‘Make in India’ is doomed to fail

Why ? Because of lack of understanding on part of our Babus. There is a policy paralysis in Central Government at present. With some many launches, babus are caught napping. The task of clearing competitive exams by rote in a set format is very different from what can lead India to be a super power. Several years ago, a guesstimate exercise suggested that if the delays in all the country’s public sector projects were to be added up, they’d total more than 500 years. Which means that, theoretically, we should all be living at the time of the emperor Akbar, or thereabouts. The fact that we are not, might be attributed to the get-up-and-go of private enterprise. And, of course, to the efforts, against all odds, of the relatively few, dedicated, hard-working and incorruptible public servants the country can be proud of, and who are, sadly, the exceptions that prove the misrule.

The extent of this misrule – the result of an unholy nexus between an exploitative political class that patronises sycophancy and a complaisant bureaucracy – can be gauged by the fact that of a total of 890 central infrastructure projects (power, railways, petroleum), 267 are currently running between two months and 16 years behind schedule, at an estimated delay-cost to the exchequer (apart from the budgeted cost) of Rs 20,948.69 crore. While many of these delays can be attributed to problems like shortage of funds, land acquisitions, controversies and law and order issues, ultimately most of these bottlenecks can be traced back to a lack of anticipatory thinking and forward planning on the part of the administration.Our babus’ ‘performance’ is not assessed by the public — whom they supposedly serve, but in reality routinely stymie — but by another member of the self-serving super-scheduled tribe/caste known as babudom.

What Modi’s plan actually represents is one of state-led development mimicking the policy of East Asian countries near the end of the 20th century. This is more than obvious in his call for foreign investors to manufacture in India and export to the rest of the world, with state funding to support the activity. Not very different from this East Asian model is the Chinese one of export-oriented industrialization. Make in India is based on the ridiculous notion that the state and not consumer preference must dictate resource allocation. This was incidentally the policy that guided Nehruvian industrial planning as well, but looks like lessons are yet to be learned. Whether India will cheapen its currency to spur foreign demand remains to be seen, but there is already speculation in a Deutsche Bank report that a cheaper rupee would be an essential part of the export promotion strategy. More importantly, the report also calls for increased credit provision to fund manufacturing growth. This is in line with the general call for increased lending to revive economic growth.

If this dream of increased liquidity comes true, as it may when the country’s central bank finally decides to crank up the printing press to lend credence to Modi’s plans of state-led industrialization, India will be on the course of a credit-driven bubble similar to East Asia and China. The former witnessed heavy foreign inflows of capital to complement domestic credit, while the latter currently sustains the bubble mainly on domestic credit. But state intervention of any kind can only cause massive misallocation of resources while projecting the illusion of growth, which becomes apparent when the bubble pops. Does India, like East Asia and China, really wish to waste resources in fuelling an unsustainable boom?

Of late there has been a lot of talk of ‘governance deficit’. Translated into plain language that means that the people who are meant to run the public affairs of this country – the politicians and the bureaucrats – don’t know how to do their jobs. The bureaucrats – who in order to become bureaucrats generally would have had to pass often extremely competitive exams – might say that they know exactly what their job is, and how to do it. However, they are often prevented from doing so because of political interference. Maybe that’s just buck-passing on the part of babudom, for there are many who believe that the ills of misgovernance that routinely plague the country are caused more by a generally inefficient, corrupt and unaccountable bureaucracy than by politicians

Advertisements

One thought on “‘Make in India’ is doomed to fail

  1. Pingback: ‘Make in India’ is doomed to fail | Alekhya Talapatra

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s