Monday, December 12, 2011

Strategic National Development: A Much Needed Paradigm Shift For India

Economic management has often been seen to be a four factor grid, comprising demand and supply factors as well as money supply and investment factors. Public and economic policies have focused on management of these four factors to optimize economic development. This traditional analytical framework has largely ignored what people stock could do to positively for nation building and transforming the economic fundamentals. Three decades ago, every policy maker wrote off people as a burden and liability rather than view them as a competence or asset for national development. Today, the paradigm is shaping to be different; the more people you have, and that too in the younger age group, the greater is the opportunity for economic resurgence and national reinforcement.

India is a classic example of the changed paradigm. Whatever is the supply side performance delivery or demand side potential opportunities that the advanced world sees in India, the people of India have made it happen. The intriguing thing, of course, is whether the potential of the people or the relative poverty of the people that made it happen. A condescending view is that the prosperity differential that India had to bridge is so vast that India has no option but to grow economically. A more realistic view is that the potential to grow is harnessed in an optimal manner only when public policy sets the right goals and enablers. This blog post proposes that an execution framework of strategic national development is indeed necessary to enlarge the country's potential and also convert the enlarged potential into enhanced economic performance.

Top 10 development triggers

It would be wise for the Indian policy makers to identify and focus on the development triggers that would have a cascading effect on the entire economy. The author believes that India's future economic superstructure can only be as robust as the foundations of its social and economic infrastructure. Creation of islands of excellence, be it a few manufacturing plants, software houses, starry villas or exclusive malls, is no substitute for an orderly development of a whole national infrastructure that can truly broad-base development. In the past, these islands of excellence used to be created around a few national competencies while the rest of the sectors and infrastructure struggled to support or keep pace; more often than not the rest of the sectors constrained the islands of excellence! For example, a computer can be made from order to plant delivery in less than three days in India but could require more than treble the time to inward and stack up the components and to ship out the finished product.

The Top 10 triggers for India's rapid economic growth in the author's view are the following: Evening education, universal healthcare, high speed bullet trains, express roadways, mega seaports and airports, slum redevelopment, Innovation parks, natural energy systems, river water grids, and political unity in diversity. These Top 10 triggers can be achieved only through an exclusive integrated, prioritized national development management framework that is strategic and long term, and is different from a departmental budgeting that emerges out of India's central and state government five year and annual budgeting processes. To set that distinctive process through, policy makers and people must understand the benefits of the Top 10 triggers and the need for the new strategic development management framework.

Top 10, the canvas

The Top 10 triggers are not mere standalone development islands; each of them would have cascading developmental impact for the Indian society and economy. The outlines of each of the Top 10 programs are etched below.

Evening education

A major deterrent for the below-the-poverty-line (BOPL) households in India to educate their children is their need to use them to augment the family earnings. No amount of public legislation or social counseling would make the BOPL households forsake the present for the future. The only way to ensure universal education would be a combination of banning of child labor and enabling of universal evening education for school and college education. The teachers, faculty and the course work for the evening education should be completely on par with the day institutions to ensure academic delivery. Also, to ensure that the BOPL households are motivated to accept college education as a goal for their wards, most such courses must have a strong, industry specific vocational component making the graduates immediately employable in the industry or business.

Universal healthcare

This is one area where the Indian governments, central and state, as well as the Indian corporate sector must do distinctly better. The horrendous AMRI hospital tragedy of the last week in which over ninety lives have been lost and several others rendered critical must open the eyes of the society and the stake holders to the dire need for drastic reforms in the Indian healthcare sector. Many more community clinics and hospitals need to be set up in each city and town for universal inclusiveness. The quality, affordability and safety of healthcare as well as the safety and upkeep of the clinics and hospitals must be made dramatically better. As opposed to any other investment and subsidy, healthcare investment and subsidy must rank the highest on the governmental and corporate agendas. A healthy nation will be a wealthy nation too eventually.

High speed bullet trains

The fuel efficiency of transportation of passengers and goods by rail is well established. India has not progressed beyond the rail network laid decades ago. India needs to have a parallel high speed rail infrastructure that is adequately elevated, fenced and multi-modally connected. All cities and towns above the population of 5 million should qualify for bullet train connectivity (In Europe bullet trains connect countries with population levels of even 1 million). As per the latest 2011 census there are several 5 million plus habitats in India which are also industrial and business centers in their own right. The leg-up to social mobility and industrial productivity that the bullet trains would provide would be remarkable. While the Government of India (GoI) has taken the first step by initiating feasibility studies with global high speed train corporations, it would be necessary to plan and execute quickly the high speed train infrastructure on a much larger canvas.

Express roadways

While the rail system is generally preferable to road transport for speed, energy efficiency and safety, road transport significantly scores on the grounds of door to door delivery, employment generation and flexibility to reach anywhere in India, given the thousands of rural and urban habitats in India. However, national highways and the golden quadrilateral expressways are less than 2 percent of India's total road length which itself is woefully short of the requisite level. A national expressway system complete with city entry and exit systems and plentiful grade separators is an urgent necessity. Land acquisition which has been a major barrier to road development needs to be squarely addressed by providing ownership of road amenity complexes to the displayed urban and rural landowners. A new land acquisition act for expressway development would be in order.

