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'India-specific growth model needed'

Posted on May 3, 2010 | Author: Rakhi Mazumdar | View 411

His firm offers strategic advisory services to large corporates and governments on key policy issues. Harinder S Kohli, president and CEO of the Centennial Group, a US-based strategic advisory firm, has recently edited a book, India 2039: An Affluent Society in One Generation.
The book presents a vision of what India could be 30 years from now, based on the work of a multidisciplinary team of experts from different spheres: policymakers, civil servants, academics and development professionals.

artical Picture

It says if India maintains its present rate of growth — which Japan, South Korea and China have done in their long-term spurts — it could be among the top three economic powers. And, in the process, India could achieve the living standards of an affluent society. But this is not a pre-ordained state of affairs. It comes with a list of imperatives.

The book also contains the alternative scenario of India getting caught in a middle-income trap if these imperatives are not fulfilled. The study has indicated global output would exceed $200 trillion against $60 trillion now and the Asian part of the world will account for more than 50% of it against the present level of 20%. However, it warns India should guard against falling into the middle-income trap that has ailed many Latin American economies.

So how can India avoid this trap?
“For this, India needs a dramatic change in the mindset of all stakeholders, including the politicians, bureaucracy, private sector and the civil society.”
The book compares successful east Asian economies that have sidestepped the middle-income trap as they grew from a low income to a high income, with some Latin American and west Asian economies that fell into the trap.
“Given the verdict of the electorate in general elections last year, India is facing a historic opportunity for bold and farsighted action. But if the momentum is not seized, this opportunity could be easily frittered away,” he remarks.
To realise its potential, India must understand the world it will be operating inand the changing shape of its economic footprint, says Mr Kohli, who has spent 26 years in several senior positions in the World Bank.
“It must start to put in place the institutions and policy frameworks consistent with a move from poverty to affluence in one generation. Few countries have achieved this, so the challenge is enormous.
But no country has achieved it without serious deliberations over the ingredients for sustained growth,” he points out.
   
What are some of the biggest challenges in this?
“It is important for India to successfully navigate simultaneous transformations in moving from a domestically oriented to a globally-competitive economy and moving from a small player in global affairs to a responsible global citizen,” he adds.
“To sustain a steady economic growth rate, agriculture has to grow. The government wants to make small farms productive and less reliant on subsidies. We had a meeting with government officials and Planning Commission members on this recently,” says Mr Kohli.
“At the same time, the government also wants a more decentralised planning exercise, so that funds percolate down to villages at the panchayat level and development plans too are fixed by them,” he avers.
Centennial will be working closely with the ministries of agriculture and rural development to offer policy inputs to the Planning Commission as part of the government’s wider initiative to create a new rural development model to improve farm productivity.
“We will take a close look at different models from countries like Mexico, Indonesia, China and Brazil, which have largely decentralised decision-making right up to the village level and try to create an India-specific model around it.”
Mr Kohli further says, “For this, we would also have to look at the possible scenarios that could emerge in the next 10-15 years and beyond, when rural wages are likely to increase and there is a subsequent change in items in an average food basket.”
The new rural development model can then perhaps be incorporated into the Five-Year Plans from the 13th Plan onwards, he hopes.

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