At the outset some
loud noises are heard in India these days that there is a lesser growth of GDP (gross domestic product) in the last few quarters. We still achieve
impressive GDP growth rates over other parts of the world.
We have to
understand one thing...
When the floods are
moving at a rapid pace to the sea, we can create barriers in the form of
dams, reduce the speed, divert and store water for irrigation for
future.
Do we leave a
rapid moving flood to reach the sea without use or do we arrest the speed,
create course correction and use it for future irrigation and growth?
Yes we need to
arrest the speculative flood pace of our economy, arrest the speed in the
form of reforms, in order to have greater sustainable growth of GDP in
future. This is what the current government is doing now.
Due to the structural
reforms taking place now, Momentary drops of GDP growth over previous
quarter will be inevitable for another few quarters so that a faster
sustainable growth can be achieved in future.
Otherwise we will
have only speculative jobless paper growth without real economic
growth.
Out of box ideas-
Instead of crying
about falling growth rates which are inevitable during the period of structural
reforms , why don’t we think out of box solutions and keep tossing up such
suggestions in social media debates?
What is GDP?
The components of GDP are:
Personal Consumption Expenditures plus Business
Investment plus Government Spending plus (Exports minus Imports).
We need to increase each
of these components more than the previous quarters considerably high to reach
higher rates of growth.
But when one goes
down, the other has to go up more to compensate so that the GDP growth is sustainable.
Due to the reforms, personal consumption may grow at reasonable level
only for some time. Export growth is based on global growth scenario and
we cannot quickly grow that beyond certain levels , as it is relatively
inelastic. Business investments also during the period of structural reforms will
not grow appreciably for some time.
Then we need to look
at government spending to accelerate growth. No wonder, massive roads and
infrastructure outlays are planned
Some out of box
ideas here-
One has to note
these are brain storming ideas to be debated further and accept with or without
amendments. Creativity will have to flow without applying rationality first in
a brainstorming, hence the pundits may factor this before shooting down these
thoughts. Let us debate, deliberate and move on...
What are these
thoughts tossed up for government?
-offload some government
scheme expenditure to pvt sector. For example mgnrega subsidy schemes are
a must for uplifting our poor masses. But the government may offload some of mgnrega
outlays- how? Why don't we allow pvt sector to take over these subsidy
outlays region wise by allowing them to brand itself?
For example we
can allow say" Reliance mgnrega west region.." the government can
auction these branding rights to pvt sector brands and in return pvt sector has
to take over these mgnrega outlays upon themselves against their branding
permission. Govt should only monitor mgnrega scheme's reach and delivery
and should stop funding from its budget. Like spectrum auction such branding
rights of subsidies offloaded by govt will give them substantial revenue, keep
the subsidy outlay out of government budgets. Can't we look at this
thought?
It is a brain
storming idea to be pruned further.
-One more thought
for Railways
There are various railway platforms not named in every city. For example, They call it Chennai central platform 1,2,3 etc. Why don't we allow branding of platforms by pvt sectors say Tata platform, reliance platform etc. Railways can auction these platform branding rights and create a fee based income for Railways.
-Similar analogies can
be extended to unbranded spaces and generate more revenue.
Auctioning of
preferential car number plates, naming of new roads - the possibilities are
endless.
These pvt
sector spend on CSR initiatives, they can look at funding subsidies by the
above schemes. They also spend huge amounts for branding. By allowing them to
brand this way the pvt sector will directly pay auctioning revenue to govt that
will enable government to spend better on health care and other priority
sectors.
More such out of box
ideas should become the focus of discussions than just criticizing the government.
To sum up- we just
do not simply criticize but say what out of box alternatives can be looked at.
That will be more productive. Is it not?