The world economy has clearly been on revolution mode since January 2008. There are certain facts, which are quite conclusive and not open to debate.
1) Europe is just not coming up with a robust economy for the last 10 years. It is sputtering, wheezing and billowing out black smoke as it can no longer sell to Asian nations with cheaper Chinese goods occupying shelf space everywhere. Europe’s own population has been on a steady decline for the last 50 years. Therefore, it does not have the luxury of constituting a market for its own goods.
2) During the last 10 years, the surplus in people’s income, which allowed them to buy an Rs 1 lakh phone or an Rs 1 lakh handbag, does not exist anymore. Even if that surplus exists, it is either carefully saved or converted into earning assets. Throwing away money just to prove you belong to an upper class has become extinct behavior across the world except in the area comprising Saudi Arabia with a 200 kilometer radius.
3) Transporting goods and food had become cheaper than either manufacturing them or growing them owing to low fuel prices. However, after cost of fuel rose the worlds became confused again as it no longer proved cheaper for McDonald to grow potatoes in Brazil, convert them into French fries in New Zealand; after doing so, and ship them to India and China. Now the cost of fuel has fallen again and people are debating whether to use cost of fuel as a reliable foundation for supply chains across the world.
4) Access to finance was restricted before the age of the Internet. After the browser became commonplace and broadband became wider, funding is arriving from all sorts of places for various projects from building a new bridge across the Bering Strait to saving the life of a street dog in Manila, Phillipines. Now the pin striped suits with their huge surpluses are being threatened everyday and they may have to go the way of software professionals with shorts and beach shirts very soon.
5) After the boom and the bust of the greatest consumption driven economy in the world, viz the USA, the virtues of household savings are again coming into the picture. However, the rate of inflation is now fast outpacing the rate of savings. Therefore, savings must find equity driven investment options or perish into a too little-too late form of finance.
6) The joys of eating fresh produce are coming to the fore again less owing to lack of worldwide supply chain but more because of health issues. The world has discovered the hard way that eating preservatives from tinned food all day is the best way to bring about rheumatism, myopia, hypermetropia, gastritis and cervical spondilytis before you turn 35.
7) Lastly, the truth that economies such as the US and Europe still do not want to acknowledge is that pure consumption and spending with all forms of manufacturing and intellectual creation transported to cheaper countries is a sure fire way to kill your own economy in small painless installments. The US slowly transported the dirty, grimy industries to Mexico, then South America, then Phillipines, then South East Asia and now China. This has resulted in close to zero growth in the US and Europe. Government spending can only lift your engine so much and it does not count in the long run.
The above super seven truths have put India back in focus where hard work, savings and a frugal lifestyle are the norm in a large middle class. Good grief the upper class in India prides themselves shamelessly having middle class roots. Indians do not have a royalty. The royalty pinch pennies and convert their palaces into hotels, which sell rooms and rolls to fund their home and hearth. We are proud of being pragmatic and down market.
So what is holding back India with such an advantage?
AGRICULTURE: We have no clue as to how to manage this mammoth need and engagement. We still have 70 per cent Indians tilling land with Neolithic tools with no access to finance, healthcare, education, electricity and markets. Not good for any economy. This could be the fatal flaw.
BANKING: Just having a large State Bank of India with mandatory branches in villages is not enough. Such branches should prove attractive enough by villagers to bank in and encourage online payments from cities for farmer’s produce being transported by road. The recent Jan Dhan programme is a right step in that direction.
RAILWAYS: The Indian Railways is an organization of massive size and scope. It needs to do much more than just transporting people from here to there. For instance, some cars could be leased to wholesale buyers of farmer produce and the trains could transport themselves into a moving market, visitng various parts of the country picking up fresh produce to sell or supply to cities such as forest honey from Sunderbans, Nilgiri and Yercaud, home-made water-cooled cottage cheese from Nadia and Darbhanga, home grown prawns from tanks in Odisha, metal works from Western Uttar Pradesh, etc.
Some dedicated tracks and coaches could be leased to hospitality chains such as the Oberois, Taj and Holiday Inn to run and earn revenue with independent pricing.
TELECOM: Despite all the robbery of public money in doling out 2G and 3G licenses, we still do not have fool proof broadband in this country. Broadband is essential for a thriving economy. Ajit Balakrishnan of Rediff.com has lost all his hair advocating broadband for the last 15 years.
TOWN PLANNING: We do not have a single planned city in India. Comprehensive town planning leads to maintenance of law and order, proper supply of public utilities and access to markets. Our planning is in fits and starts or negligible to ensure a parallel earning from bribes by beneficiaries.
The government has to tackle intrinsic lethargy, encourage public debate and innovation in the above areas to convert our nation into a power house it deserves to be for long.