two young sons of a farmer in Vidarbha, whom the farmer now uses to plough his fields, after the death of his oxen.

Well, perhaps there still is hope. Growth of industries like Automobiles should enhance the demand for raw material like Iron and Steel and two large-scale Steel projects involving global majors have already been announced in the recent past. Hopefully, progress in basic industries like these should promote the development of basic infrastructure and, therefore, sustainable economic development.

As the lyrics of a song by the popular Indian band 'Euphoria' go:

Chhota jee na kareeN...aiNwaiN tu na dareeN...Sohnya!

(It is difficult for me to attempt a precise translation, but it is something to the effect of "Don't worry, be happy!")