UP elections and economic reforms

January 18th, 2012

The economic reforms are stuck. The government at the centre (UPA) has been jammed since long. Some of the major reforms have gone to the backburner manily because of the electoral politics being played by the major alliance partners. Mamata Banerjee has suddenly become the villan for having opposed FDI in retail and then again putting her foot down at the time of the Rajya Sabha voting for the Lokpal. Rumours tell us she has been instrumental in opposing a large number of reform oriented bills the UPA has wanted to introduce.

If the above is true, then has the UPA decided upon a strategy to tackle the Kolkata Lady or has it resigned itself to time? The outcome of the elections in Uttar Pradesh may throw up some light on the future course of the economic policies of the UPA. Going by the current trends, it is clear that the BJP and the Congress are fighting for the third and the fourth place. That leaves BSP and SP in the race for the top slot. Anybody who has been following the trend in UP will clearly agree that the gap between the second and third in the UP outcome will be huge.

Given the above scenario, both BJP and Congress will be happy to play king makers. This is where the future of the UPA’s economic reforms comes into play. If SP manages a close second and is able to form a government in the state with some support, Congress will be the first to spring up and help. Of course, in return it will expect the 23 MPs of the SP to become a part of the UPA in the centre. This will ensure the UPA does not have to depend on Mamata, who controls only 19 MPs. If this scenario becomes a reality, the UPA may be in a position to take a strong stand on certain economic reforms without bothering about the noise created by Mamata Banerjee. Hence all hopes of economic reforms (much needed) now depend upon whether the SP can cycle (its election symbol) its way to power in UP.

But hold on, weren’t we taught economic reforms are dependent upon the state of the economy and not on the election outcomes of a particular state? Well, it seems times have changed since we were taught this, so let’s adjust to the new reality. So the UP election results hold the key to the future of the economic reforms in India. Let’s all wait for them.

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The quality of the Indian human resource

January 2nd, 2012

Employees First, Customers Second is an interesting management book. The entire book is based on a simple logical chain – take care of the employees of the organisation – they will take care of the customers – and the satisfied customers in turn will take care of the shareholders. Make an organisation internally strong and it automatically takes care of the external stakeholders. The learning from the book is immense not only for a corporate leader but also for a government like ours.

There was a time when corporates were known by the brick and mortar – the physical assets they possessed. The great powershift changed all that. Modern corporates are now known for the minds they possess. Like the great powershift in the corporate world, similar revolutionary changes are going to sweep the economies. In future it will be the quality of the human resource possessed by the economies which will determine their relative strength. The theories which have been doing the rounds for the past decade or so, such as Bottom of the Pyramid, Demographic Dividends etc., will be seriously put to challenge since these are primarily based on the quantity and not the quality.

We, in India, will be among the most severely affected by these changes. Over the past several decades, we, as a nation, have collectively shunned our responsibility towards the quality aspects of the population. The two basic needs of the population – education and health – are the scarcest in this country. The government has miserably failed in fulfilling its primary responsibility towards its subjects as far as health and education are concerned. In fact the acute shortage of these basic necessities has converted them into huge business opportunities. Large amounts of private enterprises are expected to come into these fields. The government has successfully managed to transfer its obligation into private hands.

This, in the long run, will have disastrous consequences for the Indian economy. The quality of the Indian human resource will rank the highest among the various infrastructure factors crucial to sustaining the country’s rapid economic growth. In fact, this will be the single most critical factor for the success of the country. Leaving the most critical of factors responsible for the sustaining of the economy in private hands is itself not a comforting thought.

If this experiment of the government fails, the much-touted Indian “demographic dividend” (considered as a panacea for all the economic ills of the country) is more likely to boost the development of a society beset with uneducated and unhealthy youth rather than an educated working class who would be able to make a positive contribution to the gross domestic product.

For most part of the previous decade, the story of rising India has eclipsed the mind of every Indian so much so that certain commentators (political and otherwise) have started dreaming of a global economic revival led by India. It would be wonderful to have their dream fulfilled but the turn of events in the past year have made the thinking brain realise that dreams can also be shattered if the right steps are not taken to achieve them. And caring for the qualitative aspect of the human resource of the country is definitely the most important step in the direction of achieving the great Indian dream.

Hope the government is listening.

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