Millennium Post

A hard look

Government attempts to revive the economy must be grounded in a realistic strategy

Never before has there been so much speculation about what the Union budget would be, what would be the steeply sliding fiscal deficit figures and what concessions could be introduced in the budget to pull the economy out of its present rut as in the run-up to the present one.

In the end, the finance minister, Nirmala Sitharaman's second budget has sought to make the best in a bad situation, without being overambitious.

Resisting any temptations for large spending hike, the finance minister has reiterated the much-touted National Investment Pipeline, envisaging investments up to over Rs 100 lakh crore as the sole pump-priming announcement. The NIP is long on the list of projects, just as the finance minister's budget speech was interminable, running close to three hours.

In a way the finance minister has admirably unveiled a holding operation. The experts had pointed out the need for large-scale demand creation by handing out money to farmers and income security. Any aggressive moves would have altogether upset the tenuous fiscal balance.

Sitharaman seems to have hit upon an underlying growth strategy for the Indian economy which should help growth rebound in the medium to longer-term than turning on the growth triggers immediately. This is how she had worked the strategy out.

The finance minister is laying a good deal of stress on the recovery of the rural economy. She had addressed one major shortfall which had affected the Indian farm sector. The severe shortage of storage facilities had hurt the interests of farmers and also resulted in price fluctuations. It had often resulted in prices crashing immediately after harvest and rising in the aftermath.

In addition, she is earmarking a good amount for extended rural credit, development of irrigation and special emphasis on another white revolution. On the other hand, devilment of fisheries and marine products processing in the coastal area could provide jobs for the rural youth on off-farm activities.

On the industrial front, the notable point is that she had laid out a strategy which appears like a toned-down industrial policy target announced by China sometime back. China had stated upfront about its ambition to dominate the technology industries of the twenty-first century.

In view of its bad experience with its attempts to take over major chip manufacturer, Qualcomm, which was blocked by US regulators, China proposed to take a headlong jump into chip and semiconductor manufacturing. Besides, genetic engineering and higher echelons of the computer industry were its avowed targets.

Nirmala Sitharaman is somewhat similar in her aims. She wants India to win big in quantum computing. Quantum technology can be said to be the frontier of new technology and its success, wherever that is, will give a critical edge. Sitharaman has setup development strategies for quantum technology in India.

She has provided Rs 8,000 crore for a National Mission for Quantum Technologies and Applications to begin with.

She is also giving emphasis on enabling the private sector to build Data Centre parks throughout the country. Data is said to be the new oil for the world economy, she said, as also everybody else nowadays. Big data will be used for medical centres as well as even for diagnosing the reasons for bad loans by banks.

Technology startups are the carriers for the development of new technology-based industries. Measures proposed to benefit the start-ups include a digital platform for seamless application and capture of IPRs and Knowledge Translation Clusters to be set up across different technology sectors, including new and emerging areas.

A lot of emphases is being placed on developing the semiconductors industry in the country. The budget speaks of developing the basic manufacturing industries and mentions a few steps for encouraging these. However, these are old wives tale, in a way. We have been talking about developing basic manufacturing industries for a long time now with little happening on the ground.

If anything, the manufacturing sector is going down. Latest figures on IIP indicate the pitiable state of Indian manufacturing industry growth. For any significant growth in manufacturing the essentials of developing large scale, green projects must be cleared. The first requirement is land for industries which has proved to be the most contentious issue.

A budget cannot solve every problem of the economy. But when it is attempting to put in place a strategy, the elements for implementation should also be in place.

The large infrastructure projects that are big touted as NIP cannot be taken up and implemented quickly unless the land for such large infrastructure projects are cleared. Even the roads building programme has gone slack for want of land on time. How do we ever put on the ground the ambitious countrywide infrastructure building programmes in the current context?

Maybe, the smaller technology base industries could be our best option for industrialisation. But then sooner or later time will come when we will be faced with the real challenges. Better prepare or solutions.

Government attempts to revive the economy must be grounded in a realistic strategy

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