Tuesday, July 22, 2008

The Great Indian Growth Story

So the Indian economy did clock 9% growth according to the FM, so what does it mean? it means the stock market will recover slightly, the FIIs will again pour some of their excess money, pro-reform economists will keep screaming for more reforms so that the economy can break the barrier of 10%+..Things will just go on as usual. What difference will it make if the economy grows at 10% ,20% or more to the common man? I feel it is nothing. And there can be no better example than India right now. I am not a left-winger nor a right-winger.. i am just a believer in Bentham's law ..greatest good of the greatest numbers....So is that happening with all the growth and stock market boom? The answer is a clear no.

A vast majority of Indian population still live in conditions that renders figures like per capita income, poverty line useless in assessing well-being. The indicator that is more meaning full is more basic like consumption of food, nutrition, life-span, child-maternal mortality, employment, then of course gender dimension (after all neglecting half the population is a sin).
It puzzles me to see stock market getting such a wide media coverage ..especially in the new-papers calling themselves 'economic'...I am more than convinced that because of this coverage, majority of the new-paper reading population corelate economy to stock markets. There is obviously a co-relation, not to deny it. But then is not the economy much more than the stock market? Far from dalal street, economy should be much more related to the people far and away breaking their backs to feed themselves and their families? The stock market! If there were to be a record of how many individuals profited from activities in stock market and how many institutions especially FIIs profited, i m sure it how skew the balance in favour of FIIs solidly. I have seen more people kill themselves after having lost heavily in stock markets than people who invest there to make up for their retirement funds.. Simple enough. Its uncharted territory for a vast majority. In the latest meltdown, many of my friends have lost their hard earned money. They invested at the wrong time, (despite my warnings!!!I keep myself away from a bull market!!!) and they are not alone. They will have hundreds of small investors along with them. The pity is your bank fails, the government will pay you back your money, you loose at the stock market, its gone.. just gone in the useless bits of paper...I wish it were as clear.
All said and done stock market and horse race has far too many things in common than economy and stock market. The same is the case in the great US of A!!! I m surprised how the Wall street gets to have its way. They are profit monger of the worst kind. In a bull market, they want the government and the regulators out... they always scream for reforms-free markets-magic of invisible hands-etc.. but at the smallest signs of trouble they expect the Fed-Federal government to pitch in! its like heads i win, tails you loose! Come what may they will still be around and make money!Unfortunately this is what a financial sector led economy goes through.

Its true that Indian financial economy still has a long way to go. I am glad it has. After are we still don't have something called sub-prime mortgages! (we do have the commercial micro credit which is almost the same but much better regulated than sub-prime stuff but micro credit has its own pitfalls!)
So what is the real economy saying right now?
Firstly, consumption of food: Has reduced in the past few years, more rapidly after 2003-04.
Nutritional status: Though no famine-starvation related death, there is wide-spread malnutrition.
Poverty : actually much more than what the planning commission estimates using an archaic formula.(they are intelligent enough to fool us by over-estimating the reduction in poverty levels)
employment: most recent data.. no significant increase in employment.
That means Indians are not eating well and are more vulnerable to ill-health and malnutrition,more Indian kids are malnourished, people are not getting jobs, they don't have access to PDS food, so what is the celebration about the growth and the stock market hitting 20k, or even 50k.. if course if it hits 50k, Mukesh Ambani and likes will still be able to build grand structures for homes... import the latest of cars,gadgets, wear cloths designed by french designers, throw grand parties, host wedding celebrations in palace of Versailles...and keep thinking of innovative ways to blow up their burdensome money-bags!! But what about us? what about our domestic servants? what about people in villages who still have to travel far often on dusty roads in moving shacks of vehicles for schools, hospitals and live on less than Rs 300 per month per person.
When i work on the Indian data, i feel frustrated with myself and my creed. What are we trying to do.My blood boils the very minute i hear reforms!!
Yes we do need reforms.. what kind of reforms? Introducing universal coverage under PDS (greater good of the greater number here there are more under nourished than are affluent who will anyway abhor the idea of buying insect infested, rat bitten PDS food, and there will be a self selection; but if food is that much more affordable to those who would not buy from markets, they would be better for sure) Make sure that all food and civil supplies department is completely computerised and stocks are never diverted to open market. Also issuing ration should be redone perhaps linking it with individuals to generate some kind of unique number skin to Social Security Number in the US. With the availability of bio-metric technology, it is not difficult today to undertake such an exercise. After all India is the back office of the whole world, and has the expertise in processing that kind of huge data. So that one person is not given a hundred ration cards as in the case of Delhi is not repeated. Is this asking for too much? If the government can handout Rs 60,000 crores to farmers, it can definitely be more liberal with respect to the nutritional adequacy of its citizens.
After food comes education. Why not spend more on education? Establish more primary schools, more colleges, more world-class universities? I doubt if Bangalore University still has a functional computer lab with broadband Internet access! It was not there not a long time back when i was a student there. I am sure its not much different now. I wonder if young men in the cyber parlours that have mushroomed in every corner of Indian cities know much beyond emails, orkut and pornography. (Regardless of the city and cyber centre, the machines are full of bugs from the pornographic websites!)...There is a huge body of information that is up-to-date that we can harness to make ourselves better, more competitive and have better prospects.

Reforms for me means just these for now. If any thing, universal health coverage is the other most important matter that requires urgent attention.. the rest may go to hell.. Let the government get out of Maruti Udyog, useless Air India, Indian, and Ashoka Hotels and all such stupid ventures, But realise its obligation to its citizens are more basic, not the stock markets and cell phones, but food, water, education and health.
I wish our politicians had a commitment, even a small wish to make a difference. But pity they are just the same as G.B.Shaw called them!

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