Among eminent Indians who have raised real security issues in a simple and direct manner this decade, Admiral Sureesh Mehta now stands out. What really puts him in the hall of fame is that he didn?t make his remarks at some marginal memorial event. Moreover, he bravely made them just before retirement, probably jeopardising a cushy job. This is the stuff sipahis are made of, offering sharp contrast to the so-called experts who hang around cocktail circuits. Whatever critics may say, the Admiral?s message was actually one of hope. What he suggested was that if?instead of flexing our military muscle internally or against quixotic enemies?we begin the admittedly painful process of scaling up our defence, then we can tackle security seriously.
I thought I would raise the issue of faster growth alongside the Admiral?s cannon ball at an invited Independence Day speech for a premier Indian economics think tank. But a young student there poured cold water on me by saying that we have to grow because we have to grow and this has nothing to do with China. He wasn?t supposed to be so good for he was from a deemed university. The HRD minister has told us that deemed universities are the worst in India. But some of them are also the best and may in fact survive even after they are inspected by HRD experts. The young one also proved the Alagh law of generational progress, that the next generation is smarter than mine.
In his Independence Day speech, the PM hit the bull?s eye by saying that a 9% growth rate is a must. If we go by studies, often by deemed universities, there is one that finds that the savings rate, factor productivity and trade ratios have to go up if India is to achieve such a growth up to 2020.
First, our savings rate is high but East Asia?s is higher. The Bretton Woods message that savings should not be incentivised is wrong. As is the Goldman Sachs BRICS one about the good life made up of just cars and air conditioners. Because good modelling suggests that savings are needed to support high growth. Incidentally, if you listen to the good Admiral, then ?guns? will also have to be factored into this high-growth model.
Second, a rupee of resources has been giving us 3.5% higher growth every year in the eighties, nineties and this decade, as some careful measurements have showed. This has to go up to 5% for the 8%-plus growth game. Now, this means that everybody has to make sure that the buck go further. Also, this means that we must not let our leaders?howsoever powerful?stop the projects that are critical to India?s economy.
Once when I was visiting China, leading a civil society group, the deputy mayor of Shanghai told me over dinner that the Party had given him the power to relocate thousands of people in a matter of weeks. This, then, was the source of that country?s growth. And what I remembered was that a young lady had stopped a major irrigation project in my state for two decades. This was after a rehabilitation programme?the best in India?had been finalised. The delay only helped create a five times cost escalation.
We also need to evolve economic and technological policies to help our manufacturing and agricultural sectors grow faster, as East Asian examples have shown time and again. Reform means more than wanting financial and insurance companies in serious trouble on home territories to come to India; it also means working steadfastly with a medium-term vision.
Rising trade shares are a part of the competitive pressure to make the buck go further. We need to hold the hand when our people get the short end of the stick, both when they invest abroad and when they export. As the East Asians have taught us, efficient import substitution is the other side of the coin of export promotion. This lesson will be important as the green shoots become stronger.
RBI, the chief economic advisor and the EAC chairman have made it clear that we have to cut down government consumption and government borrowings as the recovery begins, because you don?t stand a chance with your global competitors if your interest rate can?t come down. Economists like me are not outliers any more. Of course, the pressures of a coalition will not go away, nor will the opposition stop criticising the government for doing what it was doing when in power. But civil society groups can at least expose those who would jeopardise this country?s future. If you don?t grow fast you will be a has-been of history, which has never been kind to those who fail. Economists, businessmen, trade unionists and strategic planners should be a part of the forward-looking group, and we should ask Admiral Mehta to head it.
?The author is a former Union minister