VIJAY SARABU DEVELOPMENT MODEL

Here, ‘Development Model’ means ‘Economic Development Model’. Some economists usually call ‘Economic Models’ as ‘Economic Growth Models’. But, here I call as ‘Economic Development Model’, because economic growth is a narrow term when compared to economic development. ‘Economic Growth is the increase in the amount of goods and services produced by an economy over a period of time’. Whereas economic development is a broader term and generally ‘refers to the sustained, concerted actions of policy makers and communities that promote the standard of living and economic health of a specific area (country) along with the increase in the amount of the goods and services produced by an economy over a long period of time’. Thus, economic development may also be referred to as both the quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, social inclusion, health, safety, literacy, and other initiatives.  Economic development may also be defined as “ a process whereby an economy’s real national income increases over a long period of time”. 

Economic development differs from economic growth. Economic development is a policy intervention endeavor with aims of economic and social well being of people, where as economic growth is a phenomenon of market productivity and rise in GDP. Consequently, “economic growth is one aspect of the process of economic development and involves quantitative changes in the economy”.

Economic Growth and Economic Development can be explained with a best example, let us compare the body of a person with the economy. When a person’s body grows with the increase in his age without corresponding increase in his brain may be referred to as growth, while the development refers to progress in his intelligence  with the growth of his body.

Thus, economic growth refers to simply growth in the goods and services in an economy over a period of time. Whereas economic development includes growth plus institutional and technological changes for the betterment of an economy. Economic Growth being a narrow term and economic development being a broader term and as it encompasses growth, I prefer my model as ‘Development Model’ instead of ‘Growth Model.’

My economic development model reviews the economic, political, infrastructure reforms and suggests some ideas for the rapid economic development of India. This model, being a simple one and thought provoking, understandable even to a lay man, does not involve any mathematical applications like other growth models.

   VIJAY SARABU ECONOMIC DEVELOPMENT MODEL

Economic Reforms:

Economic reforms means changes in economic policies of a Government for the betterment of its country. This can be explained by taking India as an example. Before 1980s, Indian economy was a closed economy. That means, a State controlled economy. The initial attempts at liberalization in the 1980s combined expansionary fiscal policies with selective reduction in tariff barriers, and a managed floating of the Indian rupee and since 1991, as a part of economic reforms, the nature of intervention has shifted progressively from micro economic regulation to macroeconomic management through fiscal and monetary policies. Market forces are assigned an increasing role in allocating resources and in determination of prices of most commodities and services. India has embarked on a far-reaching economic reform program covering trade, investment, monetary and exchange rate policies. Highlights of the economic reforms include, a major liberalization of trade policy covering progressive reduction in the customs tariff rates. The import licensing system has been dismantled and quantitative restrictions on imports have been phased out two years ahead of WTO schedule. As a part of reform measures, India joined WTO on 1^st Jan. 1995, while China joined on11^th Dec.2001. China, a communist country  initiated economic reforms including the focus on outward orientation in 1978. The establishment of the socialist market economy was reiterated as the goal of reform in the early 1990s. Thus, both India and China which were ‘Closed Economies’ became ‘Open Economies’ with the implementation of economic reforms.

The main of economic reforms is inclusive growth. Inclusive growth means “growth process which yields broad-based benefits and ensures equality of opportunities for all,” it stands for “equitable development” or “growth with social justice”. Now, the point is whether the fruits of economic reforms reached the common man in India? The answer is no, because even after 64 years of independence, the gap between ‘haves’ (rich) and ‘have not’s (poor) increased. There is huge money in the Swiss Bank in the form of black money (more than 1.4 trillion dollars. One trillion is equal to one lac crore). This shows how corrupt are our rulers, politicians, and bureaucrats). If our rulers are really patriotic, sincere and committed, they must immediately bring trillions of dollars of our money  in the Swiss Bank to the country. The money, thus brought must be invested for creating public capital assets (Major & Minor Irrigation Projects, Steel Plants, Large Scale and Small Scale Industries of Public Interest & Export Oriented Industries and in Infrastructure like  Power, Rail, Roads, Water, Education, Hospitals and in Agriculture and in other Public Services) there by eradicating poverty by creating employment opportunities to the people. Money must not be given to the public freely in the form of subsidies, but instead provide facilities i.e. infrastructure like power, safe drinking water, education etc for cheap rates. But, nothing should be given freely.

