Paradoxically, this comes when it badly needs foreign direct investments (FDI) to underpin its targeted growth rate of 8 per cent during the Tenth Plan (2002-2007). Why did it fight shy of leveraging a powerful platform to address foreign investors After all, the former Union finance minister Dr Manmohan Singh continued to take standing ovations at such fora as the architect of Indias reforms long after they too had stalled since 1994.
Presumably, there is a difference between not doing anything and slowing down what is being done. Presumably, Dr Singh didnt have to explain why strategic sales of public sector undertakings have halted. Presumably, he didnt have to explain why the Big Bang tax reforms of the Kelkar task force have been politically dumped. Presumably, the former finance minister didnt have to explain the standstill on labour reforms. Presumably, he also didnt have to explain the electoral compulsions behind the reforms slowdown.
Whatever may be the BJP-led governments reasons, the fact remains that a valuable opportunity was lost. Engaging foreign investors is not a top down process of telling them what is being done on reforms, but also learning from them what they think of Indias prospects and what place it holds in the FDI sweepstakes vis-a-vis countries like China. Actually, one of the most informative interactive sessions at this years India Economic Summit was the one on Envisioning India in 20 years: A view from Abroad.
The panel was a good one comprising Keith Vaz, member of UKs Parliament, Lord Powell of Bayswater, co-chair of the India Economic Summit 2002, Georges Ugeux, group executive vice-president, New York Stock Exchange and
Peirs Cumberlege, vice-president, Bombardier International. Interestingly, the discussion was moderated by Arun Maira who earlier helped bring out a CII publication Scenarios for India 2010: Putting it together again.
Putting together what they said reminded this writer of participating few years ago in some of the early discussions on Mr Mairas generative scenario thinking. The one that immediately came to mind was that of Birds Scrambling: Where grain is strewn in the courtyard for the birds. The birds scramble for it. The pigeons flap their wings and push the smaller sparrows aside. They peck away at the grain with no concern for the sparrows. A peacock arrives and the pigeons retreat. The food is over. The sparrows have gone hungry. Maybe tomorrow, they may have a chance.
According to this scenario, India is rapidly integrating with the world economy. Imports and exports are deregulated. Foreign companies are investing in many sectors. Foreign money and goods are flowing in. Several Indian companies, unable to face large foreign competition, have sold out to them. Ports and airports are run efficiently by private companies. Business opportunities are opening up. Change is lauded in the western press.
One panelist felt that India was an emerging economic superpower in 20 years time. Lord Powell envisioned the country as a member of the Group of Eight in the very near future; as one with high living standards, a more substantial middle class, a consumer society which was more westernised in the appurtenances of day-to-day living and a provider of world class services with outstanding quality. There is a sense of progress in the air.
While that was the good news, the panelists also indicated what could go horribly wrong over the next 20 years. The most important factor was the prospect of extreme communal violence that could shred this multicultural and multireligious country that still upholds secular values. There was also the disturbing prospect of a nuclear war between India and Pakistan a possibility that is pooh poohed in the media commentary on this topic.
Birds scrambling implies that the government and businesses cannot afford to provide for Indias poor. They are waiting, impatiently, for the trickle down of benefits to them. Many scramble from the rural areas to the towns to seek peripheral jobs. Slums grow in the big cities. The contrast between those who have more and those who hope to have more is even more immediate. Meanwhile, the poor in the rural areas continue to multiply.
To which the panelists add the fear of growing regional imbalances in India as richer parts grow much faster than the poorer parts. Paradoxically, the richer states are also ones which are more prone to communal violence, Gujarat being the most obvious example. If this is indeed the outcome of faster growth per se, there clearly is a need to moderate it so that it doesnt lead to a social explosion or a million mutinies in the country. The moral is not to push for a growth rate that is not sustainable
The panel thus outlined a textured vision of India a nation very much on the move but with a dark underside of continuing poverty and widening income and regional inequalities. One of them also mentioned that this dynamic couldnt be sustained unless India paid attention to its agricultural sector that accounts for 27 per cent of its Gross Domestic Product and was surprised that agro-based industries werent being developed at all. That there was also the need to develop a vibrant capital market to fuel faster economic growth.
Interestingly, the vision of this panel discussion went beyond the narrower and mechanistic set of scenarios circulated by the CII on the reform pre-requisites for a 5.5 per cent, 6.5 per cent and 8 per cent growth path termed as a lumbering pachyderm, a more purposeful pachyderm and a when a pachyderm becomes a jaguar respectively. But if what they outlined indeed is true, the more appropriate metaphor is of a lordly elephant that begins to run. And when that happens, it is more feared in the jungle!