Reader Debate: Is govt's policy on eco development flawed?

One of our most commented articles today was Incredible India’s 8-9% growth was a fluke: Ruchir Sharma. We found one of the conversations around this piece interesting and have republished it as “Reader Debates” something that we will do more of. As always we have removed personal attacks that took away from the argument.

Karma: Here is the bottomline: There isn’t an economy in the world that has become a developed economy without doing following things:

1 Invite Capital from outside.

2 Allow best management and Technology to come in to the country.

3 Make country a good place for business. ie A business friendly govt - good Infrastructure, less bureaucracy and tax benefits.

4 Rule of law - Have clear laws that are implemented ruthlessly.

5 Educate your population. Have near 100% literacy and less than 20% workforce in agriculture.

6 Export, Export, Export.

db:

the growth 9 percent is result of NDA government worked during 2000 to 2004. if NDA government had continue we would have 12 - 15 percent growth.

Rajivbhutara: to some extent its because of global liquidity tightening where the world particularly US is having its dinner and enjoying on the money of other economies( loans).

second factor of this high growth i feel is due the conversion of black money to white entering india and also due to the tightening of policies where the business carried out in black (2 no) by people in india have started doing business in white.

It certainly was a fluke that India could grow at 9 percent without any major reform!

Karma: Lets consider the facts -

1 India never developed its infrastructure. For China to grow the way it did, it had to invest in huge infrastructure, and invite huge FDI.

2 India never relaxed rules of doing business in India. It always viewed foreign businessmen as adversaries! China welcomed them and created massive employments, and new cities to accomodate the newly urbanized citizens.

3 India followed crony capitalism. Most businesses grew wildly on getting scarce resources cheap from govt. So, we have the absurd situation of some of the richest people in the world in India (not china, inspite of it being 3 times our economy now)! So, most of business growth in India was cornered by some 20-30 families. Run away corruption has caused huge losses to the nation’s exchequer and GDP.

4 India was a consumption driven story. Our consumption increased, but our exports didn’t keep up. China was export driven story. They earned money. India was “Amdhani Attanna, Karcha Rupaiah” economy.

5 China adopted some good aspects of Communism and some good aspects of Capitalism while rejecting democracy and it has benefited. India has got the worst of Communism, Worst of Capitalism and with only some good parts of Democracy.

It was unsustainable. So, it all had to give in at sometime!! We’d be lucky if we didn’t fall in to 3 percent growth in near future.

Rcjk24:

It is not by fluke we had achieved 9 percent growth. He is entirely forgetting the scene before 2003 and after 2003. Between 2000-2003 IT industry found step and started growing creating thousands of jobs. After 2004 IT industry has created lakhs of jobs per year. This has resulted in a number young people going for houses and cars. This has resulted in fantastic growth of housing and automobile sector. This had whole repercussion on manufacturing and service industries. Due to this only the growth rate has climbed to 9 percent. The growth has decelerated only after RBI started tightening interest rate. Continuously for 2years interest rate has gone up. Now coupled with that eurozone crisis is there. This is a short term hiccup. Once the interest rates are reduced growth also will pick up. Again India will charter to higher growth path. Policy initiation in land acquisition, environment clearance, insurance bills etc. will definitely help.