            Economic reforms in India are more helpful to the rich. We cannot blame the economic reforms for this. But, we can blame the rulers, who frame the policies, but failed to implement them properly. For example, ‘Dis-Investment Policy’ (Dis-Investment Policy means to sell the loss making PSU shares to the private companies, thus there by diverting the investment to productive purposes) is used to fill the fiscal deficit. The government not only tries to sell the loss making PSU shares, but also efforts are on even to sell the profit making PSU shares. What does that mean? Even the best performing public companies are sought to be sold to meet the budgetary needs of the government. It is more or less comparable to the selling of the family assets to meet the day to day expenses of the family. In the name of economic reforms the rulers are making money. The recent best example is ‘2G Spectrum Scam’ (2^nd Generation of reforms in Tele- Communication Sector) which resulted in crores of loss to the exchequer. In this Scam, Mr. Raja and others are sent to Jail. Economic Reforms in India helped more the Industrial and IT Sectors rather than Agricultural Sector, there by effecting its performance badly. Here, I explain how the agricultural sector in India was badly effected in the process of economic reforms.

Agricultural Sector:

One of the excluded sectors during reform period was agriculture which showed low growth and experienced more farmers’ suicides due to fake and terminal seeds, low prices and inadequate agricultural policies. The post- reform growth was led by services. Commodity sector growth (agriculture and industry) has not been higher in the post reform period as compared to that of 1980s. Particular worry is agriculture sector which showed lower than 2% per annum in the last decade. There is disconnection between employment growth and GDP growth. In other words, employment is not generated in industry services where growth is high. On the other hand, GDP growth is low in agriculture where majority are employed. Today, even after 64 years of independence agriculture sector bears 60% of population with low earnings, while industry and services together bears 40% with high incomes. Thus, there has been lopsided approach to development in India in the last two decades. Governments are more interested in pleasing the corporate sector (e.g., SEZ   policy) rather than helping agriculture sector which bears 60% of the burden. Even today about 60% of the cultivable land is in the hands of 10% of the landlords. The rest of 40% of land is in the hands of 90% small and marginal farmers basically produce food for the country. Though, the land reform laws advocates the distribution of the government lands to the landless poor, 65% of it has been illegally given to ineligible rich.   The lack of political will of Indian rulers led to deliberate non-implementation of land ceiling laws in the country.  Further, the small and marginal farmers are pushed to peripheries without getting any benefits from the state. In other words, the state subsidies on agriculture are to support the capitalist farmers who cultivate for market not for people.

The penetration of terminator seeds into various crops, high usage of pesticides and chemicals and the state subsidy for such crops is devastating not only the land fertility and also the peoples’ health. Self production of seeds by farmers for their own requirement disappeared. In its place, MNCs and Corporate Sector entering to the seed market and agricultural biotechnology. India accepting agriculture within WTO is disastrous in the lives of farmers and the vulnerable communities.  Hitherto the farmers have not been getting fair price for their produces.  Now as a result of AOA, the government of India is importing Pam oils as against the interests of the farmers produce groundnut and coconut oils in the country, import of China rice and American wheat further kills the interest of farmers to produce the food.  According to one estimate opening up of agricultural trade has risen overall agricultural prices by 22%, whereas the producers got only 2% hike in the price. Thus, the producers nor the consumers getting the benefit, but the middle men are grabbing the profit. Our New Agriculture Policy is planned in such way that our farmers are going to be agents of MNCs/TNCs and private sector is going to be savior of Indian agriculture. The new agriculture policy of government of India is aimed to gear up the production only for export than the local consumption hence the subsidy means supporting the corporate agriculture.  The subsistence farmers will not be supported anymore rather put in pressure to sell away their lands to the big land lords or MNCs. The imperialists on one hand setting up to control the production and distribution of agricultural commodities, on the other hand flooding the country with cheap agricultural products. While the imperialist governments offering huge subsidies, the Indian government removing all subsidies and benefits for the peasantry.

