For many years now India has been growing at 8-9% per annum. Further, there is expectation that this growth rate will soon rise to 10-12% per annum and sustain there for a couple of decades. If this were to happen, India would be transformed in less than 10 years. India would be in the top 3 countries in the world by GDP after the US and China.
What is often not understood is that its relatively very easy for India to go to 10-12% growth rate. To understand this better, lets first try and break up the overall GDP growth number into its components. I dont want to go into the traditional break-up: Agriculture, services and manufacturing. The story is better understood if its broken up into "poor performing states" and "better performing states". The story goes that the poor performing states have traditionally pulled down India's average.....so a Bihar, MP, Chhatisgarh, Jharkhand, UP, Orissa, WB have typically grown at 2-4% per annum while the rich states like those in the North, West and South of India have typically grown at between 8-14% per annum. Gujarat has been growing at a rate faster than China's for the last 15 years....Well, the good news here is that in the last 5 years, most of these poor performing states have really got their act together. So Bihar has been growing the fastest at 12% and at the other end, even UP has grown at 6% over the last 5 years. The impact of this growth on the national GDP has been profound. India's national growth climbed to 9% from a low level of 5-6% during the NDA regime primarily as a result of the improvement recorded by the earlier poor performing states.
Having come to 9%, why am I saying that its relatively easy for India to go into the10-12% region? Because, there is another interesting way to dissect this 9% growth. Lets divide this up into contributions from "private sector" and "public sector". Actually, I dont really mean the public sector. What I really mean is the "government". My theory is that if only the government got its act together, that alone would life India's GDP growth to 10-12%. Here's what I mean.
Look around you. Whatever....almost whatever.....has improved around you in the last 20 years is on account of the private sector. Whether it is the quality of automobiles, houses, malls and multiplexes, availability of food items, electronics.....everything has come from the private sector. Truly, the private sector has performed well. But whatever goes into the government domain has lagged behind. Quality of roads, the drainage system, electricity, pollution control.....even education and population control....have all lagged behind. So primary education has lagged behind, but privatized college education has blossomed. So a beach will normally remain very dirty....but when it is handed over to the private sector, it will be well maintained.
The only successful initiative the government has taken has been what is called "PPP".....Public, Private, Participation. So the government gives out the contract to private companies who "build, operate and transfer" the infrastructure. Whatver progress has happened in the government sector has again happened because of the private sector.
Just imagine what could happen if the government got its act together. Like in China. Incidentally, the bulk of Chinese GDP growth comes from the government sector. Even today, more than 85% of Chinese GDP is accounted for by government companies. Imagine if India's governance standards could go somewhere close to the Chinese government's.
This wont happen unless the politicians are held accountable for the work they do. People must stop voting for parties that dont deliver growth. But this is already happening. Look at the 2nd terms that the CMs of MP, Chhatisgarh, Gujarat.....now Bihar have got. Even the Congress government at the center got a 2nd term. Clearly, the people of India are ready for higher growth. The other important role has to be that of media's. So media has to be on its toes and expose politicians who do not do work. Please note: I am shifting the responsibility of media from one that monitors corruption to one that monitors growth. There is a huge difference. What we need right now is focus on growth. That alone will mitigate the corruption in this country.
The next 2 decades are clearly India's. The truth is that India has grown so much only because of the private sector. The truth also is that if governance improves, nothing can stop us from hitting 12% in the very near future!