INDIA MODEL OF GROWTH
India is Sparkling But which Model of Growth should we choose
Model of Growth
American Model of Growth OR Russian Model of Growth OR Chinese Model of Growth OR INDIAN MODEL OF GROWTH
Let Us Look Back
250 years back before British rule India was controlling 25% of World Trade When British left we were controlling 2.5% of world trade In 1991, before liberalization, we were controlling 0.4% world trade
Let Us Look Back
16 years after economic liberalization we control only 0.8% world trade Whereas China today controls 2.5% world trade Between 1947 and 1991, the country followed socialistic pattern of Society (Russian Model)
Let Us Look Back
Import, Export, Production Capacity all regulated through license. Foreign companies had to dilute their Equity to 40% Economy grew only at 3.5% per annum resulting in low rate of increase in per capita income
Let Us Look Back
We remained one of the poorest country of the world One third of our population remaining below the poverty line
Let us Look Back
Not only our per capita income is low, in terms of Human Development Index (HDI) India ranks 139 out of 174 countries HDI is an index created on a scale of 0-10 measured by 3 components longevity, knowledge and income, each measured by several parameters
India Since New Economic Policy (1991)
We are now growing @8% per annum Foreign Exchange Reserves have touched 210 billion dollars Exports reaching US$ 100 billion Overall Optimism in the air and all the developed countries are ready to invest in India Will India be sparkling?
THEN, IS EVERYTHING O.K.?
Let us Scratch the Surface
Quality of Life as measured by HDI, India currently ranks 127 out of 177 Out of a total of over 1000 million 240 million people are middle class and above. 270 million are living below the poverty line without two square meals a day
Let us Scratch the Surface
Sharp increase in mafiaraj, terrorism, separatism and Naxalite movements Environmental warming & pollution have reached alarming level Over 2 lac villages still do not have drinking water
Let us Scratch the Surface
Underground water level is receding at a fast rate due to rapid withdrawal of water for multiple cropping Sanitary conditions, primary education, primary health services and village roads are in pathetic states Trade gap is increasing due to sharp increase in volume and price of petroleum crude
Let us Scratch the Surface
75% of our Petroleum Crude is imported Global warming causes extreme weather In 1988, 1999, 56 countries have experienced catastrophic floods (China & Bangladesh) Antarctica is 2.5 degrees Celsius warmer than in the mid 1940s
Let us Scratch the Surface
In October 1998, a 7125 sq. kilometer block separated from the Ronna Ice shelf If the West Antarctica Ice Sheet breaks off, sea levels could rise 5 meters within a decade In the India sub-continent, 2/3rd of Bangladesh was under water in 1998.
Let us Scratch the Surface
Orissa faced a devastating cyclone killing 10,000 people Our forest area has shrink to an alarming level of 11% against minimum of 20% for ecological balance Automobile pollution is suffocating all major cities with rapid increase in related diseases
SO IF INDIA HAS TO SPARKLE YET NOT CREATE DISASTERS! We have to blend Western Economic Model co-terminus with Eco-friendly, Sustainable & Employment oriented growth model
WHERE DO WE GO FROM HERE
SHOULD WE ABANDON THE EXISTING GROWTH MODEL FREE ECONOMY MODEL
Free Economy Model
Companies / organization survive and flourish under free competition As a result, companies acquire core competence using latest technologies and massive economy of scale requiring minimum human intervention Stress is on quality, efficiency and productivity keystones of material prosperity & higher standard of living
Free Economy Model
The focus of the business is to serve the customers to their fullest satisfaction at the lowest possible price leading to higher share of market Higher share of market leading to higher rate of return on Shareholders Capital Economy is driven by the market forces and consumerism
Impact of Free Economy Model
Material prosperity invariably have led to higher level of consumption of energy generated from organic fuel This has led to global warming through generation of unabsorbed green house gases
India a Growth Dynamo
India is second in terms of rice, wheat, groundnut and tobacco and third in cotton India is blessed by nature with plenty of sunshine, rainfall and moderate climate
India a Growth Dynamo
India is blessed by nature with plenty of sunshine, rainfall and moderate climate Moderate climate ensures three to four crops per year in irrigated land But our yield per crop is only 30% of world standard Scope for 3 to 4 fold increase by proper use of inputs and services & management
India a Growth Dynamo
At current level of productivity, our agriculture produce one of the cheapest in the world Our export growth of 16% per annum over last 10 years largely been derived from cotton & silk textiles, jute products, tea, coffee, rice, spices, herbal drugs, fruits and vegetables, floriculture, pisciculture, oilseeds, tobacco based products
