An Agenda for New Parliament to Propel Prosperity
It is easy to be swayed by the rah-rah raga. Lessons of the 1991 crisis matter. Sustainability and resilience calls for a political consensus on critical goals. How can a nation servicing global digitalisation not have a template to track welfare spend, jobs, incomes, poverty? India needs a new architecture for governance, improve data collection, end judicial delays, address water crisis, align skilling to jobs and address electoral reforms.
Shankkar Aiyar | The Third Eye | The New Indian Express | 02 Jun 2024
In the summer of 1991, India’s forex reserves were barely enough to cover seven days of imports. India pledged 46.1 tonnes of its gold reserves with the Bank of England to raise $405 million to avoid default. The exposé — authored by this columnist and published in this very newspaper on July 8, 1991 — informed the world at large about the precarious state of the economy and compelled the liberalisation of the economy.
On Friday, the Reserve Bank of India shifted 100 tonnes of gold from the UK, from the Bank of England, to its own vaults. India’s journey from penury to the promise of prosperity, chronicled in my book Accidental India, has been propelled by a series of crises. Today, India has over 822 tonnes of gold. It has $646 billion in foreign exchange reserves. It is the fastest growing economy ranked fifth on the global table. It is easy to be swayed by rah-rah ragas. It is instructive to remember the lessons of the 1991 crisis.
This week will witness a newly elected parliament and a new government. They carry the onus of steering the nation through tumultuous times, disruptions in geopolitics and geo-economics. The promised tryst with destiny calls for an agenda which has a buy-in across party lines. Indeed, it would be ideal if President Droupadi Murmu, in the opening address to the new parliament, calls for a special session for the MPs to forge an all-party consensus on critical national goals.
Here are a few suggestions to install resilience and sustainability.
Maximum governance: It is often said India’s governments have too many people doing things which don’t quite matter and too few people doing that which matters. Essentially, the architecture of governance needs a review — what can be manned, what can be offshored for self-regulation and what can be automated or digitised. It is not so much the size of government, but simplicity of processes which defines efficiency. Can India hope for a select committee of Union ministers and chief ministers assisted by an expert group deliver a new design of governance?
Moolah mobilisation: Cost of capital has implications for growth. The world is witness to new industrial policies and fiscal expansionism. As the new coinage goes, the world is flat for high interest rates. India must fuel its growth by inducting efficient resource management. It needs to weed out waste. To raise resources it must encash/monetise assets by offering them to investors — this includes idle land, enterprises and shareholdings. The government’s holding in 28 PSUs that went public since 2004 is over 80 percent and valued at over Rs 21 lakh crore. Trimming holdings to 51 percent could deliver as much as Rs 10 lakh crore. The aspiration to be the third largest economy rests on finding resources to invest in human and physical infrastructure.
Measurement matters: Elections reveal that politicos fumble for answers on critical questions. Shouldn’t a nation servicing the frontiers of global digitisation have a data template — on jobs created, incomes earned? Can a triangulation of data — bank credit, private equity, UPI payments and GST collections — yield a summary of the gig and formal economies? Can government expenditure yield a synopsis on employment that is intelligible and not gobbledygook? Why must statistics on GDP or poverty be shadowed by doubts? Peter Drucker said what gets measured can be managed and improved. If India aspires to do better, it must improve its measurement systems.
Track the welfare trail: Elections are effectively a contest between schemes. India’s welfare model is at an inflection point of cost and benefits. The central government spends over Rs 5 lakh crore on social schemes. What’s the quantum of state government transfers? Given the intensity of disruptions, income support and welfare measures will expand. It is time the Centre and the states reassessed merits, added up the costs and examined outcomes in an annual report on welfare.
Align jobs and curriculum: India’s job market is a study of paradoxes. There are 3 million vacant government posts and the joblessness debate. There is also another market reality — the gap between what employers want and what aspirants are equipped for. Accelerated adoption of technology will widen the gap. Primary education is broken; higher education is located in the past. India needs to map the skills of its workforce and what the market needs. The realignment of curriculum with market needs a public-private partnership between academia, industry and government. India needs an active labour policy which enables skilling, up-skilling and re-skilling.
Flailing judicial system: Delivery of justice is a cornerstone of the Constitution. The National Judicial Data Grid shows that the delivery of justice is flailing across levels. India’s has over 5.1 crore cases pending in its courts, of which over 80 thousand are in the Supreme Court and 61.9 lakh in high courts. Year after year, judges have bemoaned the fact that the government is the biggest litigant. Will India modernise in time for a Viksit Bharat?
The thirst gap: No modern economy can sustain growth if the basic issues are unattended. Delhi and India recorded the hottest summer this year. Global warming is manifest and is accelerating the not-so-silent water crisis. Cities are dependent on long-distance transport of water, farmers mine water and groundwater levels are plunging. There has been much speculation on how the government will use the Rs 2.11 lakh crore bonanza delivered by the RBI. How about deploying a portion to create a seed capital to set up water recycling and desalination plants in cities?
Finally, the MPs have five years to address the critical issue of electoral reforms. The list is long. The campaign was littered with allegations of corruption. While they mull on it, they may want to examine whether the economy can afford long, multi-phased elections. Does it have to be in the summer? The answers will illuminate the future.
As Voltaire said, “We never live; we are always in the expectation of living.”
Shankkar Aiyar, political economy analyst, is author of ‘Accidental India’, ‘Aadhaar: A Biometric History of India’s 12-Digit Revolution’ and ‘The Gated Republic –India’s Public Policy Failures and Private Solutions’.
You can email him at shankkar.aiyar@gmail.com and follow him on Twitter @ShankkarAiyar. This column was first published here. His previous columns can be found here.