Opinion When glee is complacency

Why India cannot afford to take economic growth for granted?

September 2, 2011 01:18 AM IST First published on: Sep 2, 2011 at 01:18 AM IST

I notice some glee and schadenfreude (taking pleasure in the sufferings of others) among many of my friends who are a tad happy that England had been facing riots. Riots,after all,are supposed to happen in India,in Nigeria,in Guyana not in England,the country imagined for us by P.G. Wodehouse,Agatha Christie and Neville Cardus. But before we start taking pleasure in the troubles of Hackney and Birmingham,lets pause for a minute and look at our own prospects.

Despite the unintelligible statistics that emanate from our Yojana Kremlin Gosplan Bhavan (the members of this body live on a planet of their own making),one thing has been clear for some years now to all of us who live in this country: any young person who wants work can find a job. This is especially true in urban and metropolitan India. And if you have some useful skills (the most useful being a smattering of English) you can get a job making much more wages early in life than your parents late in their careers. You can work in a call centre,in a retail mall,in a fast-food outfit,in a hole in the wall that sells cell-phones,in a beauty parlour (the fastest growing industry in our slums),in a coaching class that teaches computers or English,in a security agency that supplies ill-equipped guards to assorted middle-class gated ghettos,in an outfit that makes ill-timed sales calls to persons who would buy insurance if only they knew better,in an event-management firm that stages absurd show business events,in TV channels that get started at the rate of one a week in short,in many sectors where our economy is growing robustly. Many of these are contract jobs; some are not jobs in the old-fashioned sense,but activities that require a one- or two-person entrepreneurial set-up.

All these jobs,all this frenetic economic activity mean that young folks with high testosterone levels do not have much incentive to congregate in an Indian Tahrir Square or break shop-windows in our many-splendoured ugly shopping malls. All this has been possible because of the 8 per cent growth rate the lagged result of the freedoms given us by the late unlamented Narasimha Rao and substantially carried forward by the understated Vajpayee. Tarry a minute what would happen if our growth rate dropped to 5 per cent or,God forbid,to 3 per cent? If the educated,the half-educated and more-or-less educated youthful powder kegs of urban India saw no more call-centre jobs,no more fast-food outlets or beauty parlours or opportunities to become temporary drivers or contract security guards,what would happen? Lets guess: Hackney would look like paradise. Urban India could explode on a scale that none of us can even begin to visualise. The violence,which will be a direct result of the slowdown in economic activity,may take different ugly turns. People may turn on migrants from other states (we have seen ominous dress rehearsals); caste-based violence may grip many of our smaller towns; Hindu-Muslim riots (that curse of our country for centuries) may start on an unprecedented scale with our major cities having territorial enclaves following the Beirut pattern.

Let me not go on. Suffice it to say that a decline in growth rates could result in catastrophic social consequences in urban India and,apart from Leninists in our midst,nobody relishes this frightening prospect. While we cannot influence lunatic Tea-Party fanatics or rigid EU bureaucrats who may precipitate a double-dip global recession,which will inevitably hit us hard,we can at least take steps to mitigate the situation and minimise the negative consequences of a fragile global economic scene.

Here are some steps I can think of:

Get GST implemented in a hurry. BJP: For heavens sake,cooperate with the UPA in the interests of patriotism. This one step alone can give a fillip to growth and to fiscal revenues.

Reinvigorate the Vajpayee-Khanduri highway plan. Dr Singh: Just because the NDA started it,it does not mean that you should go slow on it. Remember Akbar built on the fine foundations laid by his fathers adversary,Sher Shah.

Declare all land up to 20 km deep on the sides of all highways and all land up to 60 km from metropolitan centres and all land up to 30 km from other urban centres (except designated forest lands) as automatically available for residential and commercial construction (or to use bureaucratese,change them from A to NA status) with some subsets available for factories. This will right away result in farmers getting higher prices for their land with no government intervention; it will drive down the prices of peri-urban housing and trigger off a lot of economic activity. (Disclosure: the columnist is an entrepreneur in the affordable housing space.)

Open up mines to transparent leases involving royalties that are on a revenue-sharing basis to only publicly listed companies where promoter shareholding is less than 40 per cent. The government will gain strong allies in SEBI,stock analysts,and institutional investors who will all help to make sure that promoters or firms do not loot the nations valuable mineral resources.

Increase the FDI limits on insurance. Put on hold multi-brand retail where there is no consensus. We dont need bitter battles on this one.

Appoint a Telecom Settlements Commission. Resolve all past issues through fines and selective licence cancellations. Put a closure on all matters. Let the industry move forward.

Award bank licences to groups of professionals backed by PE and VC funds. Do not indulge in crony capitalism and award licences to business houses and conglomerates.

If we do all of these (all easily and eminently doable,I might add),we may just be able to avoid a slippage in growth rates and keep our urban young away from violence,the prospects of which are truly frightening. Will our leaders grasp the nettle or take the risk of doing nothing and possibly precipitating Hackneys in Mumbai and Delhi?

The writer is an entrepreneur
jerry.rao@expressindia.com