'India Needs China Growth Rate' : OutLookIndia.com
It's the same rant everyone from New York to New Delhi seems to be giving. Quite frankly I don't see the Indian economy clocking 8% p.a growth on a consistant basis. We have have this sudden spurt once or twice in a 5 or 6 years. Personally, I see this attributable to the fact that we have somehow leap frogged a very critical phase of economic development i.e strengthening our manufacturing base.
We seem to have literally jumped from "ape to man". Although the of the service sector as the biggest contributor to the GDP is to be appreciated, I dont think this sector alone can carry the burden of pushing economic growth.
I dont know the figures but look at China's (or for that matter many of the Asian economies) exports. It being pushed purely by their manufacturing base. Everything for torch bulbs to sophisticated DVD players are now manufactured in China. Zoom back home and you see that the only thing the news and media talk about these days are the craze with BPO and IT Services. And what do we have here? Projections of the BPO becoming a $25 billion industry by 2012 or whatever.
Here is what could get things moving:
1.) Encourage private investment in manufacturing. India can be as competitive (if not more) than China in terms of labor cost (Yeah I know, the wages paid for Chinese labor would make an Indian labor of the same category feel like a million bucks.). The way to do this would be to identify areas where Indian manufacturing has real strenght. Automobile manufacturing and auto ancillaries is such an industry and states like Tamil Nadu or Karnataka could become the world car makers if investment in such areas is given a push.
2.) We need more infrastructure, more roads, more ports, more power, better airports. Everyone seems to be unanimous in their decsions as far as investments in infrastructure is concerned. Nothing seems to be happening. Automatic FDI approval for infrastructure projects has been mulled for so many years but I have no clue here as to if this is now official.
3.) Face the facts: The great rurla urbal migration has begun and I see no way that this process can stop or turn around. Folks in the rural areas are thronging cities by the thousands ins earch of better work and lives and if our decision makers could only apply the basic tenents of Keynesian economics, things could look better. Huge infrastructure projects will have just the right kind of multiplier effect that the economy needs to boost production and demand on a consistant basis over the medium term ('Cos in the long run we are all dead).
I could fill up stuff for hours but rite now I gotta work or else..the boss kicks my lazy butt. More eco fundas to follow...