Prime Minister Modi, newly elected, will have the greatest opportunity to create an economic revolution to modernize India and create massive employment opportunities.
India has been independent for 72 years. It is still a developing country. Theoretical economists believing in liberalism and socialism schooled mostly in England have not been able to prescribe practical solutions to modernize India and create massive employment. Nehru dynasty has ruled 60 out of 72 years. India, though called itself nonaligned, but was actually aligned with the Soviet Union/Russia. This has clearly put India far behind China. China, like India, first emulated the Soviet Union from 1949 to 1979. When China realized that it was not working, created economic revolution by using capitalistic tools of the USA. The China-USA alliance on economic and business front helped China become the second global economic power in two decades. Should India learn anything from this experience?
Prescription for Modernization:
- Privatize all Public Sector Corporations and Public Sector Enterprises. This will release substantial financial resources, may be in trillions of dollars. It will also contribute to efficiency and profits. It will get rid of massive corruption and delay thru government bureaucracies. Prime Minister Modi must try to convince the new Parliament to approve his new policy from both the houses.
- The Government of India has excellent credit. It must underwrite and float trillion dollar 50- or 100-year Treasury Bonds, that will be traded in world financial markets for 24/7. Because of the liquidity and India on the road to modernization, the Bond will become an attractive investment for Indians and others.
- Put into action major infrastructure to modernize India that should benefit all Indians. The basic needs such as clean drinking water, electricity without power cut, supply of gas for cooking thru pipeline, system for removal of garbage and waste management, building of modern sewerage systems throughout India, building of large scale factories to manufacture 100 million pieces of clothing for men and women for export, modernization of ports, highways, roads, elimination of wastage of food production of 40% valuing $40 billion a year, investment in sports to qualify India in Olympics, World Cup in soccer, and other sports, building of 100 I.I.T.s and new colleges and universities, building of shelters, health clinics in villages, etc.
- India must get rid of poverty of 300 million poor. India cannot call itself a democracy if India is the largest poor country in the world.
- Capitalize on the USA-India closest ally relationship and produce consumer and industrial goods for export to the USA. This will create huge employment opportunities for the less educated and the poor. India has a comparative advantage over China and therefore, it is in the interest of the USA to import from India, when it is capable of delivering.
- Because of this closest ally relationship, India will be able to transfer 100% of all sophisticated technologies from the USA and apply them to manufacture consumer, industrial and military products. All modern wars are won because of the most sophisticated technologies. The US excels others in communications, intelligence and signals. As close ally, the U.S. and India will be sharing the information. This will beef up India’s national security and military intelligence and preparedness. Thus, India can focus on modernizing its economy without being overly concerned to protect its sovereignty and territorial integrity. India must fully capitalize on the close ally relationship to allow India to focus on modernizing its economy.
- To attract massive private foreign investment, India must liberalize and open its economy as China did in 1979. India has two advantages over China: (a) India is the largest English speaking country in the world and will remain so. (b) India’s population is 50% under age of 25, and 67% under 35. (c) India has a large supply of engineers, computer scientists, and professional managers. (d) IBM is the second largest private employer after Tatas. IBM employs 150,000 in India more than its headquarters in the USA. This is a good advertisement for investing in India.
- India must open Investment Promotion offices in all major financial markets – Wall Street, NY; London; Frankfurt; Hong Kong, Tokyo, Singapore, Shanghai.
- India must deregulate and make it easy and comfortable for foreigners to do business in and with India.
- India also should leadership in creating a Common Market of all South Asian countries.
- India needs to build modern commuter rail systems in all its metropolitan cities including Mumbai, Calcutta, Chennai.
- The IIT has been branded as No.1 in the world. India should build 100 I.I.T.s and also start several new colleges and universities to educate the large population of under 25 age. India can attract millions of foreign students because it has a huge comparative advantage with the U.S. and UK. Experienced and reputed senior Indian faculty of the USA may be interested in heading colleges and universities in India that can attract substantial number of international students.
- Research and Development: India should start a world class R & D by attracting the top and senior scientists and technologists from India and abroad. Because the US is allowing India to transfer 100% of its sophisticated technologies, scientists doing research can benefit immeasurably. Ancient India invented many things including zero and mathematics.
Thus, the goal should be for India to grow its GDP minimum @10%. If Prime Minister Modi were to implement some of the above suggestions, India can easily grow @12% for the next decade. By 2030, India could compete with China for the second global economy.