Vidarbha Economic Development Council (VED) organized a webinar on, “India’s Place Among Asian Tigers” recently. Among the eminent Panelists were Vishnu Prakash IFS, former Envoy to Canada and South Korea, Ajay Sancheti, former Rajya Sabha Member, leading industrialist and into healthcare and environment protection management, and TS Rawal, a prominent economist and Partner, TS Rawal and Co, Chartered Accountants.
Prakash informed that when the world had shut down due to the corona, at that time China was capitalizing on its sales as it had already gone through the lockdown period. Now that the economies were resuming, so was India, but should India follow the eastern economy? 20% of the world’s working people would soon be Indians. With the right skill sets, how can we be a leader in Asia? He informed that countries like Singapore, Japan, Korea were all devastated economies but had revived fantastically due to export-led growth. He observed certain common key factors that led to this revival viz – Industrialization and exports, discipline and diligence, patriotism and a national character, and flexibility in labour laws and taxation.
India would be the third-largest economy in the world in another 20 years, said Prakash, as we have conducive elements such as a democracy, an aspirational population, frugal innovations, youth, size of our market, and we are heading for food and energy security, so our stock is very high.
However, what seemed to bother Prakash was that in spite of all these positives, India was still in the take-off mode for the past 30 years, and that was because we have failed to expand our manufacturing base, and our security environment remains very vulnerable. In order to compete with the world, we have to provide ease of doing business, have the next generation of reforms, and go for industrialization.
Ajay Sancheti informed us that India is the fifth-largest economy today after the US, China, Germany, and Japan, but we need to speed up and scale-up. Although our infrastructure, earlier lacking, has now picked up, and in IT the world depends on India and is controlled by Indians, but in order to compete within Asia, we are lacking in one area, i.e. our need to develop regional sectors all over the country, only then can we have over-all development.
Our banking system has to compete with world markets and standards. The banks have to provide timely availability of money. The Govt. is trying to do everything, but it’s not reaching the people. Businesses came from China to the small countries which made it very conducive for them to go there which India did not do, hence we lost out. He stressed also that old laws needed amendment.
TS Rawal argued that there were three critical interventions that governments could use to speed up economic development.
The first intervention – and the most overlooked – was to maximise output from agriculture, which employs the vast majority of people in poor countries. Successful East Asian states have shown that the way to do this is to restructure agriculture as highly labour-intensive household farming. This makes use of all available labour in a poor economy and pushes up yields and output to the highest levels.
The second intervention was to direct investment and entrepreneurs towards manufacturing. This is because the manufacturing industry makes the most effective use of the limited productive skills of the workforce of a developing economy, as workers migrate out of agriculture. Relatively unskilled labourers create value in factories by working with machines that can be easily purchased on the world market. Focus on exports was the key to success.
Finally, interventions in the financial sector to focus capital on intensive, small-scale agriculture and manufacturing development provided the third key to accelerated economic transformation. The state’s role was to keep money targeted at a development strategy that produced the fastest possible technological learning, and hence the promise of high future profits, rather than on short-term returns and individual consumption.
The Addresses were followed by a Q& A Session. Malhar Deshpande, Jt. Secretary, moderated the programme and proposed the vote of thanks.