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Given Manmohan Singh's age, and political condition he may well take a negative view of India's economic future. But I think this does not have to be the case as many nations in Asia have shown, and continue to show. ManMohan Singh with his Ph.D in economics is educated in the West, and he must not be carried away by Western economic thinking with its models, which may well be totally irrelevant to India's economic situation.
First we must de-link the world economy with the Indian economy. India in 2011 exported according to government figures about $ 246 billion worth of goods and services. The Indian economy measured by PPP could be close to $4.5 trillion, the third largest economy on earth, where exports represents a paltry 5% of the whole PPP GDP.
Quite frankly given such an insular economy it really doesn't matter if demand for Indian goods dip in the West......which knocks off even 20% of exports.....it doesn't effect India's continued growth rate, PROVIDED THE GOVERNMENT TAKES SOME ADDITIONAL SIGNIFICANT SPENDING PROGRAMS TO COMPENSATE.
The other dampener on growth experts say is inflation.
Any single digit inflation figure is perfectly OK, it indicates the economy is rapidly expanding, and peoples expectation of a rapidly expanding economy also pushes up prices. In addition the basket of commodities that are used to measure inflation includes food prices, and fuel. These are two things the price of which the government has very little control, and are affected by factors beyond their control.........Monsoon/weather...food prices to a significant extent, and fuel prices according to the machinations of Western oil cartels and speculators based in NY/London and Rotterdam who manipulate this abundant natural commodity for huge profits. The realistic price of oil should be about $15 a barrel but due to the manipulation of the Western commodity bourses is in reality now ridiculously close to $90 a barrel.
These are things which the Indian government can do little about save make significant investments in oil/gas exploration in India, and the neighboring countries; Thorium use for nuclear power...and greater use of coal power stations.
The Indian government could introduce massive subsidies, and elaborate price fixing mechanisms for food and fuel, BUT given the rather poor governance record of Indian governments and the on-going levels of massive state neta/babus corruption, it may well be wiser for the Indian government to stay shy and well clear of such well meaning huge endeavors.
In my honest opinion the government can undertake massive boosts in INFRASTRUCTURE, INDUSTRY/MANUFACTURING, education, and healthcare......significant increases in spending by the government in these strategic and important areas will not necessarily lead to added inflationary pressures. But that investment in such things will clearly add to greater annual GDP growth, and since all of them are labor intensive will create significant new jobs for the masses who are swarming the cities from the countryside.
WIN/WIN........the challenge is then to find the extra money by expanding the 30 million tax base (only 2.5% of total Indians pay tax), and focusing on well meaning expenditure on the above four areas towards the levels of neighboring China. Perhaps a budget of $400 billion for 2012--2013, AND $500 billion for 2013--2014 leading up to the next election. Peoples budgets.
Finally I want to hail Comrade Stalin, our friend who confessed to Krishna Menon that he felt more an Asian than a Westerner. The man with the show trials, the Gulags and the 5 year plans, the last of which ONLY India tries to emulate. As we all know the world experienced the great depression of the late 1920's and early 1930's......and that ONLY demand led growth in armament, and specific job creation schemes helped all major economies out of the depression.
The only exception to the above being the Soviet Union which between 1928--1941, when 5 year plans first began, experienced real annual GDP growths of 20% year in year out, despite sanctions and other restrictions from Western countries, with heavy emphasis on INDUSTRY/MANUFACTURING and INFRASTRUCTURE. By 1941 the Soviet economy represented nearly 45% of the USA economy. Whereas in 1914 the Imperial Russian economy represented a mere 18% of the USA economy.
Now I am not suggesting ManMohan Singh is or should copy Stalin...he can't. The Congress Party in addition is no Bolshevik Party filled with tough desperate revolutionary men, willing to make sacrifices and be ruthless to achieve their objectives. The Indian Congress Party by contrast is a fat bloaty Third World venal corrupt dynasty run Party, that has seen far far better days. Corrupt Italian Sonia with no education, and playboy Rahul clearly are not in the league of the Bolshevik Party men who led the Soviet Union out of backwardness, forcefully.
But despite all this India can achieve at least 10% annual GDP growth in the next five year period easily. This ensures despite all the scandals that Congress comes back to power in 2014, and ALL is forgiven.
This is where the Congress heavy weights need to focus, and help Pranab Mukherjee out on this.
Can't see the sense in ManMohan Singh making doom and gloom predictions in this delicate juncture.
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Tough to attain 9% growth: PM
Times of IndiaIn his first acknowledgement of what economists and corporate chiefs have been saying for past few months, PM Manmohan Singh on Saturday warned that achieving 9% growth during the next plan period - April 2012 to March 2017 - may be tough in the absence of difficult decisions.
In his opening remarks at the meeting of the full Planning Commission, Singh said the panel settled on the 9% growth target, instead of 9%-9.5% as suggested earlier due to the uncertainty in the global economy and challenges at home. The PM's statement indicates that the global environment - led by problems in Europe and the US - is expected to be uncertain for a while. PM said in the best case scenario the growth rate during the five-year period would grow 9.2%. Economists are already drawing parallels between the Great Depression in 1929 and the one that started in 2008 and are of the view that the problems, like in the thirties, could last for a few years.
The PM said that health, education and infrastructure spending would get more funding than other sectors. PM's observations on taking tough decisions come at a time when issues such as liberalization of foreign investment regime for retail and defence production are held up due to inter-ministerial wrangling. The proposed national manufacturing policy too is held up as labour and environment ministries are unwilling to show flexibility in reducing undue inspection and clearances that are required.
The Centre and the states have also been divided on the rollout of Goods & Services Tax from next April due to lack of political consensus.
Singh said a broader national consensus was required to push the next round of reforms that entailed legislative changes.
In his opening remarks at the meeting of the full Planning Commission, Singh said the panel settled on the 9% growth target, instead of 9%-9.5% as suggested earlier due to the uncertainty in the global economy and challenges at home. The PM's statement indicates that the global environment - led by problems in Europe and the US - is expected to be uncertain for a while. PM said in the best case scenario the growth rate during the five-year period would grow 9.2%. Economists are already drawing parallels between the Great Depression in 1929 and the one that started in 2008 and are of the view that the problems, like in the thirties, could last for a few years.
The PM said that health, education and infrastructure spending would get more funding than other sectors. PM's observations on taking tough decisions come at a time when issues such as liberalization of foreign investment regime for retail and defence production are held up due to inter-ministerial wrangling. The proposed national manufacturing policy too is held up as labour and environment ministries are unwilling to show flexibility in reducing undue inspection and clearances that are required.
The Centre and the states have also been divided on the rollout of Goods & Services Tax from next April due to lack of political consensus.
Singh said a broader national consensus was required to push the next round of reforms that entailed legislative changes.
