For all the cacophony that was supposed to be governance and building india the last 10 years, today we stand at the verge of a new era in governance. The fact that the UPA has so spectacularly screwed up the growth story and the economy, we should be at least optimistic in what the new government has to offer. Looking back at the opportunities that have been lost and what we stand to gain the next 5 years, we see two successive UPA governments at different ends of spectrum. The first UPA offered a decent growth around 9 percent and then a downfall in the second term. Wouldn’t it be safe to say that most of the growth in the first term had been due to the policies and the measures taken by the NDA government until 2004? The major scam that has taken place in the second UPA term was not 2G, CWG, Coal or myriad of other scams but the derailing of the growth story and getting us to where we are right now. We can talk about a lot of faults as factors such as inability or the incompetence of the UPA, but it was predominantly because the government never really bothered to make corrections or do the right thing for our country and hence the multitude of scams and corruption. We all talk about the global recession, scams and so many external factors contributing to the decline, but it would be unwise to ignore the factor of economies of west playing their own part with the UPA to derail India growth story. The Indian and other similar world economies cater to the American and EU economies, I wonder if a strong indian economy is in the best interests of the big players.
A lot of it is also because our national media has never really bothered to pull up the government for its inability to govern. If we look at media, primarily the TV news media and that most of them sprung up during the UPA rule and the amount of credibility that they have been left with it suspiciously looks like they played hand in glove with the misadventures of UPA. As it has been evident with information that has come out in the public domain time and often that the major news organizations are backed by foreign news behemoths, it could very well be possible that they could very well have had a stake in controlling our economic policy through UPA. This arrangement between the media and its stake in government policies would definitely alter with the new government but not sure in what direction.
Around the period of 2007 and 2008 some studies were done to understand the growth story of India. As per a McKinsey report, the middle class population in India at that time was around 50-60 million people and projected to be around 270 million by 2014-15. I wonder how much of that has been possible as the current statistics are unavailable. My guess is we are around 150-170 million people we could categorize as middle class and thats about 15%. We have gotten to a state where the government perpetually debates about defining the definition of poverty and calling it a state of the mind instead of providing the poor a sustainable life. By most estimates, around 30% population is below the poverty line. We have an untapped resource of around 500-600 million people who belong to the lower middle class of our society. This is majorly the population which lives in the numerous towns of india.
I would like to believe that the the purchasing power of middle class is what basically defines the strength of a country’s economy across the world. Looking at the future and the opportunity it presents us with, upgrading our lower middle class population to a middle class would be the biggest challenge. This I would assume will have a ripple effect to the bottom end of the society improving the standard of people below the poverty line. This is where specifically the manifesto of the BJP makes all the ‘right’ noises. Building 100 new cities, better road connectivity, infrastructure, upgrading the manufacturing sector, skill development and tourism wherever possible. The towns and rural India is what would get the most out of these measures. American economy by nominal GDP is at $17 trillion with a population of around 320 million and we are 1/10th of its size with around 4 times the size of its population. Any change in purchasing power and strengthening of our fundamentals would result in tectonic shifts and major realignments towards east with India and China being the hubs and other technology hubs such as Japan, Taiwan and Korea supplementing it. I wonder if this what the western governments are apprehensive about.
One of the major accomplishments that UPA boasts about in its regime is the NREGA, that rural people get 100 days of employment per year. Mr. Jayaprakash Narayan of LokSatta Party put it best when he said, “In this day and age, it is an insult to our people to consider digging and filling pits as employment. NREGA has also distorted labour markets and destroyed the work ethic.” and that is the sad reality of dole based reign of UPA. This is where Mr. Modi’s focus area of skill development makes real sense to provide sustainable employment round the year. For all the talk about Gujarat model and how effective it will be in other places, my understanding of the Gujarat/Modi model is about the ability and willingness to solve problems. Every state and every landscape of our country has its own problems and with that presents us unique opportunities. The ability and willingness to take the bull by its horns and solve those problems and grab the opportunities is what is required and whatever model we may call it is irrelevant. I think Mr. Modi offers this. The aspiration of India to be superpower in a global economy is well placed in the hands of a leader who has the guts, the experience and looks like has the sense to take India to its rightful place. On the verge of history, on the day the nation takes a turn for the better let us wish ourselves a Better India.
Over to you Modiji !