Friday, February 16, 2007

The Indian Budget : Playing for a Draw

March 01, 2006 | 05:42 PM
The Indian Budget : Playing for a Draw

The Finance Minister in his press conference said that in the Indian Government has to show that it's heart is in the right place as well as it's head. He needs to be congratulated for his heart.

With the great emphasis on the rural and agricultural sector, on education, on micro credit to the agricultural sector, the FM has certainly exposed the kind heart of the Government to the voters. He has it right. In order to sustain the current growth rates, and if India is to become a Global power, it must do so with most of all it's population as part of it wealth increment. For if we do not, the social pressures on our fragile growth economy will bring us falling down like a pack of cards. History has constantly reminded us of that lesson. So congratulations Mr. Finance Minister.

But the head knows that expressions of the heart must be matched by implementation. That's where my fears lie. Allocation of funds are the tip of the rapidly melting iceberg. I was disappointed to see no new incisive schemes that suggested how the FM will ensure this allocation will not just lead to a bloated money disbursing scheme, rather than provoking a rural entrepreneurship that becomes as vital as our urban service sector. We can, as the simplest example, build 10,000 new schools. But, Mr Finance Minister, how do we ensure the quality of teaching in those schools ?

Is there one possible ? Yes of course there is. Technology. India is on the forefront of a world surge in the knowledge economy. Lets make it work for our rural sector. I am surprised the the FM refuses to bring Broadband into the purview of primary and essential infrastructure. With every Indian connected to Broadband, we could do wonders for our education and rural empowerment schemes. And give the rural population access to the growth of the Urban Service Sector. So if an Indian software engineer can be part of a global service sector, why not a rural person ? Interactive integration of our people, where information, education and opportunity flows freely and interactively between all, is the key to India's rise as Super Power. Building interactive Information Highways is key to trade of the future and therefore integrated economic growth.

Now for the Urban sector. Yes. Allowing MF's to invest more overseas is definitely a confident step in the right direction. But overall, this budget feels a bit like the FM taking a breather. Yes, the Nation of Urban India is doing extremely well. So when we are doing so well, why play for a draw ? Why not drive the advantage into a win ? It seems our Government is so used to problem solving, so used to batting on the backfoot, that it needs to learn how to be aggressive. This is an ever changing world where a sudden oil crisis can substantially change the game. So if the West sneezes, will our Urban growth catch the flu ? Probably. So what should the FM be looking at ? If we are now coming to the forefront of the world's knowledge economy, how about giving increasing tax breaks to creation of intellectual property owned in India ? How do we encourage the next Microsoft to be an Indian Company, for example ? How do we encourage our youth to create new businesses, rather than become part of a work force that services an uncertain (and economically declining) western world ?

A couple of issues that will be our biggest challenge in the next five years, that I think the FM has not addressed :

We are running out of drinking water. That in itself will bring our economic growth to nothing.

The infrastructures in our cities are crumbling. They are about to burst. I wonder how the urban renewal scheme announced last year is doing ?


No comments: