Budget should focus on HR growth

India has become a two trillion dollar economy. The foreign exchange reserve has reached US $ 327.88 million as on 30 January 2015.

Prime Minister Narendra Modi calls for a top speed reform to make India a $ 20 trillion economy.

India’s GDP growth target for 2014-15 is 7.5 per cent. The International Monetary Fund says India will grow at 7.6 per cent in 2016-17 and surpass China. Though it is propagated that high growth only could alleviate India’s age old poverty, illiteracy and backwardness, the growth benefit seldom percolates.

India became the third largest economy in 2011 from its 10th position in 2005. But the benefit had not improved the quality of living. The Global Strategic Consultant Gallup found that the average sufferings in India has more than doubled between 2006-2008 and 2010-2012.

In 2012, a full quarter of India was suffering.  The 2011 Global Hunger Index ranked India at 67th above Pakistan and above 54 African nations. The economic survey 2012-13 found the total employment in the country grew by just 1.6 per cent per year from 1999-2000 to 2009-10 in spite of growth boom. People’s suffering was the main reason for UPA government’s rout in 2014 Lok Sabha election.

In fact, the economic growth was not based on sustainable growth fundamentals. If we sum up the cost of damage to natural capital, loss due to various mega scams, cost of financial stimulus, cost of periodic recapitalisation of PSBs, the massive social sector spending, public debt, the actual GDP growth will slump to negative only. It all happened due to poor quality human resources who squandered away the opportunities to improve the quality of life.

A scientific, need-based, nation specific Union budget opens up opportunity to boost growth and quality life. An expensive Metro rail, though reduces the commuting time,  helps the realty giants by linking desolate land whose price soars up.

The CRISIL has estimated that India will need Rs 30 lakh crore to build its infrastructure in the next five years.  Whether the new infrastructure would increase the productivity vis-à-vis its investment?

Over the years, massive infrastructure fund has been spent to improve the urban infrastructure. But majority of urban centers have become unlivable mess. Why can’t the government build environment friendly cycle track, pedestrian path, improve the existing local train facility and low cost public transport facility? Stress on public sector banks has increased mainly due to lusty infrastructure finance. What was the fun of building hydro-electric projects on hill slopes of Uttarakhand which were damaged by the 2012 flood?

Infrastructure spending

The outstanding banks’ credit to infrastructure sector increased by 100 times from Rs 7,243 crore in 1999-2000 to Rs 7,86,045 crore in 2012-13. Between 2000 and 2012, around $3 trillion has been spent on rural infrastructure like roads, drinking water, sanitation, housing and irrigation.

After so much of investment, why is there phenomenal increase in rural to urban migration and biodiversity loss? The country needs quality infrastructure for growth. But who is going to monitor the quality? Former finance minister P Chidambaram once said, “we have no dearth of fund but we have problem in deliverance.” 

Our research and development contribution to the world knowledge is less than 4 per cent. Without R&D growth, manufacturing sector will not be sustainable. India’s natural capital cannot sustain an aggressive industrialisation with foreign direct investment. The quality of teaching in our schools and technical institutions has to improve for better R&D performance.

India is a vast nation with huge potential for multiple sector growth. Sectors like agriculture, forestry, tourism, fishery, animal husbandry and handicraft can generate employment on a sustainable basis.

There are 47.6 lakh artisans in India and the handicraft export grows at 20 per cent per annum. When potential increases, poverty continues to stalk the street due to poor delivery. A recent UN report says about 30 crore Indians still live in extreme poverty.

In order to improve the delivery, there is need for honest and committed leaders and CEOs in every sector who can work honestly without external pressure. This is high time for the nation to focus on development of human resources and knowledge capital. Without quality human resources, budgeting for growth is like moving with elephantine legs.