It all started in the year 1991 when Manmohan Singh, the then Finance Minister of the Narsimha Rao government, "decided" to enter the world of economic liberalization and Globalization. Well that is what Congress says. That they "decided" on this path. The truth being the government was left with no other choice. In 1980's the Private savings financed most of India's investments. But it was difficult to sustain this investment and as a result India started borrowing from foreign resources. This led to a payment crisis. Facing this economic crisis, India approached the IMF which granted "structural adjustment" loan: a loan with certain conditions. India was thus tunneled into a structured economy which was based on reforms like Liberalization, Privatization and Globalization.
Liberalization: Aimed at removing government control on trade and business
Privatization: Aimed at reducing public sector units and converting them into private sector units
Globalization: Aimed at increasing the interdependence, integration and interaction between people and trade of disparate countries.
In general people have two opinions about free trade globalization of business. The first opinion being that it is an engine which will drive us towards better standards of living and robust economy. While second defines it as “corporate imperialism" which tramples human rights of people.
Being a S/W engineer working in an MNC I’m inclined to accept the former opinion as I am one of the millions who are directly benefited from it. The ever increasing Foreign Direct Investment in India and share markets scaling new heights every day have been underlined quite regularly in the recent past by our media. Even the BJP government under Atal Bihari Vajpayee tried to showcase their achievements based on the India Shinning campaign. They tried their best to focus the campaign on the rising GDP of Indian Economy. I along with most of the people in BJP camp was quite sure of 5 more years of BJP rule. But the verdict given by the Indian voters was quite different.
To some extent I do believe open trade and competition have benefited the Indian manufacturing industry and brand India has now become far more acceptable that it was in the 1990's.The bigger players in market have profited from open markets, but at the same time the small scale industries' graph is on a downslide. I think this can be avoided with an introduction of some more reforms in the manufacturing sector.
The real problem lies in rural India. Increased number of suicides committed by farmers has done no good to the claims offered by advocators of globalization who say that it will help in eradication of poverty. Some statistics do show that poverty in India has come down but I strongly believe that the whole process of calculating the number of people living below poverty line is flawed and needs to recalculated
Agriculture employs 60% of the Indian population but contributes to approx 20% of the GDP. Agricultural production fell by 12.6% in 2003; one of the sharpest drops in terms of crop production in the history of independent India. Agricultural growth slowed from 4.69% in 1991 to 2.6% in 1997-1998 and to 1.1% in 2002-2003. (Agricultural Statistics at a Glance, 2006).The greatest problem that farmers are facing today is "debt”. The poor farmers of India are in the inclement hands of moneylenders. The introduction of microfinance has not contributed much in alleviating the problems of Indian farmers. The earlier seed market was regulated in terms of price and quality, but with liberalization the farmers were in the hands of global agribusiness. The farmers were provided genetically modified seeds at a price hike of 3555%. On top of this, the government had to reduce subsidies (as per IMF conditions) on pesticides and fertilizers. All these contributed to an increase in the prices of Indian crops. With the withdrawal of tariffs and duties on imports, cheaper products of foreign market flooded India. As a result, the Indian farmer was not able to sell his crop even in Indian market. He was strangled in a debt trap.
One more aspect that strikes my mind is privatization. Privatization was aimed at increasing productivity and competition which, in turn, removed monopoly. But privatization in India was always aimed at generating revenue for the government. It is true that not all public sector units introduced by Congress in the late 1970's are profit-making ones and so, privatization should aim to target non profit making sectors.
We often compare India with China and how these two countries might become super powers in the near future. But the fact is both countries have their own internal problems. On one hand China is way ahead that India in terms of Technology and Infrastructure but China has undermined local entrepreneurship in favor of foreign direct investment. On the other hand India has built an infrastructure that allows entrepreneurship but is still fighting to spread the benefits of liberalization to a larger segment of its population.
The recent protests have helped .They have been successful in scrutinizing the processes adopted by WTO. There are questions raised about the matter of agricultural subsidies given in rich countries. Moreover, the developing countries have realized that something has to be done. Trade liberalization is ok but only if it’s done after bringing all partners at par. It’s not globalization or liberalization but economic mismanagement that is often the root cause of many problems.
The current danger to India is not Economic Liberalization but economic mismanagement of the past which can only be faced by sound polices of economic adjustment and an even spread of benefits among the masses.
Friday, November 17, 2006
Friday, November 03, 2006
The Famous IF Then Else Condition
I somehow was not able to come up with a title more apt than the one I kept for this post of mine. I guess this particular "condition" has contributed the most in making me think. The amount of introspection that I have done in the last ten months, or so, has been largely due to it.
Anyone reading this blog (if at all someone is) must know about the "If Then Else Condition". It’s the same that we use in programming languages. I had used this umpteen number of times during my engineering days but then had never realized it creeping into my life. I was oblivious of its presence, but it was there with me. Making important decisions of "my" life and making me follow a pattern devised by someone else.
Most of you may be puzzled as to how a simple IF Then Else Condition could’ve decided someone's fate. Rethink. There must have been some symptoms of this in your life. Don’t you carry some of the common beliefs that most of our parents have had? Like "My son is good in Mathematics. He is surely going to become an Engineer'' or "My Daughter secured A+ in biology she would be appearing entrance for MBBS".
