This article was originally published in Postnoon on June 27, 2013
The Rupee is falling, almost touching the Rs60 per dollar mark. The Sensex is falling, is at last two months lowest levels. Confidence in the economy and government is at the lowest. Even nature does not seem to be co-operating and continues to pour in Uttarakhand. The general atmosphere is that of pessimism.Amidst this scenario, comments from Jim O' Neill, British economist and former Chairman of Goldman Sachs Asset Management, famous for coining the term BRICs, to denote Brazil, Russia, India and China, indicate his continuing confidence in the potential of India.
O' Neill revisits the 10 ten things that India must do (included in his original paper in 2008, and relevant even today) to achieve its potential in a recent article published by Bloomberg.com. The ten things that O' Neill writes about are:1. Improve governance. This seems the most difficult as well as the most important. The corruption and lapses at all levels are reaching unprecedented levels.
2. Fix primary and secondary education. While the population of India is now looked as, as an asset, rather than a liability, it would not remain an asset if the majority of the workforce are not capable of doing even the most basic jobs. A lot of other social problems have their root in the lack of education.3. Improve colleges and universities. Once considered a centre for learning, and home to the Indian Institute of Technologies and the Indian Institute of Managements, half the graduates in India are unemployable. The quality of faculty and infrastructure and the number of institutions of higher education needs to be beefed up.
4. Adopt an inflation target, and make it the center of a new macroeconomic policy framework. This is what RBI has been trying to do, though with little help from the government.5. Introduce a medium to long-term fiscal-policy framework, perhaps with ceilings as in the Maastricht Treaty- a deficit of less than 3 percent of GDP and debt of less than 60 percent of GDP. This is something the current UPA government would find impossible to achieve with its populist policies. But if not addressed soon, growing deficit and debt could go out of hand.
6. Increase trade with its neighbors. As O' Neill points out, this could also be a good way to promote peace with neighbors.7. Liberalize financial markets. The financial markets in India are relatively more liberalized than a lot of other emerging nations. Though investor protection and awareness is something that needs to be worked on.
8. Innovate in farming. Another green revolution is required in India to improve productivity and yield. With increasing number of middle class families and people being able to afford better quality food, the demand for pulses, fruits and vegetables are on the rise.9. Build more infrastructure. O' Neill suggests that India learn from China in this department. I totally agree.
10. Protect the environment. With the ongoing calamity at Uttarakhand, need this point be emphasized more?