Indian Agriculture in the Post-Reform Period:

The growth in GDP in agriculture was around 2.2 to 2.5% per annum during 1950-51 to1980-81. It recorded the highest growth rate of more than 3% in the 1980s. In the post-reform period, the growth rate declined to 2.76% per annum. Growth in agriculture GDP which was 4.7% per annum during Eighth Plan (1992-97) declined to 1.8% per annum during Tenth Plan (2002-07).Thus, there has been significant deterioration in the growth of agriculture since mid – 1990s. In the 11^th plan, the agriculture sector has achieved the average GDP growth rate of 3.2s’ per cent.

Farmers Suicides:

The reasons farmers suicides are growing indebtedness, increasing risk, sharper decline in absolute productivity, price uncertainty due to trade liberalization and rise in cost due to domestic liberalization, decline in credit, and non-farm work intensified the crisis. Long term factors like decline in farm size, ground water depletion, deterioration in soil quality etc. have also been responsible for the agrarian crisis and farmers’ suicides. Because of demographic pressure, there has been significant increase in small and marginal farm holdings. These farmers have to face the challenges of globalization. Risk and uncertainty has also spread to marginal lands. The diversification of agriculture also raised concerns on food security.   

Globalization resulted in the neglect of agriculture that adversely affected the vulnerable classes of rural society in their employment conditions, income and consumption pattern, their education and health status. The small and marginal farmers are affected as there is a reduction in the fertilizer and chemical subsidies and in the budget for poverty alleviation programs as well as shift of area under food production to export oriented commercial crops.

Other related:

Some of the consequences and impacts of globalization are: exposure of domestic agriculture to international competition, growth of non-agricultural sector and its impact on demand for agricultural products, urban middle class life style changes including diets, rising food imports in developing countries, competitiveness of diversification of domestic production systems, vertical integration of the food supply chain. The disintegration of rural economy brought about by globalization lead to the disintegration of village communities, their society, culture and religious aspects.

Indian Villages:

According to 2011 Census 69% of India’s population lives in villages.  Their livelihood mainly depends on agriculture and related activities. The village economy had been independent throughout the ages and even the industrial development has not reduced its importance. It played a crucial role in the economic development of India by providing food and raw materials, employment to 2/3 of work force, capital for development and surplus for national development. The Indian agrarian structure is dominated by 90 per cent of small and marginal farmers. The extent of landholding is associated with caste and social status. The small and marginal farmers and agricultural laborers constitute the vast majority of rural society.

In the villages, farmers are not much aware of global economic system. Most of the food crops are converted into cash crops. Sugar cane farmers are getting advance loan from banks and MNCs. They used to supply hybrid seedlings, fertilizers and highly advanced equipments. This equipment utility reduced the human labour force. Hence the rural people are shifting from place to place for want of labour for their livelihood. Natural manure is replaced by synthetic fertilizers. As there is a shift from food crops to export crops, the prices of food items went on high, and the poor people couldn't buy from their meager income. Similar trend continued for clothing, housing, transportation, health etc. So people were forced to consume less of even basic necessities. Agriculture sector is the primary sector and it plays a crucial role in the economic development of India by providing food and raw materials to other sectors. Hence, the fruits of economic reforms must be reaped by this sector, especially the poor farmers (SFs & MFs).

Political Reforms:

India needs massive political reforms to achieve full potential of its economic reforms to emerge as one of the super economic power nations in the world. The economic boom needs to trigger more political reforms. The fact that political democracy is unsustainable in the long run without the removal of socio-economic inequalities. When economic reforms were ushered in 1991, two important claims were made by their proponents. It was argued that freeing private capital from the encumbrances of state regulations vis-à-vis its mobility, size and nature of activity – the infamous ‘license, quota, permit raj’ – would unleash entrepreneurial energies and create economic prosperity. It was also argued that market based reforms would lessen the discretionary powers of public policymaking over time, removing the scope for corruption and paving the way for increased efficiency, transparency and goodness of governance. Two decades down the line, these claims sound quite hollow. Greater freedom for big capital has surely led to a manifold increase in the private wealth and power of the rich. But the overwhelming majority of Indians have remained mired in poverty, hunger, lack of decent jobs and absence of social goods. And as far as governance is concerned, the state under the neoliberal regime has increasingly become a vehicle for capital accumulation by the big corporate players. Reckless speculation on financial assets and grabbing of common resources like land, forests and minerals have all become rampant. All this has combined to toxify the political process, with money power ruling the roost and democracy gradually degenerating into a bazaar of brokers and fixers.

