Were Off To A Good Start
But we have to do more despite fractured mandate
Manmohan Singh
India is a nation on the move. I am confident that our time has come. India is all set to regain its due place in the comity of nations, as a plural, secular and liberal democracy, as an open society and an open economy.
Never before has the Indian economy sustained close to 9 per cent growth year after year for so long. Most projections suggest that we should be able to sustain this rate into the medium term. You must compare this number against the fact that for almost three decades after independence, our annual growth rate was a mere 3.5 per cent. The economic reforms we initiated in the 1980s and took up with greater vigour in the 1990s helped push this growth rate up to an average of close to 6 per cent over the last two decades of the last century.
It is important to appreciate that this acceleration of growth is not a flash in the pan. There has been an increase in our gross investment and savings rate, particularly in the last three years. I believe this will be sustained into the foreseeable future because of the demographic transition underway. India is a country of young people. It will remain so for sometime to come. The generation of savers outnumbers the generation of dis-savers.
Secondly, our growth process is largely based on growing domestic consumption. Ours is not an export-led growth model. Nor are we a mercantilist economy pursuing beggar-thyneighbour trade policies. Indias growth process is based not only on an expansion of the home market, but also largely on the rise of domestic enterprise. The economic reforms of 1991 unleashed a new era of entrepreneurial growth in India.
Clearly, India has got off to a good start in the first decade of this millennium. However, we have a long road to travel before we can claim to have fulfilled Mahatma Gandhis prayer to wipe the last tear from the poorest of the poor. We remain concerned about inter regional disparities in development. The 9 per cent growth rate is an average of over 10 per cent in some parts of India and under 3 per cent in others. Large continental economies are bound to have inter-regional disparities However, we cannot afford to see this gap between our developed and backward regions persist. And we are not yet seeing the catching-up effect as should be the case. This is a cause for serious concern. This is where the role of state governments comes into focus. The implementation of many of our social and human development programmes is in their hands.
There isnt any lack of thinking on what needs to be done to sustain and further
accelerate growth. There is also fairly wide recognition of the importance of this agenda However, given the nature of competitive politics and the very fractured mandates given to governments, it has become difficult some times for us to do what is manifestly obvious.
The successful implementation of our social and human development initiatives requires greater public-private partnership (PPP). This is yet another important initiative of our government. Both in infrastructure development and in social and human develop ment, we have encouraged such partnerships A synergy between public support and private initiative can help multiply the productivity of resource utilisation.
In a democracy like ours, the government is duty bound to focus on equity. At the same time, in an open economy, we cannot ignore or neglect the efficiency dimension. We have to ensure that resources are used efficiently. We have to ensure that competitive pressures are maintained in all markets. We have to ensure that the productivity of resource utilisation is increased. Hence, a judicious mix of equity and efficiency considerations is required in the policy initiatives we take.
We have been deeply concerned about the efficiency of utilisation of public funds, especially in infrastructure development, education and health care. We have been looking for ways to combine our concern for equitable outcomes with our concern for efficient utilisation of outlays. PPPs are an effective means of combining these two considerations. This is not yet a fully evolved paradigm of governance. We have bravely, yet cautiously, sailed forth into uncharted waters. We have learnt some useful lessons. We may make mistakes. But we should learn from them.
More and more of our firms are investing time and money in strategic planning. This has become necessary ever since we demolished the licencepermit raj. In those days, when the government managed the business environment, our firms had no use for strategic thinking or long-term planning. Today, firms operate in far more competitive markets. Of course, the big ones always try to reduce the element of competition and secure an oligopolistic or monopolistic environment for themselves. However, external liberalisation has created more competitive markets and limited the scope for such strategies. This has served consumers and the nation well.
In order to operate in open and competitive markets, with all the contingent uncertainties and risks, firms need long-term planning, strategic thinking and organisational flexibility to adjust to change. Our private sector companies have done well in this regard. our public sector too needs to learn more.
I am greatly encouraged by the spirit and energy of this emerging India. India will count for more in the world of tomorrow.
Excerpted from the prime ministers address at the McKinsey meet on Tuesday .
Publication:Times Of India Mumbai; Date:Oct 25, 2007; Section:Editorial; Page Number:20
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