Many issues such as 'Ten Years After the Currency Crisis', 'Chinese Yuan's continuing filtration with a variant of fixed exchange rate' cry for attention. But for now I would like to take a digression towards some autobiographical components. In less than a week, I would be completing 37 years of teaching Economics in the Union territory of Puducherry (formerly known as Pondicherry).
"Blessed is he who has found his work/let him ask no other happiness", a poet wrote once. I have been blessed and previliged enough to have been associated with Economics for a long period, in the capacity of a student and a teacher for more than four decades.
Born in a village to hard working parents 17 years after their marriage, I had enjoyed all the warmth and affection of the family. Primary and Secondary education at the government school in my village under the able guidance of one head master by name Venkata Subramaniam cemented my foundation, though the medium of instruction was Tamil, my mother tongue. Thanks to the head master teaching English in English, transition to college education in English medium did not pose any problem. But my problem areas were mathematics and science. Somehow by divine grace I could scrap through those difficult terrains and I feverishly embraced Economics at an undergraduate level. Those were the days when Mathematics component in Economics was minimal in this part of the region. Among the teachers who taught us in Tagore Arts College I must single out Prof. V Sasankan and Prof Palani G Periaswamy (who later went to University of Pittsburg for his PhD and even later became a CEO of Dharni Sugar and Cement companies in India), for exerting a beneficial influence in shaping my foundation in Economics.
State first and rank in Tagore Arts College was a god sent opportunity to get a berth in Presidency college, Madras. The competion among the students was keener. As compared to the best and the brightest from each district of Tamilnadu, who got addmission in my class I was an ordinary student straight from the village environment, struggling to negotiate the nuances of essentially an urban life. Nevertheless, god has kept me in a good stead and virtually placed me in the company of few of my professors who anchored my studies, thus assisting my evolution as a person. Professors S P Viswanathan, S P Palanisamy, Dr Kulandai and Dr Panneerselvam ought to be singled out for their contribution towards my academic enrichment.
There was a pleasant accident in the form of one of my student collegues getting married and becoming pregnant in the final year on the eve of examination; that proved to be a turning point in my life. Can you guess? A girl who was my immediate competitor in the class could not write examination and the fortune favoured me with a gold medal and first class in the Presidency college (1970). Besides delving deep into the issues of Economics I would be writing such autobiographical sketches now and then.
Sunday, July 29, 2007
Wednesday, July 11, 2007
What Kind of Country We Want To Be?
At a time when India is on a high growth trajectory, forex reserve swelling, stock market continuing to be on a bullish trend and official inflation rate contained to the tolerable level, the fundamental question to be asked and answered about our economy is simply this: are we on a comfortable track?
Normal south-west monsoon has flooded Mumbai, exposing the vulnerability of financial capital. Invariably during each monsoon time many select pockets of the country get battered, bruised and submerged by copious rains. The authorities can not remain content and complacent by simply winking and saying with the tone of sadness that they are helpless against the fury of nature.
Building up of a right kind of infrastructure not just in financial capital or metropolitan cities but all over the country with proper provisioning for clear drainage system, an institutional mechanism for harnessing water resources, improving the quality of water table, rediscovering the forgotten and almost abandoned lakes and pounds, providing health care and minimum primary education to the majority of the population and so on are the first step that the globalizing India must initiate so that the greatest possible number of individuals will benefit and share the bliss of growth process.
It is a matter of irony and definitely not a matter of satisfaction that under market led economic order, state has been withdrawing from the crucial activities where its presence is abundantly needed. The state must generate basic welfare and education to all its citizens as a matter of right, help develop their critical abilities to take charge of their lives and thus give them a stake in country’s development. Mere high growth rate alone will not make us leaders. The ongoing stock market socialism alone can not bring happiness to the bulk of the population. Global integration will have more analytical meaning only when close attention is shown to the quality of life available to all our citizens especially the poor who silently suffer without much resistance and slowly decay without much fight and then exit gracefully from the face of the earth. Should not the country as a leader provide the basic launch pad for their growth?
Normal south-west monsoon has flooded Mumbai, exposing the vulnerability of financial capital. Invariably during each monsoon time many select pockets of the country get battered, bruised and submerged by copious rains. The authorities can not remain content and complacent by simply winking and saying with the tone of sadness that they are helpless against the fury of nature.
Building up of a right kind of infrastructure not just in financial capital or metropolitan cities but all over the country with proper provisioning for clear drainage system, an institutional mechanism for harnessing water resources, improving the quality of water table, rediscovering the forgotten and almost abandoned lakes and pounds, providing health care and minimum primary education to the majority of the population and so on are the first step that the globalizing India must initiate so that the greatest possible number of individuals will benefit and share the bliss of growth process.
It is a matter of irony and definitely not a matter of satisfaction that under market led economic order, state has been withdrawing from the crucial activities where its presence is abundantly needed. The state must generate basic welfare and education to all its citizens as a matter of right, help develop their critical abilities to take charge of their lives and thus give them a stake in country’s development. Mere high growth rate alone will not make us leaders. The ongoing stock market socialism alone can not bring happiness to the bulk of the population. Global integration will have more analytical meaning only when close attention is shown to the quality of life available to all our citizens especially the poor who silently suffer without much resistance and slowly decay without much fight and then exit gracefully from the face of the earth. Should not the country as a leader provide the basic launch pad for their growth?
Tuesday, July 10, 2007
India's road to leadership
Given its size- both physical features and demographic profile, civilization heritage, composite culture, long historical continuity, successful secular democratic institutions, original signatory to GAAT agreement and abundant skilled personnel and a substantial workforce, India must have emerged as a great leader long ago and shaped the world affairs.