It is a fact that the economic crisis has not affected India to a serious extent so far. Yet, the structural causes behind the crisis, especially rising income inequalities, is as much a feature of India’s growth story in the post-liberalization period as it is in the West. The principal beneficiaries of the Indian growth regime are the big business class and the urban elites. The wealth and assets of the Indian big business houses have sky rocketed over the past two decades. The social consequence of this accumulation regime – concentration of wealth, rapidly increasing inequalities and credit driven hyper-consumerism of the elite – has also been accompanied by a tectonic shift in the moral landscape. In a setting where getting rich fast becomes the dominant ethos, bending of the rules to get rich does not invite much repugnance. Naturally, the moral disincentive for the abuse of public office for personal gratification also gets weakened over time. A nexus of big corporates, ruling politicians and bureaucrats has matured under the neoliberal regime and made our system more vulnerable to cronyism and criminality. Corruption in high places has been a feature of our political system for many decades. It is in this backdrop that we are discussing political reforms in India today. As a part of political reforms a strong lokpal bill must be introduced.

Lokpal: 

The Anna Hazare movement has taken up the anti-corruption cause through the demand for a strong and effective Lokpal institution. The demand for a Lokpal is a legitimate one and the Union Government has only exposed itself further through its cheap maneuvers on the issue inside parliament. The passage of an effective Lokpal Bill remains an urgent imperative. The Lokpal should be a fact-finding body that receives complaints, enquires, investigates and forward cases to Special Courts, wherever prima facie there is a case of corruption, for prosecution and punishment. It should have powers to recommend an enquiry and investigation suo moto. It should oversee the entire machinery related to corruption cases at the Central level and should have the powers to recommend executive action and to approach Courts when these are not accepted. The Lokpal should be entrusted with quasi-judicial powers and autonomy to fulfill these functions in an independent, accountable, transparent and time bound manner. The separation of powers between legislature, executive and judiciary is a part of the basic structure of the Constitution. The institution of Lokpal should conform to this basic structure.

The Prime Minister should be brought under the purview of the Lokpal with adequate safeguards. The office of Prime Minister along with all public servants was brought under the purview of Lokpal by the V.P. Singh Government in 1989 and in all subsequent draft legislations, the Prime Minister has been placed under the Lokpal. A Parliamentary Standing Committee headed by Shri Pranab Mukherjee had also made this point while examining the 2001 Lokpal Bill. All public servants of the Union Government within the definition in the Prevention of Corruption Act, which includes the Prime Minister, must fall within the purview of the Lokpal. 

It is necessary to recognize that an important source of corruption since liberalization stems from the corrupt nexus between big business and public servants. It is necessary for the Lokpal to have the power to investigate cases which involve business entities and to recommend cancellation of licences, contracts, lease or agreements if it was obtained by corrupt means. The Lokpal should also have the power to recommend blacklisting of companies from getting government contracts and licences. Similarly, if the beneficiary of an offence is a business entity, the Lokpal should have the power to recommend concrete steps to recover the loss caused to the public exchequer.

Beyond Lokpal: 

The battle against corruption, however, cannot be won only through the institution of a Lokpal. For this a comprehensive reform of our political, legal, administrative and judicial systems is required. There has to be a National Judicial Commission to oversee the higher judiciary and act against corrupt judges. There has to be electoral reforms to check the use of money power in elections, which is a major source of corruption. Urgent steps also need to be undertaken to reform our tax system to plug loopholes and unearth black money, much of which is stashed in offshore bank accounts and tax havens. Article 105 of the Constitution needs to be amended to bring Members of Parliament under anti-corruption scrutiny.

The political system in India has borne the direct impact of the nexus between big business and politics. Policies made by governments openly serve the interests of big corporates and foreign capital at the expense of the people. The unprecedented use of money power in elections is also an outcome of this nexus. Big money is corrupting the entire system. Most political parties are selecting candidates on the basis of their money power and this is now percolating down even to the panchayat elections. Distribution of cash to the voters is also becoming the norm in many states.