I have been adhering to such conditions. They were never set by me. was good at mathematics; so, I had to become an engineer. So here I was ,barely 15 days after my board examinations, sitting in a packed class of 45 odd aspiring IITans , religiously solving complex Trigonometry equations . I am sure there were quite a few like me who had the patience of sitting through that 3 hr long class just because they could have ‘Kalia's chicken champ’ after the class.
After a few hiccups I did clear an engineering entrance exam and entered a good college. The first three years were good. The creepy "condition" had not made its appearance. One day I called up my parents and my Dad asked me "Beta MBA nahin kar rahe ho kya?".There it was. I knew it was back. This time I had made a decision that I won’t fall into the trap of this "loop”. I was not sure about doing management; so, I decided to get some work ex.
My company was a little too employee friendly. There was absolutely no work for the so called developers. It’s bewildering how this very word has lost all its significance in just 10 months. I started feeling guilty as I was not working on the week days and this guilt pushed me to enroll in the TIME cat coaching center. The moment I entered the class I had the same feeling as I had in my first tuition class for engg entrance exams with the only difference in the latter being that the class comprised of 80 plus students. In one of the classes I asked a lady sitting beside me as to why did she want to do an MBA.With a grin on her face she said "There is no other way that I can postpone my marriage”. There were some other weird answers to this question as well like "My friend has challenged me” or "Both my room mates are preparing for GREE I need to do something”. I guess these guys were in the same state of confusion as I was.
One of my friends did argue that an Indian student has limited options and a lot of responsibilities which contribute to his/her decision making or rather his/her inability to take decisions. I agreed with his argument to some extent . But there were still a lot of questions which were unanswered. Questions like ‘why should I do higher studies to prove I am successful in life?’ or ‘why someone with a better car or a better house should be more successful than I?’
I guess the fact that most of us associate success with money would answer some of the above questions. I wouldn’t deny that I want money and fame in life but definitely not at the expense of hundreds of question marks. So lets not give our lives in the hands of conditional statements and question marks .As one of my writer-friends aptly said, "Of all the kinds of imprisonments that we find ourselves living in, one of the worst is to carry a question mark as a legacy of our past or as a precursor of the future."
Anyone reading this blog (if at all someone is) must know about the "If Then Else Condition". It’s the same that we use in programming languages. I had used this umpteen number of times during my engineering days but then had never realized it creeping into my life. I was oblivious of its presence, but it was there with me. Making important decisions of "my" life and making me follow a pattern devised by someone else.
Most of you may be puzzled as to how a simple IF Then Else Condition could’ve decided someone's fate. Rethink. There must have been some symptoms of this in your life. Don’t you carry some of the common beliefs that most of our parents have had? Like "My son is good in Mathematics. He is surely going to become an Engineer'' or "My Daughter secured A+ in biology she would be appearing entrance for MBBS".
I have been adhering to such conditions. They were never set by me. was good at mathematics; so, I had to become an engineer. So here I was ,barely 15 days after my board examinations, sitting in a packed class of 45 odd aspiring IITans , religiously solving complex Trigonometry equations . I am sure there were quite a few like me who had the patience of sitting through that 3 hr long class just because they could have ‘Kalia's chicken champ’ after the class.
After a few hiccups I did clear an engineering entrance exam and entered a good college. The first three years were good. The creepy "condition" had not made its appearance. One day I called up my parents and my Dad asked me "Beta MBA nahin kar rahe ho kya?".There it was. I knew it was back. This time I had made a decision that I won’t fall into the trap of this "loop”. I was not sure about doing management; so, I decided to get some work ex.
My company was a little too employee friendly. There was absolutely no work for the so called developers. It’s bewildering how this very word has lost all its significance in just 10 months. I started feeling guilty as I was not working on the week days and this guilt pushed me to enroll in the TIME cat coaching center. The moment I entered the class I had the same feeling as I had in my first tuition class for engg entrance exams with the only difference in the latter being that the class comprised of 80 plus students. In one of the classes I asked a lady sitting beside me as to why did she want to do an MBA.With a grin on her face she said "There is no other way that I can postpone my marriage”. There were some other weird answers to this question as well like "My friend has challenged me” or "Both my room mates are preparing for GREE I need to do something”. I guess these guys were in the same state of confusion as I was.
One of my friends did argue that an Indian student has limited options and a lot of responsibilities which contribute to his/her decision making or rather his/her inability to take decisions. I agreed with his argument to some extent . But there were still a lot of questions which were unanswered. Questions like ‘why should I do higher studies to prove I am successful in life?’ or ‘why someone with a better car or a better house should be more successful than I?’
I guess the fact that most of us associate success with money would answer some of the above questions. I wouldn’t deny that I want money and fame in life but definitely not at the expense of hundreds of question marks. So lets not give our lives in the hands of conditional statements and question marks .As one of my writer-friends aptly said, "Of all the kinds of imprisonments that we find ourselves living in, one of the worst is to carry a question mark as a legacy of our past or as a precursor of the future."
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