In an interview with Mr.Rajat Gupta, Dr.Manmohan Singh,Prime Minister of India discusses his plans to modernize the country's infrastructure, attract FDI, and create jobs - all in the service of eliminating chronic poverty and disease in India. Dr.Singh rates his government achievements at six out of ten, a performance he said was unsatisfactory. I sort of liked reading this as what came out looked like a clear perspective of what the country should be aiming for and a certain amount of big hat thinking with doses of moderation and reality. Some key points from the interview:
- India needs a growth rate of about 7 to 8 percent per annum, sustained over a period of the next 10 to 15 years. It needs to underpin that growth by strong performance of agriculture, strong performance of our physical and our social infrastructure.
- There is a lot of backlog in improving the infrastructure. India may need an investment of about $150 billion in the next seven to eight years to realize the ambition to provide an infrastructure which is equal to the economic and social challenges faced by the country.
- India needs a lot more FDI than it’s got, and needs to have the ambition to move in the same league many other countries in the neighborhood is moving. India may not be able to reach where the Chinese are today, but he is optimistic about the role of foreign direct investment, in the areas relating to infrastructure, where the needs for investment are very large.
- Extreme rigidities in the labor market, inflexibility of the labor market, is not consistent in achieving the goals in a world where demand conditions are changing so fast, technological conditions are changing so fast.
- India will need a second green revolution to increase production and productivity, and in the process create more jobs. Services today account for 50 percent of our GDP. Services cannot move far ahead of what's happening in manufacturing, and there lays an imbalance. India may need to do a lot more on manufacturing because, ultimately, services respond to what's happening in the production sector. Agribusiness and food processing are important parts of modernizing the economy, moving into a phase where a more modernized agriculture helps not only farmers but also helps consumers.
- Over the next 10 to 15 years about 50 percent of India’s population will be in urban areas. India needs new strategies to look at urban transportation systems, urban management of solid wastes, new sewerage systems.
- In India the savings rates are improving and the proportion of young people to total population is increasing. If India can find productive jobs for this young labor force, that itself should bring about a significant increase in India's savings rate in the next five to ten years. If the savings rate goes up, in the next ten years, by 5 percent of GDP, it would have generated the resources for investment in the management of this new urban infrastructure that is needed in order to make a success at modernization and growth.
- In a world in which technology is changing at such a fast pace, where demand conditions change very fast, India needs to look at a more innovative mechanism to cut down on this rigmorale of many tiers of decision-making processes.
- Overall, India is today on the move. The pace may be slow, may not be as quick as some people would want, but the direction is unmistakable. India's future lies in being an open society, an open polity, a functioning democracy respecting all fundamental human freedoms, accepting the rule of law and, at the same time, to emerge as a successful, internationally competitive market economy. After reading this please read this piece -why china no match for india