Electoral Reforms:

Far reaching electoral reforms have become a vital necessity, both for safeguarding the democratic system and checking political corruption. Stringent provisions need to be built into the election rules against the use of money power and illegal money in elections. These provisions can be implemented meaningfully only if there is state funding of election campaign material for all candidates and a prohibition of private expenditure in election campaign material. Equitable access for election propaganda in the media, including the private corporate media, has to be ensured and the law should be amended to prohibit paid news and make it an electoral offence. Persons charge sheeted for serious criminal offences like murder, rape, kidnapping, dacoity and extortion should also be debarred from contesting elections. For a durable solution to the problems faced by our electoral democracy, the introduction of proportional representation on a partial list system (PR means that the number of seats won by a party or group of candidates is proportionate to the number of votes received. For example, under a PR voting system, if 30% of voters support a particular party then roughly 30% of seats will be won by that party), which is followed in many democracies across the world and the power to re-call the corrupt political leaders should be seriously considered. Political reforms are indeed necessary to safeguard and deepen stable democracy for rapid economic development.

Infrastructure Reforms:

For economic development of any country infrastructure reforms are very essential. India is lagging behind in infrastructure reforms, that’s why its economic development is at slow pace. Infrastructure sector is characterized by

• Natural monopoly
• High sunk costs
• Non tradability of output
• Non rivalness in consumption
• Price exclusion
• Impart externalities

The following sectors come under the purview of infrastructure:

Electricity (which would also include generation, transmission and distribution) and Renovation & Modernization of power stations.

• Non conventional energy (including wind energy and solar energy).
• Water supply and sanitation (including solid waste management, drainage and sewerage) and street lightning.
• Telecommunications.
• Road & bridges.
• Ports.
• Inland waterways.
• Airports.
• Railways.
• Irrigation.
• Storage.
• Oil and gas pipeline networks.

Infrastructure Of Indian Economy:
Urban Infrastructure:
It has been found Internationally and in India too, urban development is key to economic prosperity. The growth of the service sector has further cemented the need for an efficient urban infrastructure. The rapid urbanization and the increasing pressure on major cities from the migrant population, has put undue stress on urban infrastructure resulting in shortage in housing, inadequate water supply and sewerage, traffic congestion, pollution, poverty and social unrest. Today managing urban infrastructure is a major challenge for urban planner.

Post - Reforms Urban Development:
The reforms concentrated on restructuring and defining the role and responsibility of urban municipalities. Some of the salient features are:
1) Expand the source of fund for financing urban infrastructure projects. These include

• Urban Reform Incentive Fund
• City Challenge Fund
• Pooled Finance Development Fund
• Tax Free Municipal Bond

2) Improved public private partnerships to augment private sector participation in the urban sector.
3) Issue municipal bonds to generate finance.

The Constitution Amendment Act 1992
The act provides the state governments power to involve local civic bodies in improving the condition of the urban poor. The act gives constitutional status to Urban local bodies (ULBs) and advocates a uniform local governance structure throughout the country. The functions under the responsibility of local civic bodies are:
Urban Planning:

Regulating land usage and construction activity.

• Planned socio economic development.
• Improve quality of roads and bridges.
• Regular water supply for domestic, industrial and commercial purposes.
• Public health, sewerage and solid waste management.
• Fire services.
• Protect urban eco system.
• Measures to improve living standard of urban poor.

Rural Infrastructure:

India lives in its villages. Development of rural infrastructure is equally vital, if not more important than urban infrastructure. Efficient rural infrastructure is key not only for rural economic progress, but also to alleviate the living standards of rural poor. Some of the constraints for rural infrastructure development are poor financial health of the state governments, insufficient rural development projects and the incompletion of many sanctioned projects. In order to address the problem, the government initiated the Rural Infrastructure Development Fund (RIDF) in 1995-96 with an initial sanctioned amount of Rs 2000 crores with inputs from both the public and private sector.

Some of the salient features of the RIDF are:

It covered the inadequacy of both private and public funding for rural infrastructure development.

• It covered the shortfalls in target by public banks for agricultural lending.
• Deposits from commercial banks to RIDF have been broad based.

