Engines of Growth & Development

By

Dr T.H. CHOWDARY Director: Center for Telecom Management and Studies

Chairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director

Videsh Sanchar Nigam Limited &Information Technology Advisor, Government of Andhra Pradesh

T: +91(40) 6667-1191/ 2784-6137(O) 2784-3121®F: +91 (40) 6667-1111, 2789-6103

hanuman.chowdary@tcs.comthc@satyam.com

Talk @ Osmania University, Hyderabad : 16 April 2008

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Development

• Economic:– Family Income– Old Age Pensions– Insurance

• Life, Health, Work

• Human:– Health– Longevity– Education– Quality of Life ( air, water, leisure, communion…)– Stable Family– Stress

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Key Components of Human Development

Material Well-Being

KnowledgeLongevity

MortalityNutrition

Health Care

IncomeAssets

Employment

LiteracySchooling

Higher Education

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Building Blocks of the Development Process

Enlightenment

Empowerment

Enhancement

Enrichment

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Linkages Between Economic Growth & Human Development

ECONOMIC GROWTH

Government Households

Productivity R&D

Innovations

Economic Policy Social Policy

Public Provision

Structural Factors- Assets, Income & Employment

Level & Pattern of Expenditure

Poor Rich

Expenditure on Basic Needs

Education, Health, Nutrition

Assets & Employment

Social Security

Delivery Systems-Quantum & Quality of Services

Public Services

Private Services

Corporates

HUMAN DEVELOPMENT

Investment in Human Capital

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Growth Measures(1)

• Rates of GDP & PCI growth• Food, calories & proteins• Health: Disease & Death rates Doctors• Literacy, Education (graduates, S&T & R&D• Electricity consumed• Telecoms• Motor vehicles• Housing

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Growth Measures(2)

• Trade

• Foreign Exchange Resources

• Tourism

• Roads, Railways, Ports (sea & air)

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Ancient Engines of Growth of Wealth

• Conquest & loot (Greek, Persian, Roman, Egyptian, Arab, Mongol (i/c Mogul), European imperial/ Colonial conquests

• All these which depended on force died/ dying (US)

* Empires of the future will be those of the mind (ie intellect).

– Winston Churchill

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Fuel for Modern Engines of Growth

• Education

• S&T

• Knowledge Creation – R&D

• Health

• Human Resources ( can overcome lack of natural resources. Eg: Singapore, Israel, Japan)

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Prosperity & Poverty

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Developing Countries Developed Countries

Country PCI Country PCI

Korea 17,930 USA 37,500

Mauritius 11,260 Ireland 30,450

Malaysia 8,940 Japan 28,620

Brazil 7,480 Netherlands 28,600

Thailand 7,450 UK 27,650

China 4,900 Germany 27,460

Sri Lanka 3,730 France 27,460

Indonesia 3,210 Singapore 24,180

India 2,880 Israel 19,200

Per Capita Income (PCI)

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Period GDP POP PCI YRS

1951 to 2000

3.5 2.8 0.7 70

2004-07

9.0 1.8 7.2 10

Growth of GDP; Population;

Per Capita Income (PCI) &

Years for doubling PCI

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Poverty Ratio in Selected States (1)

Contd.

1973-74 1993-94 1999-2000

All India 54.9 36.0 26.1

Low poverty ratios

Goa 44.3 14.9 4.4

Kerala 59.8 25.4 12.7

Gujarat 48.2 24.2 14.1

Rajasthan 46.1 27.4 15.3

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Poverty Ratio in Selected States(2)

1973-74 1993-94 1999-00

High poverty ratios

Maharashtra 53.2 36.9 25.0 West Bengal 63.4 35.7 27.0 Uttar Pradesh 57.1 40.9 31.2 Madhya Pradesh 61.8 42.5 37.4

Bihar 61.9 55.0 42.6 Andhra Pradesh* 50 35 28

* According to white ration cards A P’s BPL pop. Is 85%

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Agriculture

Industry Service

Developed <5% 25 70

(Work force 3 20 75)

Developing 30 to 40 20 to 25 35 to 50

India* 18 26 56 China* 15 53 32

Content of GDP(Figs. in %)

* In the year 2006

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The Rising Cost of SustenancePrices for various food staples

(in US $ per ton)

$0

$100

$200

$300

$400

$500

$600

2007

2008

Maize

Wheat

Soyabeans

Rice

Source: TIME, March 31, 2008)

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Engines of Growth(1) • UK and other Western European States – Industry, Rail roads • USA :

– Rail Roads– Automobiles– Interstate Highways– Electronics & Computers– Defence industries– S&T (Nuclear, pace, missiles)

• Japan: – Automobiles & – Consumer Electronics– Semiconductors– Ship building– Robots

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Engines of Growth(2)• Korea

– Electronics– Automobiles– Ship-building– Construction

• China– Highways– Railways – Dams & Canals– Telecoms– Industries (from small to sophisticated machines)– Electrics– Machines– Construction (buildings, ports…)– Defence Industries– Iron & Steel, Cement

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Engines of Growth(3)

• India: – What are & what could be– I.T & Software– Pharmaceuticals– R&D ( for other nations)– Highways– Construction (Housing, offices)

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What slow down or brake our engines of growth

• Governments – permit-licence-quota• Corruption• Welfare before work• Competitive populism• Personality cult in political parties

(proprietarisation)• Poor education• Poor Nutrition• Ignoble leadership

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Post-USSR engines for Development (1)

• Winding down government /state capitalism

• Liberalisation, privatisation & competition (eg: telecoms/ air travel, personal finance, automobiles)

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Post-USSR engines for Development (2)

• Flow of capital/enterprises

• PPP- projects

• Privatisation of Higher Education (Talent creating A P, TN, KN, MH) and now all stages of education.

• Competition between PSUs & privates

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Affordability of Electronic Devices:Ratio of Price of Device to Per Capita Income

1951 1974 1994 2007

Radio 2.0 0.5 0.02 0.005

TV Set NA 1.9 1.2 0.37

Year’s Telephone Service

2.5 1.0 1.0 0.12

PC NA NA 6.0 0.75

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What we should not do…

“You cannot bring about prosperity by discouraging thrift.You cannot strengthen the weak by weakening the strong.You cannot help the poor by destroying the rich.You cannot establish sound security on borrowed money.You cannot keep out trouble by spending more than you

earn.You cannot build character and courage

by taking away man’s initiative and independence.You cannot help men permanently by doing for themWhat they could do for themselves.”

- Abraham Lincoln(Source: Freedom First, May 1989)

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Dhanyawad:Thank You

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Subsidies (Central) in crores of Rs.

Year 2004-05 ‘06 ‘07 ‘08 ‘09

Total 45,957 47,522 57,125 69,742 71,431

Of which food

25,798 23,077 24,014 31,546 32,667

Education: (Rs. crores)

Total Py Sy High

34,400 19,777 4,554 10,853

Health 2006-07 08 09

11,366 14,500 16,968

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Budgets of the Union Government

Year 2006-07 2007-08 2008-09

Revenue 4,34,387 5,25,098 6,02,935

Capital 1,49,000 1,84,275 1,47,949

Total Income 5,83,387 7,09,373 7,50,884

Non-plan 4,13,527 5,01,849 5,07,498

Plan 1,69,860 2,07,524 2,43,386

Total Expenses

5,83,387 7,09,373 7,50,884

Rev. Deficit 80,222 63,488 55,184

Fiscal Deficit 1,42,573 1,43,653 1,33,287