India a Growth Dynamo
Because of our strength of bio-diversity, we can protect 50% of our working population in Agriculture Apart from retaining them in this Sector, we can improve their real earning through increased productivity In the next 6/7 years India could become the largest exporter of agriculture and agro-based products
Indian Model of Growth
Must be globally competitive Eco-friendly Sustainable Employment oriented Less Capital Intensive
Priority Sectors of Indian Model of Growth
Agriculture & Agro based Industries Tourism Information Technology Gems, Jewellery & Handicrafts Entertainment Industries
Priority Sectors of Indian Model of Growth
Pharmaceutical & Healthcare Higher Education Alternative Energy Precision Equipment
Agriculture & Agro based Industries
Out of 320 million workforce (1/3rd of total population) 170 million (53%) are employed in Agriculture India ranks 2nd in the world in terms of usable land as also irrigated area India ranks number 1 in the world with respect to production of milk and milk products, sugar and tea
Tourism
India has 5000 years of civilization 6000 miles of coast line Tallest mountain range Yet India attracted 2.29 million (0.39%) of World tourists Indias tourist traffic is only 30% of Singapore and Malaysia Needs Infrastructure Development
Information Technology
Our export from IT and ITES has now reached US$ 423.6 billion in 2006 Total employment in IT & ITES has crossed 1.6 million in 2007 IT & ITES exports is likely to double in next 3 years Silicon Valley would not come up - had there been no IITs in India
Gems, Jewellery & Handicrafts
Gems & Jewellery accounts for over 30% of our total exports. Growth potential is very high Gems, Jewellery & Handicrafts are high skill labour intensive areas where India is globally competitive
Entertainment Industries
Entertainment Industry meets five criterion of being globally competitive, eco-friendly, employment oriented, sustainable and relatively less capital intensive Demand for Indian films are now becoming popular in China & Russia Huge prospects exist for Multimedia and Animation Services Potential of Entertainment Industry is huge
Pharmaceutical & Health Care
Pharmaceutical Industry is another skill & knowledge based Industry where India has huge potential We have great talent in Pharma Research & Development and India has the potential to be world leader
Pharmaceutical & Health Care
In the area of Biotechnology & Herbal Drugs India has large potential India will also emerge as a global hub for Clinical Research Huge scope exist to attract investment in Contract Research
Pharmaceutical & Health Care
The dormant Indias rural market will provide enormous opportunities for Pharma Industry in India Demand for Health Care Services is growing at a phenomenal speed Modern Hospitals & Diagnostic Centres in Metros are full of customers
Higher Education
Major scope exits in creating infrastructure for higher education for students from abroad Our IITs, IIMs, NIITs, leading universities and other top private institutions can compete with best of the institutions in the world. Since our fees 30% cheaper than similar institutions in Europe and North America, we can earn considerable Foreign Exchange in this account
Alternative Energy
Alternative Energy Sector is another area which needs utmost priority Since Global Warming is due to Green House Gases emanating from burning of fossil fuel like petroleum crude and coal, scope of using alternative energy sources like nuclear fission and fusion, hydro electric, solar, wind, biomass, geothermal is large and huge prospect for development and commercial exploitation
Precision Equipment
Manufacture of Microprocessor chips, Computer Desktop, Laptop and Communication Equipment like switches, routers, mobiles, robotics, process control equipment, numerically controlled machine tools, automated diagnostic equipment, miniaturized audio & video equipment, modern toys and video games etc. offer huge opportunity for growth and development
Precision Equipment
Precision Equipment Sector do not consume huge energy but requires high investment Precision Equipment Sector requires high degree of computer software skill where we have global competitive edge
India Model Blend of Best of Globalization and Swadeshi Competitive Strength Developed world has taught us how to organize efficiently using IT and Biotechnology in a market economy Indian tradition advocates a holistic approach with respect to human happiness through a balanced view on environmental protection and distribution of purchasing power
India Model Blend of Best of Globalization and Swadeshi Competitive Strength We should work towards higher standard of living but with a drastic reduction of people living below the poverty line while maintaining our ecological balance Hence we should not copy American or European model or Chinese model but adopt Indian Model of Growth
THANK YOU