Future Trends:

To sustain growth in the infrastructure of Indian economy, despite the global meltdown, the government is planning an investment of US$ 20.38 billion in the next two years for infrastructure development. Further the government has set aside US$640.8 million for improving the condition of ports, railroads, highways and airports over a period of 15 years.

The index for the six core industries-crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel has shown a growth of 2.9 per cent for March 2009 in comparison to March 2008.  According to the Planning Commission, there exists an investment opportunity of US$ 25 billion by 2011-12 in India's shipping and ports sector, as the country seeks to double its ports capacity to 1500 million tons.The government plans to bring private investment through the PPP mode to set up over 300 airports. It has planned to invest US$ 9 billion to modernize existing airports by 2010.

Power:

Frequent power cuts is hampering our development process. India’s overstressed power grid is one of the most obvious signs of lagging infrastructure development.  Effectively, the government is passing the buck on infrastructure to the investor, and generator costs add up fast.  Is the situation going to improve?  India’s government has committed itself to improving the nation’s power grid, but in the world’s largest democracy, government targets tend towards “Electricity for all by 2012” (a part of many politicians’ election campaigns) rather than “Reliable power by 2012” or “A well-managed grid by 2012.”  

Roads:

To drive on India roads you need three things: a good horn, good brakes and good luck. India’s roads were mostly small one or two lane affairs until massive building projects in the past few years, and the new roads are instantly distinguishable from the old infrastructure. New roads are not only wider and better paved, but with physical dividers the traffic flow is far more orderly.  A new problem has cropped up, however, which is that most cars on the road (as well as lumbering trucks and motor-rickshaws) are designed for slow crawls through traffic and are vastly underpowered for a decent highway.  What this means for businesses is that any truck shipments will move at, optimistically, 30 km/hr (about 15 mph) even on good roads, as trucks are not very capable at weaving and passing around motor-rickshaws, not to mention the cattle strolling freely in the streets.

Air and Sea Ports:

India’s airports are unfortunately lagging sufficient infrastructure, and they are undergoing much needed improvements.  To take Delhi’s Indira Gandhi airport as an example, the airport currently is built to accommodate 12.5 million passengers a year but must deal with 16.2 million (for comparison, Thailand’s Suvarnabhumi airport is built to handle 45 million).  At India’s ports the dual problems are a lack of infrastructure and a crippling bureaucracy.  This differs greatly from port to port, but in general the necessary upgrades are being made, but very slowly.  The inefficiency issue is harder to fix, and is a reflection of India’s bloated public sector.  The often-quoted statistic is that Shanghai’s port can turnaround a container ship in 8 hours, but the same ship in Bombay takes 3 days.  Without a doubt, China or Thailand’s ports are well ahead of India.

Water:

Fresh safe drinking water for all people in India has become a mirage. Multiple factors are converging to ensure that India will suffer severe shortages of freshwater in the years to come.  As the poor majority of India’s population rises to the level of running water (drinking water for everyone by 2015, as another political campaign goal), freshwater usage will spike.  India’s industries are finally moving into high gear, however steel production and chemical manufacturing both require huge amounts of water.  India’s population continues to grow at an alarming rate, farm yields are declining due to sloppy crop rotation and pesticide use and more farms are needing irrigation.  Global warming has led to a well-documented reduction in the size of India’s glaciers, whose snowmelt feeds the country’s rivers, and the water table in the north has dropped from 60 feet ten years ago to over 300 feet today, nearly depleted.
The poor will, of course, be hit hardest and an investing business will no doubt be able to afford water and food, as will their workers, however for manufacturers and other industries that require a reliable source of freshwater, shortages will become a problem.  While now water availability is not an issue for factories, in ten years the situation will probably be akin to the power grid where there are rolling blackouts as reservoirs run dry and must be refilled.  Likewise, factories will need to have reservoirs of freshwater onsite to provide continuous water just as they need diesel generators now.  Another added and, for now, hidden cost to expect in an Indian facility.

Migration:

India’s rural population continues to flow towards the urban centers for work and skilled labor (including knowledge workers) move from the second-tier cities to the main hubs of Delhi, Calcutta, Bangalore and Mumbai.  The national government is trying to redirect migrants to the second tier cities to prevent slums from forming, and knowledge industries are increasingly looking at second tier cities as salaries in the major cities, especially Bangalore, skyrocket.