Mega seaports and airports

Successful and productive globalization requires India having large and accessible entry and exit points for movement into and out of India, for people and products. India's seaports and airports are rather infamously congested and each expansion typically takes years to complete. More often than not, the upgraded facilities become grossly inadequate to cater to the expanded demand levels that arise by the time of completion. If India would be the third largest economic power by 2035 there is a need today to plan for the likes of Singapore seaport and airport. Such a futuristic infrastructure would need to be integrated with the bullet train and expressway network that was referred to earlier to ensure efficient end-to-end rapid flow. India could take a different approach in this futuristic global bridging by co-locating the futuristic mega seaports and airports, typically in an area of 1000 to 2000 acres each. The co-location would provide significant logistics, freight forwarding and customs infrastructure benefits to exporters, importers and travelers.

Slum redevelopment

A slum is an unplanned chaotic habitation with practically no access to civic services. Slums exist both in urban and rural contexts in India and are considered disruptive to progressive development of land assets. Universal education and healthcare or creation of glitzy infrastructure development would not by itself eradicate the attitudes that perpetuate and expand slums. The spatial and behavioral issues that cause and perpetuate slums need to be addressed. The attempts by the governments to remove slums and rehabilitate slum dwellers have so far failed to make a tangible impact as the rehabilitation has been to far off locations. Slum development would be successful when the slum dwellers are rehabilitated in the redeveloped land. An appropriate spatial planning model which provides a small piece of land for vertical rehabilitation while leaving the larger parcel for redevelopment for other commercial purposes would be beneficial. In fact, slum redevelopment could be a very lucrative option for the Indian real estate sector.

Innovation Parks

India must target innovation as the foundation of future growth. Indian scientists and technologists can do wonders in their domains if their start-up costs, especially on land and facility shell are taken care of. Establishment of science and technology parks by the governments where such laboratories and pilot plants could be offered free of charge up to a reasonable period, say 5 years, would be very helpful for supporting innovation. The innovation parks could, over a period, nurture an innovation-led entrepreneurial ecosystem on the lines of such parks that are successful in Sweden. Eventually, such parks would also attract higher academic institutions to either participate or network. Interestingly, the Indian Institute of Technology Madras (IITM) has taken the reverse initiative by setting up its own IITM Research Park, albeit on commercial lines.

Natural energy systems

If India has something in plenty it is the natural energy, be it in the form of solar energy, ocean energy or wind energy. Of the three modes, solar energy has the most potential for ready exploitation. The concept of solar cell farms is already tested. In addition, every skin or surface of a product or facility which is exposed to the Sun has the potential to become a solar power house. Toyota's pioneering hybrid car has, for example, come up with a solar roof top to further generate power. In India, with intelligent planning, all residential energy requirements as well as street lighting needs may be met through solar systems. The governments must extend major incentives to popularize the solar energy systems followed by wind and ocean energy systems. Though the latter two are less flexible compared to the solar systems they too have their utility. Some areas are particularly suitable for wind energy while some are well suited for ocean energy.

River water grids

Despite over 60 years of independence, disputes on river water usage continue to dominate the inter-State relationships. The latest unrest in the States of Tamilnadu and Kerala on Mullaperiyar dam issue is a stark example of the conflicts that could occur on river waters. The only solution could be to develop river water grids which could provide equitable solutions to all the states. In the past, such efforts could not make progress because of lack of technological tools and investment vehicles. By making a calibrated beginning and extending the concepts progressively better impact may be achieved. For example, Andhra Pradesh and Maharashtra could collaborate on linking up Krishna and Godavari rivers to start with. Once the regional projects are successful they may be connected with each other for muti-regional, and eventually, national river grids.

Political unity in diversity

At the core of Indian democracy lies the freedom of expression enshrined in the constitution. The society's freedom of expression is channeled through the political institutions. The democratic urge of the people and the constitutional provisions of the nation have led to a very high degree of political plurality. While this by itself is not bad, the ideological positioning and posturing that accompanies such plurality and the powers legislators have to stall and veto parliamentary proceedings have taken a toll on the productivity and efficiency of the Indian governance systems. India as a country is held out as an example of unity in diversity. Some degree of political alignment on broad economic parameters while ensuring political plurality would go a long way in ensuring India's competitiveness as a nation. From an earlier era of single party rule India has come a long way in terms of coalition politics. The sooner the next step of achieving all-party consensus on key issues is taken the better it would be for the Indian economy.

Development management

The Top 10 programs as listed above require a different management paradigm. Each would require an administrative vehicle that has the ability to plan, resource and execute each of the mega programs. In the past, establishment of the National Highways Authority of India and the Airports Authority of India had enabled fast track development of specific projects. The Top 10 programs are multi-ministerial and pan-Indian requiring tremendous collaboration and coordination between the different states and centre and their ministries. For their success, there needs to be a phenomenal gearing up of resources, which has to be carefully planned for in advance through capacity augmentation and technological upgradation.

Principally, for example, the programs would require multi-fold increases in the output of iron and steel, and their value added products as well as a wide range of construction materials. There would be a tremendous upsurge in the demand for various types of capital goods. The Top 10 program would require a total mapping out of scientific, technical, financial and manpower requirements on a 10 to 20 year horizon and a clear articulation of imported and indigenous inputs. In some cases foreign technologies and management know-how as well as foreign aid would be required. On the lines of the UID Authority, a high power intellectual leadership organization, comprising the best of public sector and private sector leaders, with exceptional empowerment and accountability needs to be created to execute the Top 10 program.

Paradigm shift

India as a nation cannot become economically big without thinking big on the developmental perspectives. India is at the cusp of a new growth wave. If the growth agenda is not conceptualized in its entirety the growth potential would be sub-optimized. The classic ministerial and departmental five year planning process needs to be replaced by a more strategic multi- ministerial and multi-departmental development management process. A paradigm shift towards mega development planning and a willingness to create mega execution authorities is vitally required to harness India's full development potential.

Posted by Dr CB Rao on December 12, 2011

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