Current Affairs
CURRENT AFFAIRS: EVEN AFTER ADOPTING REFORMS OUR ECONOMY IS STILL AILING!! WHAT SHOULD INDIA DO?
- While India has been doing well for more than a decade, there have been changes over the last three years that are especially significant.
- Firstly – Indian companies have come of age. India now possess near world-class companies, good corporate governance and capital market transparency. This began with software companies like Infosys, Wipro and Tata Consultancy Services, which set new standards in corporate culture and spread to other sectors, such as pharmaceuticals, bio-technology and beyond.
- And, aided by the sharp rise in foreign exchange reserves, Indian companies have over the last three years, begun making global acquisitions. In 2003, they bought 35 companies abroad.
- Secondly –There has been a windfall in India’s outsourcing business, related. India which already had the organizational infrastructure for back office work and a ready supply of English-speaking workers, did especially well.
- Thirdly – with China joining the WTO, India having removed quantity controls on imports, and the advance of the IT industry, there has been an unprecedented rise in Indo-Chinese trade. The total value of trace between these two nations was $ 5 billion in 2002, which rose to $ 13.6 billion in 2004. Moreover, what is interesting is that it is India that is running a trade surplus. More generally, there seems to be a general rise in India’s economic links with Asia.
- Finally – these strong economic developments come with a fortuitous political change. With the rise of global terror, US political interests have come into alignment with India’s and also US share similar political systems – democracy, free press and a constitutional commitment to secularism. This makes India a natural strategic partner for the US. With this, US is likely to embark on a policy of trying to use India as a balancing force against China’s inevitable rise to world power.
- Despite all these good portents for the economy, much remains to be done. The world may judge us by the size of our national income and foreign exchange balance, and by the overall growth rate of our economy. But we must be clear in our minds that these are of no more that instrumental value. India continues to be crushingly poor and economic growth and trade are valuable only to the extent that they reach the disadvantaged and the poor.
- For the next round of policy making, India will have to craft a package to sustain and step up the momentum, in growth that has been gained, and to spread its benefits to all regions and citizens.
- To sustain the momentum that has been gained by the Indian economy and to spread the benefits widely, our government will have to work on many fronts.
- Firstly – The Government has to work on money supply, the balance of trade and budgetary deficits.
- If one want to start a business in India, it takes 88 days to get the clearance. If one’s business runs into a problem of contract violation, it takes 1 year to solve the problem. To resolve an insolvency case and shut down a firm takes a little over 11 years.
- One specific facility that the Govt needs to provide urgently is that of patenting inventions. In 2001, the number of patents filed by Indians in India was 234, whereas the figure for Japan was 388990.
- To reach New York starting from a factory in India, a garment takes on an average 32 days.
- Secondly – It is time for India to make major infrastructural investments. Poor roads, interruptions in electricity and inadequate airport facilities are strangling opportunities in many sectors, especially in manufacturing.
- Thirdly – India needs labour market reforms.
- Fourthly – the country needs to plan a variety of more imaginative direct interventions to improve the standard of living of the poor. India needs to invest more in interventions to combat illiteracy, morbidity and poverty.