Rising India: Some Concerns on Growth and Equity

Srijit Mishra

Public Lecture National Chengchi University

2015 June 09

Broad themes

• Make in India: a call to business

• Comparing with China: miles to go

• Distribution issues: people are ends

• Lessons from Taiwan: small is beautiful

2015 June 9 2 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Source: Janta Ka Reporter

2015 June 9 3 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Come, make in India

• Facilitate investment

• Foster innovation

• Enhance skill development

• Protect intellectual property

• Build best-in-class manufacturing infrastructure

• Single window (ease of making business)

• Economic federalism

2015 June 9 4 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Business Corridors

• Delhi-Mumbai Industrial Corridor (DMIC), 2006

– Six states

– 24 cities

• Plans for

– Bengaluru-Mumbai

– Chennai-Bengaluru

– East Coast

– Amritsar-Kolkata

Source: Wikipedia

2015 June 9 5 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Demographic Dividend India China

Market - 1.3 billion, 1.4 billion Working Population - 54+% 60+%

2015 June 9 6 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Three D’s

• Democracy

• Demand

• Demography

• Mandate of the people

• Fulfil wants for the people

• Produced by the people

2015 June 9 7 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Comparing with China

Source: Indian Express

2015 June 9 8 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

GDP Growth Rates (%): India and China

Source: World Development Indicators (WDI), World Bank

-4

-2

0

2

4

6

8

10

12

14

16

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

India China World

2015 June 9 9 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

India Indicators (2013) China

1.25 Population (billion) 1.36

1.88 GDP, current (USD trillion) 9.24

6.90 GDP growth, (%) 7.67

1498 GDP per capita, (USD) 6807

0.47 Exports (USD trillion) 2.43

71 Mobile (per 100 people) 89

684 Electricity (KWh per capita, 2011) 3298

28 FDI (USD billion) 348

70 Remittances (USD billion) 39

Source: WDI 2015 June 9 10 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

India Indicators (2013) China

66 Life Expectancy at birth (years) 75

53 Child Mortality (per 1000 births) 13

52 Dependency ratio (%, working age) 37

63 Adult literacy (%, 15+) – 2006/2010 95

140 Ease of doing business index (1=best) 93

32 Urbanisation (% of population) 53

0.8 R&D expenditure (% of GDP) 2.0

160 Researchers in R&D (per million pop) 1020

15.1 Internet users (per 100 people) 45.8

2015 June 9 11 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Source: WDI

Invoking Buddha

Source: Indian Express

2015 June 9 12 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

A detour: Southern Song Period

• Buddhism

• Daoism/Taoism

• Confucianism

• Mind/Spiritual

• Body/Physical

• Socio-political

• Economic

2015 June 9 13 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

“… a Gujarati, money is in my blood…”

Source: WSJ

2015 June 9 14 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Live, and let live…

• We will work on the border differences, but that should not come in the way of commerce.

• Inciting Chinese business, including Alibaba among others to look at India as an alternative avenue.

• Increasing costs, currency appreciation, and changing skill levels/demography in China means that India can complement and supplement their manufacturing efforts.

2015 June 9 15 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Fiscal Federalism in India

• The Prime Minister of India was accompanied by businessmen and two Chief Ministers in his May 2015 visit to China.

• Sister-states (Karnataka-Sichuan; and sister-cities (Aurangabad-Dunhuang, Chennai-Chongqing, and Hyderabad-Qingdao). And also Vibrant Gujarat.

• It is all about money, honey.

2015 June 9 16 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

The Powerful Selfie!

Source: Twitter 2015 June 9 17 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Distributional Issues

Source: GOP Stoppers, Liberal Planet

2015 June 9 18 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Some Contentious Issues

• Land Acquisition Act. How does one balance it with agriculture and livelihood issues of farmers/workers?

• Labour laws – hire and fire at ease. Will it compromise with workers’ rights?

• Intellectual Property Rights. Does it help innovation or facilitate rent seeking?

2015 June 9 19 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Other Concerns

• Social Sector: Low & declining expenditure –Health (4/5th out-of-pocket expenditure, WDI)

– Education (expdn % of GDP, 3.8%, 2012, WDI)

–Undernourished (195 million Indians, FAO)

– Pollution (13/20 most polluted cities, WHO/link)

• Crisis in Indian Agriculture – Farmers’ suicides (one every 30 minutes)

• Effect long-term demand and labour skills

2015 June 9 20 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

Lessons from Taiwan

Source: Dragon and Tiger Pagoda, Kaohsiung, Wikipedia

2015 June 9 21 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

People matter

• Public institutions are for people – Schools/Universities, Libraries – Hospitals, Parks

• Honesty, trust, and dignity – Respect each and every individual (migrant care

providers)

• The case for small and medium – Encouraging individual enterprise – Creating chain of linkages – Addresses efficiency and equity concerns

2015 June 9 22 Srijit Mishra, Public Lecture, NCCU; CC BY-SA

To Sum up

• Demographic dividend

• Also an urge/hunger among people

• Commerce/business first; political differences between China and India are being worked out.

• Distributional concerns are important. After all, people are ends and not means.

• Small is beautiful!

2015 June 9 23 Srijit Mishra, Public Lecture, NCCU; CC BY-SA