Investments in Infrastructure Projects:

Today, many projects, be it power, port or road projects are in pipeline but are stuck up due to some or the other reasons. There are many people who are willing to invest in our projects, but unless they feel confident that our projects will get approval, have uniform and stable policies they will be not invest in our projects. With low confidence among investors it will be difficult to convince them to invest in projects. We need to take some policy measures, give some incentives, display real ground work to show that the government has the intent before people will get that confidence back. Figure of USD 1 trillion has been set as the investment target for the 12th Plan. Is it not an unrealistic ambition to ask the private sector to participate and contribute to the lion's share of this target? Power and telecom sector were major achievers five years ago but today, both the sectors are stuck and other sectors are yet to catch up with large ticket investments. With low confidence, it will be difficult to attract investment easily both from private sector in India and abroad.

Inadequate public investment in the post-reform period had an adverse impact on the economy. It led to serious under-investment in critical infrastructure sectors such as power generation, roads, railways and ports. For example, the addition to power generation capacity in the public sector during the Eight Plan was only a little over half the target. There were similar shortfalls in capacity creation in roads and ports. These shortfalls would not have mattered if capacity in the private sector had expanded, but this did not happen either. The end result was that total investment in infrastructure development was less than it should have been, leading to large infrastructure gaps.

• Most striking, is the quality of infrastructure, which is abysmal. This is true in all areas: roads, ports, power, and telecom. For instance, India ranked 69th out of the 75 countries ranked on telephone lines per 100 inhabitants; 73rd on road quality outside of major cities; 57th on port facilities and inland waterways; and 47th on the quality of air transport infrastructure.
• The research and development nexus is very weak, with little collaboration between business and academia, and little success in commercializing or adopting new technologies. This poor outcome is ironic in view of the praise for India's science and engineering prowess.
• Labor markets are ineffective, perhaps the most ineffective in the world. Put briefly, India shows the advantages of a vast labor force with a skilled engineering and scientific community. It also shows, however, deficiency in both the hard infrastructure, such as roads, ports, and power, as well as the soft infrastructure of public administration, labor market practices, and financial market depth. With the opening up of the Indian economy, the country's information technology industry has been the biggest beneficiary.

The economy was able to achieve higher economic growth in the post-reform years despite inadequate investment in infrastructure because there was some slack in the system, but there can be no doubt that rapid growth will be difficult to sustain in future unless investment in infrastructure can be greatly expanded.

Some Ideas:

Multinational Corporations:

Due to globalization food items are being exported to India in the form of increased consumption of meat, western fast food, sodas and cool drinks, which may result in public health crisis as speculated by certain researchers. The rich biodiversity of India has yielded many healthy foods prepared from locally available organisms. But the marketing by MNCs with large advertisement campaigns lead the people to resort to their products.   

Human Development Index (HDI):

The Human Development Index shows wide gap between developed and developing countries. According to UN report released on 2^nd Nov. 2011, India ranks a low at 134 among 187 countries in terms of Human Development Index (HDI), which asses long term progress in health, education and income indicators. According to Swaminathan, “more people are watching T.V, talking on phone and communicating on line (Internet), but it is true that there has been an increase in poverty also.” Increase in growth rate has no much significance when it cannot help the poor. The economic reforms in the right direction only will help for the overall development of a country.

Sustainable Development (Eco – friendly Development):        

In the process of economic development, the environmental problems have been ignored or less concentrated. Now, the need of the hour is to concentrate on sustainable development. Sustainable development means, “Meeting the needs of the present generation, without compromising the needs of the future generation.”

Sustainable development aims at the creation of the sustainable improvements in the quality of life for all people and this should be the principal goal of development policy. Accordingly, the main objectives of sustainable development are:

(1) Accelerating economic growth (2) Meeting basic needs (3) Raising living standards (4) Helping in ensuring clean environment free from all types of pollution (5) Maximizing the net effects of economic development (6) Preservation and enhancement of the stock of the environmental, human and physical capital (7) Inter generational equity and (8) Overall strict control on gross exploitation of the natural resources of each country.