In the early stages of freedom and partition, we were much mesmerized by Soviet brand of command model. The result: Nehruvian vision of keeping distance from western influence via non-alignment and also the embrace of import substitution led industrialization model aimed at self sufficiency in all fields of economic activities. It is quite unfortunate that Indian planning experiment was more dominated and frustrated by an all encompassing state to the neglect of individual initiatives and enterprise. Despite the diversified industrial base which India built up under the planning era, Nehruvian post office socialism and to be precise the congress brand of bureaucratic socialism as late Prof. S. Ambirajan of IIT Madras aptly put it, did not help alleviate the sufferings of the poor. This command model did not have the crucial provision for land reform and other structural changes needed to lift the poor from the rut of poverty.
The alternative hindutva view of BJP was a matter of no consequence in so far as improving the conditions of the poor although it made a huge noise of difference from the monopoly congress and there was not much ideological difference in the matter of economic reforms as they appeared to be two sides of the same coin.
After opening up of the economy, liberating the markets and deregulating the economy, there is now a new vision of global finance and also growing nexus with US, with an assumption and heightened expectation that they will make our country a super power eventually. Will high growth and subtle strategic relations with US make a turn around in our economic and political fortunes and make us leaders?
In the early stages of freedom and partition, we were much mesmerized by Soviet brand of command model. The result: Nehruvian vision of keeping distance from western influence via non-alignment and also the embrace of import substitution led industrialization model aimed at self sufficiency in all fields of economic activities. It is quite unfortunate that Indian planning experiment was more dominated and frustrated by an all encompassing state to the neglect of individual initiatives and enterprise. Despite the diversified industrial base which India built up under the planning era, Nehruvian post office socialism and to be precise the congress brand of bureaucratic socialism as late Prof. S. Ambirajan of IIT Madras aptly put it, did not help alleviate the sufferings of the poor. This command model did not have the crucial provision for land reform and other structural changes needed to lift the poor from the rut of poverty.
The alternative hindutva view of BJP was a matter of no consequence in so far as improving the conditions of the poor although it made a huge noise of difference from the monopoly congress and there was not much ideological difference in the matter of economic reforms as they appeared to be two sides of the same coin.
After opening up of the economy, liberating the markets and deregulating the economy, there is now a new vision of global finance and also growing nexus with US, with an assumption and heightened expectation that they will make our country a super power eventually. Will high growth and subtle strategic relations with US make a turn around in our economic and political fortunes and make us leaders?
India Is Catching Up
Traditionally, the US, Western Europe and Japan also called the famous triad, have provided the economic leadership to the international economy. Japan showed all promises of greater economic growth in the 80s but only to falter in the late 80s buffeted by speculative bubbles and eventually slipped into a tailspin of recession through out 90s. despite experiencing Viagra economic growth in the 90s- one of the longest economic expansions in the US, that imperialist power is now getting weighed down by huge current account deficits, and the consequent loss of confidence in dollar.
With the launch of Euro, Europe is now more unified monetarily but sluggish economic growth and huge unemployment continue to plague them. Before the onset of 1997 financial crisis the Asian miracle economies were poised to become the natural leaders of 21st century. But these tiger economies got into serious economic trouble and banking crises and they are now back on their feet.
However, the emerging great players/leaders in the economics game are China and India. More particularly China has been enjoying an unprecedented growth rate, suffused with significant current account surplus. The significant point to note is that for more than a decade it has been cooperating with a rigidly fixed exchange rate with dollar, deriving thereby a mercantilist advantage of an undervalued exchange rate to boost its exports. Not only its wage rate is very low but even the interest rate the cousin of exchange rate has been also kept at a reasonably moderate level to assist the process of growth. Small wonder then, China is sitting on a mountain of $ 1 trillion exchange reserves and more recently it has shelled out a few million dollars for private equity investment in order to get better returns.
Will India compete and also cooperate with China strategically to become a leader in the economics game? There are reasons to believe that India is catching up. It may not be emerging as a raging tiger but as a slow moving sure footed elephant, it has been evolving as one of the high growth profile economies with sound financial system and a good institutional structure. Despite a cumulative failure on agricultural front, thanks to service sector growth, the overall growth statistics is very impressive.
With the launch of Euro, Europe is now more unified monetarily but sluggish economic growth and huge unemployment continue to plague them. Before the onset of 1997 financial crisis the Asian miracle economies were poised to become the natural leaders of 21st century. But these tiger economies got into serious economic trouble and banking crises and they are now back on their feet.
However, the emerging great players/leaders in the economics game are China and India. More particularly China has been enjoying an unprecedented growth rate, suffused with significant current account surplus. The significant point to note is that for more than a decade it has been cooperating with a rigidly fixed exchange rate with dollar, deriving thereby a mercantilist advantage of an undervalued exchange rate to boost its exports. Not only its wage rate is very low but even the interest rate the cousin of exchange rate has been also kept at a reasonably moderate level to assist the process of growth. Small wonder then, China is sitting on a mountain of $ 1 trillion exchange reserves and more recently it has shelled out a few million dollars for private equity investment in order to get better returns.
Will India compete and also cooperate with China strategically to become a leader in the economics game? There are reasons to believe that India is catching up. It may not be emerging as a raging tiger but as a slow moving sure footed elephant, it has been evolving as one of the high growth profile economies with sound financial system and a good institutional structure. Despite a cumulative failure on agricultural front, thanks to service sector growth, the overall growth statistics is very impressive.
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