Here we propose 3 objectives India should focus on to achieve all round prosperity, say in a time-frame of 7 years.
India should aim for 3-fold increase the value of Indian currency over 7 years.
The value of currency and its purchasing power are extremely important to not only position a country in the global trade but also in determining the prosperity of its citizens. The lower value promotes exports but at the same time it limits the choice of goods that citizens can buy. There needs to be a balance here. If the currency is not pegged at the right level it is bound to lead to inequalities between those whose skills and products are tradable and those who are not.
The prosperity through global trade percolates and makes other sectors also prosperous, but that is only up-to a point. Lot of people in India choose to work abroad for the simple reason that they can earn in stronger currency. At the same time if per-capita income of India currently at USD 1500 can rise up to USD 4500, their affordability of goods can increase. If the currency is not pegged at the right level it can lead to greater inequalities. If the currency is pegged on the lower side, most companies would look at India at most as capacity to serve global markets. This can make India overly dependent on rest of the world.
Here are the eight factors that determine the value of a currency: Rate of inflation, Interest rates, Balance of Payment situation, Government Debt, Terms of Trade, Political Stability and Performance, Recession and Speculation. India has 6 out 8 of these under control. India should focus on reducing Government debt and radically improving the terms of trade. In some cases we import raw material and add value and in other cases we export raw materials. We should be able to strengthen leverage over pricing in both these cases. That means the kind of products we make extract much higher price and we are able to buy what we are buying in a much more competitive manner. To reduce Government debt, the Government has to reduce its profligacy by targeting its expenditure and act as a change agent and catalyst. The Government also has to address NPA problem of banks by re-designing the financial eco-system. The involvement of Government in all sectors including agriculture needs to be rationalized using transformative approach. Giving ownership of public sector back to public and involving communities in areas like education and health are important. Empowering farmers to pool funds so that sector is self-sustaining through farmers’ banks and approaching the sectors Government is heavily invested strategically is very important.
India should aim for 3-fold increase in the National Competitiveness over 7 years
Currency and competitiveness should go hand in hand. Here we can put productivity, quality and innovation as contributors to competitiveness that can make use of natural and human resources at disposal. India needs to focus on particular sectors in a strategic manner with themes that can differentiate India and make India less dependent on other countries. Some of the sectors that India can attempt to lead in are: Energy (Nuclear, Solar, Fuel Cells, Bio-mass), Environment Friendly products and solutions (Organic farming), Custom/Hand-made products and solutions (Art, craft to 3D-Printing), High Tech (all kinds of infrastructure including ports) and Defence. In other sectors India should strive for parity. In services India should further enhance its leadership by focusing on areas such as financial technology and governance.
Increase in productivity means assessing unemployment, underemployment, capability, capacity and opportunities so that we get greater returns on both human and other resources. To drive innovation and in general increase capability of people the entire education sector may need to be transformed. This will also include deepening and broadening capability in Arts, Sciences, Engineering, Technology, Business and all kinds of services. Newer business models as well as scaling up use of managed services model are important. Pushing for process improvement and higher quality in all walks of life needs to be pursued with vigour. The productivity operates systemically as well – how long it takes and how much it costs to transport goods from one corner of the country to the other has an impact on our competitiveness. It is also important to follow a pragmatic taxation philosophy.
India should aim for 3-fold expansion of its markets over 7 years
India is at a cusp of digital revolution. If we imaginatively use Social and Mobile technologies, we can increase ability for buyers and sellers to connect in myriad manners. We can use technologies to boost trust and aim for India to be digitally most networked country. The access to credit can also increase if we make use of peer to peer lending. Selective use of virtual currencies and distributed ledgers can remove distortions in markets and inequalities. In many cases the Government investment does not generate proportionate activity due to leaks. All this can be changed by greater adoption of technology for transparency. Expansion of market is the right strategy for India being a large country. The diversity of innovative products and services available should be overwhelming. As the market expands India will be able to export more as well as attract more businesses and tourists. Removing hard and soft infrastructure deficit and coming up with more and more innovative India-specific products and services is important. Managing markets is very important in sectors like agriculture where farmers complain during surplus production as well deficit production. What to grow, where, when and how are to be decided in a co-ordinated manner across different regions.
The above 3 objectives dovetail with each other, higher purchasing power can boost markets. Stronger currency and increase competitiveness is what makes a country developed country. Only with higher competitiveness one case expand markets.