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Year-end euphoria: Dreams for 2010

January 5, 2010

Before the season of festive good wishes and good resolutions wears out, here’s a list of the policy changes that I would like to happen in the new year, to promote growth and innovation

WHAT better way to begin a year than to recall T S Eliot’s lines: For last year’s words belong to last year’s language / And next year’s words await another voice / And to make an end is to make a beginning. A new year is certainly a start for many things. As one gets over the hangover of the year gone by — and, for some, of spirits gone in — it is the time to look ahead. The joy of the festive season has not yet worn off, and an upbeat, feel-good mood is in the air. An optimistic outlook is, therefore, quite in order. Here, then, is a what-may-be look at the brandnew year, before the shine wears off, and through distinctly rose-tinted glasses.

All through 2010, economic growth continues to accelerate. Spurred by a slow but definite global recovery and a positive Budget, the Indian economy does exceptionally well, with a run-rate of over 9% growth. An excellent monsoon, coming after a disastrous one in 2009, leads to a strong bounce-back in agriculture and stimulates rural demand and growth. Manufacturing does well, with a big improvement in availability of power, cheaper import of raw material — thanks to a stronger rupee — and more efficient logistics. The last is a consequence of removing bureaucratic hurdles of assorted levies and paperwork traditionally involved in the movement of goods, along with better roads and a technologyenabled goods tracking system to minimise cost and time of shipments.

The entry of large retail chains has had an immediate impact on the supply chain. Wastage of agricultural produce has been minimised, as has time-to-market, thanks to cold storage facilities and refrigerated transport. Better rural roads, linked to high-speed rail and highway networks, have helped in reducing cost and time of transportation. This has led to fresher and cheaper farm produce for the consumer, while efficiencies and disintermediation have meant higher prices for farmers. The availability of cold chains, all the way from farm to urban consumer, is resulting in farmers growing more fruit and vegetables. This generates higher incomes, but has a short-term impact on the availability and prices of foodgrains; however, the large budgetary outlays for agricultural extension will help to quickly increase the yield of grains, while the big increase in R&D funding will lead to higher productivity in a few years. These steps will increase supply and keep prices in check.
NREGA continues to be a boon to the really poor, providing employment where and when none exists, and also leading to an increase in general wage rates. The use of IT and innovative solutions — like payments through pre-paid cards in mobile phones, with voice recognition technology for ID — has led to quick payments, full transparency and accountability, and higher system efficiency. Meanwhile, the National Rural Livelihoods Mission (NRLM) — with NREGA melding into it — has taken off. NRLM provides training for in-demand skills, including training for installation, maintenance and repair of agri-equipment and electronics (TV, computers, mobiles and telecom equipment, cable and DTH, air conditioners, etc); plumbing, electrical work, masonry and construction; sales; driving and auto maintenance; agriculture, horticulture and forestry related, etc. NREGA supports this by paying eligible trainees in recognised courses a per diem stipend equivalent to the NREGA wage rate. Such training has resulted in vastly improved employment prospects, higher wages, and better productivity: gains for the individual as well as the economy.

AFTER A difficult year, India’s flagship IT-BPO industry has picked up steam once again, as companies world-wide begin to increase IT budgets and look at India not just for wage differentials, but also for skill arbitrage and innovation. Booming domestic demand provides an additional fillip to this sector, resulting in an estimated direct employment generation of over 400,000 new jobs during the year, and about four times that through indirect jobcreation. The government ensures the long-term growth and global competitive advantage of this sector through positive steps in education, training and fiscal policy, including the recognition of all STPIregistered units as ‘deemed SEZs’.

Matching the bold steps by government, Nasscom announced that all IT-BPO companies with a turnover of Rs 100 crore or more had voluntarily agreed to put 3% of their profits into a special fund. Of this, two-thirds would be a fund, managed by Nasscom, for educational initiatives; the other one-third would be managed by Nasscom Foundation, and would be dedicated to improving the lives of the disadvantaged through education, training and skill development. This path-breaking initiative in corporate social responsibility by the IT-BPO industry has already energised other sectors to follow suit.

In a widely welcomed new move, the finance minister invited civil society groups for pre-Budget discussions. He agreed to ensure that each line item of budgetary expenditure would indicate the expected outcome and impact on the disadvantaged — specifically, on those below the poverty line. Government would also institute a mandatory social audit — funded by government, but independently conducted — of every social scheme with an outlay of over Rs 500 crore. The frequency — quarterly or annual — and other modalities would be decided in consultation with civil society groups. There will also be a managerial audit of all government projects to ensure accountability for delays or mala fide in decision-making. Further, even as administrative reforms are put on a fast track, a new commission will review laws to identify, within a year, obsolete and unnecessary laws that need to be repealed.

Government has created, under the auspices of the National Innovation Council, an ‘India Idea Fund’ of Rs 1,000 crore a year to provide seed money — as grant or equity — to innovative and intellectual property focused start-up ventures. Special priority will be given to social entrepreneurship which will help to improve livelihoods and services for the disadvantaged.
Are these random possibilities merely dreams emanating from ‘year-end euphoria’? Maybe; but I echo Lennon: You may say I’m a dreamer/ But I’m not the only one/ I hope someday you’ll join us. So, do. After all, Man’s reach must exceed his grasp, else what’s a heaven for.

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