Policies for Sustainable Development:

Environmental problems like air pollution, water pollution, soil degradation, deforestation, loss of bio-diversity, etc are caused by such diverse factors population growth, poverty, industrialization, agricultural development, transport development, urbanization, market failure etc. Such environmental degradation harms human health, reduces economic productivity and leads to the loss of amenities. Therefore, the damaging effects of environmental degradation can be reduced by a judicious choice of economic and environmental policies and environmental investments.

The important policy measures for sustainable development are as follows:  

          

1.   Reducing Poverty:

Reduction of poverty should be the foremost priority of the Government. It should select those projects which provide greater employment opportunities to the poor. It should expand health, family planning and education that will help reduce population growth. Supply of drinking water, sanitation facilities, and slum clearance should be given top priority.

2.    Removing Subsidies:

To reduce environmental degradation at no net financial cost to the Government, subsidies for resource use by the private and public sectors should be removed. Because, subsidies on the use of electricity, fertilizers, pesticides, diesel, petrol, gas, irrigation, water etc lead to their wasteful use and environmental problems.

      Clarifying and Extending Property Rights:

Lack of property rights over excessive use of resources leads to degradation of environment. This leads to overgrazing, deforestation and over exploitation of minerals. Therefore, clarifying and assigning ownership titles to private owners will solve environmental problems.

4.    Market based Approaches:

Various market based approaches should be adopted to protect environment. Market based instruments in the form of emission tax, pollution taxes, marketable permits, depositor fund system, input taxes, differential tax rates, user administrative charges, subsidies for pollution abatement equipment etc should be extensively used to protect environment.

5.   Regulatory Policies:

Regulatory policies are the other weapons for reducing environmental degradation. Regulators have to make decisions regarding price, quantity and technology. They decide the technical standards, regulations and charges on air, water and land pollutants.

6.   Public Participation:

Public awareness and participation are highly effective to improve environmental conditions. For this purpose various formal & informal education programme, environmental awareness programmes, advertisement, public movements, aforestation, conservation of wild life etc are to be organized on a large scale.

7.   Trade and Environment:

The Government should formulate an environment friendly trade policy covering both domestic and international trade. It should encourage the establishment of less polluting industries, adoption of cleaner technologies, adoption of environment friendly processes etc to control environmental degradation.

8.    Participation in Global Environmental Efforts:

Participation in various international conventions and agreements on environmental protection and conservation can also help to minimize damages of environmental degradation. They include the Montreal protocol, the Basel convention, the Rio Declaration, the Agenda 21, the Earth summits, etc. 
Renewable energy:

Policies should be framed for the use of renewable energy like solar and wind in place of coal and petrol. Atomic Energy Agency predicted that renewable energy would overtake natural gas to become the second largest source of power generation worldwide within two years, and that global wind and solar generating capacity would increase by more than 30 per cent.

Corruption:

Here lie the root causes of corruption in India. The mega-scams that have occurred in the recent past – the 2G spectrum allocation scam, the Commonwealth Games scam, KG basin gas, Gaali Janardhan Reddy Mining Scam and Y.S. Jagan Money laundering Scam in A.P etc – show how thousands of crores worth of public resources have been illicitly cornered by a section of big corporates, bureaucrats and ministers. While corruption in high places has been a feature of our political system for many decades, what has emerged as a dominant trend in the post-liberalization period is a thorough distortion of the policy-making process at the highest levels of the government. A nexus of big corporates, ruling politicians and bureaucrats has matured under the neoliberal regime and made our system more vulnerable to cronyism and criminality. Everywhere corruption is ruling the country. Without bribe no work is done in India. Rulers themselves are involved in several Scams. Stringent laws must be enacted and implemented scrupulously without any exception. Then only country will progress rapidly.

Poverty:

Even after 64 years of independence poverty is at rampant. There are many poverty alleviation programmes by the government of India, but they are not implemented with true spirit. Money is swallowed in different stages. The result is poor becoming poorer and rich is becoming richer and thus leading to economic inequalities in the country. Simply framing the poverty alleviation programmes by the government do not serve the purpose, ultimately their strict implementation only will serve the purpose for the progress of the country.

Morality:

Lastly, but not the least morality among the rulers, politicians, bureaucrats, and the public is very much essential for the all round rapid economic development of the country.