The Enemy Within

Anish Sankalia sent me an article where Andy Mukherjee warns that India’s Enemy Within Can Douse Explosive Growth. The enemy he identifies is government debt.

“China has brought electricity to 700 million people in the last 15 years,” Peter Schwartz, chairman of Global Business Network, said in Washington this month. “During that time, India ended with up with 200 million more people without electricity.”

The Enemy Within

So are such glowing prophecies about India’s economic growth nothing but wishful thinking? They might turn out to be if India fails to deal with the powerful enemy within: A prodigal government that takes a third of the citizen’s incomes as taxes, then crushes consumption by making them pay import tariffs that are among the world’s highest. Since all that revenue isn’t enough to service the existing public debt, the government cuts corners on the most basic services.

Then it goes and borrows still more.

According to official figures released Friday, in the first 10 months of 2003, the federal government’s fiscal deficit — what it borrows to meet its spending needs — rose 19 percent from a year ago to 1444 billion rupees ($31.6 billion). An unaffordable profligacy for a government that’s among the most indebted in the world.

This all goes to support my contention that India has been saddled with an extractive and exploitative government. Until we change the basic nature of our government, all this futzing around in the margins is not going to amount to a hill of beans. All the talk about India becoming an IT superpower or a BPO superpower is not going to materialize. We need to wake up to that fact and figure out how we can change the nature of the government.

Author: Atanu Dey

Economist.

3 thoughts on “The Enemy Within”

  1. Hello Atanu

    I agree with yr assesment.

    Coming from telecom background -I am amazed by simplicity of an operator’s business case.

    As in case of telecom oeprator:

    x*y=z
    x=number of users
    y= cost of minute per user
    z= total turnover with usage

    ( certain % profit out of Z after CAPEX, OPEX)

    (To increase x, one needs to lower y is a great learning..)

    Ultimately -z needs to be higher to get higher % of profit

    Now to increase z and in turn increase profit one can increase x or lower Y

    Iridium satellite system failed to go mass market as they had high y and low x—bankruptcy!!

    Relaince Mobile succeds they maanged to increase x with lowering the y…!!!

    Same model needs to be used for Computing Services for MASS MARKET and this business model will fit universally and may be Developed world will start learning from us!!

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  2. Right on. I don’t think things are going to change because the leftist thinking is well entrenched. Fifty years of socialistic/marxist brainwashing has done irreparable damage. People still think in terms of “strategic assets”, “public sector is for public good” etc. Even a professor of IIM Ahemedabad recently wrote that government should not be sellng profit making units. I am no economist but let me get this straight: If you’re broke and you need cash to pay your bills, you need to sell your gold and not broken aluminum utensils.

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  3. Hi friends,
    another good article to point out that “India Shining” needs to be not just in papers but also in practice. It may be good bells ringing for statisticians to point out that India added 1 crore mobile phones in last 6 months, but did anyone ensure that the already existing networks properly worked? A pre-recorded voice replies to any of yur dialling which says “The subscriber cannot be reached” when we tested the networks with the other number to which i dialled right near my mobile in the same servie provider’s network. we dialled from a BSNL enabled phone to another BSNL enabled one, each a few metres away, while we called from one to another the above happened. so if the condition of already existing infrastructure in the country is so poor, can we expect more? and when do we see electric lights and fans in our friends’ houses in rural India? what can i do for this? is anyone having the answer? is a mindset change needed? how has it been possible in our neighbour China when it has not been possible here? what can we do? if there is anything i can do, please help me out.

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