Monday, February 26, 2007

The All Important Inclusion

Inclusive. Remember this word, you will be hearing it many times in coming months. From all sorts of folks, politicians to business leaders. Because suddenly realisation is drawing that the last couple of years of runaway growth and prosperity has not resulted in inclusive growth. Rather only in a few getting wealthier.

Even China gets worried about such things so presumably we should be too. That we not only do not have inclusive growth but we have runaway inflation from rising prices of goods and services. I now understand that finance minister P Chidambaram and his team have been furiously reworking their Union Budget 2007 proposals so as to ensure that there are more specific steps to fight inflation.

And yet I wonder why we did not see it coming. We all got caught in the great India Shining mirage three years ago and vowed that we would always watch out for such signals. And yet we've had a near encore. Forget wheat prices and onion prices. Real estate prices have doubled in many parts of India in the last 18 months. What's the general reaction ? Jubiliation, because somehow we think this is a reason to celebrate rather than worry.

Rising Prices, Time To Celebrate

So instead of figuring out how to step in and control prices, the government almost took pride in the fact that prices were rising and no one was affected. Because we are a growing economy. Turns out we are growing but not quite the manner in which we thought we were. So voters are already voting with their feet as they have done in the states of Punjab and Uttaranchal. And suddenly, whether or not rising prices are the reason, politicians are scurrying around trying to put together dossiers of anti-inflation measures.

Sure the Reserve Bank has been stepping in and hiking interest rates. But then, monetary tools can only do that much. A friend from Coimbatore told me that his company had to go out of the city to expand their factory. Because land prices were ridiculous. Which means thousands of jobs would go to some other place instead of Coimbatore. But prices in this smaller town in Tamil Nadu had shot up as well. The project was looking less viable now, he said.

What does all this mean ? Quite simply, we can grow only when the critical factors of production and supply are in our control. When demand overshoots supply then you have overheating. And things don't just cool off nicely, sometimes they just collapse. The Economist hinted at that in a cover story recently. And everyone pounced on The Economist saying they got it wrong. Well, well.

Are We Not Growing ?

So are we not a growing economy ? Of course we are. But as I never fail to point out, not all of us are growing. Industry is doing well, IT is doing better but to many hundreds of millions, it will be a long while before there is any change in their lives. So, inclusion is an important word to remember.

Tuesday, February 06, 2007

Amartya Sen & The Tunnel Effect Of Indian IT

How often do you get stuck in a traffic jam ? Almost everyday right. Now, here is a car on the lane next to you. Both of you are headed in the same direction and have been immobile for a while. So you and the driver of that car get talking. You discuss various things, mostly it will be to do with the state of traffic itself.

Soon, the other line starts moving and the driver in the other car waves his goodbyes and gets going. You wave your goodbye and smile at him. You are actually happy for him. Because you know that soon you will be going too. Time passes and you get impatient. Actually you are not moving. On the contrary there is no change in your position at all. Looks like your neighbour's line was the only line to benefit. Your happiness turns to anger. You are upset. You now curse the other guy.

This, as Nobel Prize laureate Dr Amartya Sen described it this evening in Mumbai, is the tunnel effect. I hope I got his example right - if not, I shall modify. The ocassion was a small dinner hosted in his honour by IT industry association Nasscom and the Welsh Development Authority.

Staying Back In The Tunnel

What if the Indian IT industry represents the other car that you, in the beginning, are happy to see surge ahead. And your car, lets say, is the rest of the economy and the polity. What happens when you realise its only the IT industry or the other car that's moved on. You are not moving. First there is frustration and then anger. And then, who knows what.

Professor Sen is going to dwell some more on this issue, as I can see. I reckon he will raise questions about the IT industry's contribution to the society, to the nation. He will pose questions that I feel have been posed but not strongly enough. And raise issues that deserve greater debate than ever before.

India Versus China

Will India overtake China ? Everyone has a view on this. Professor Amartya Sen's view is as follows. He does not care. He does not find it interesting. "I don't have the slightest idea or interest," he says.

He would be worried, he says, if India started losing out in life expectancy and China began gaining. For instance, he says China was 40 years ahead of India in life expectancy in 1979. Now, its just 7 years. Mortality in 1979 was 39 years. Now its 28 years. States like Kerala do better on some of these counts, he points out.

Or developments in health care. China, according to Professor Sen, messed up healthcare by allowing everything to be handled by the government before 1979 and prematurely privatising and handing over everything by the private sector after. "You can't understand these things by comparing GDP rates," says Prof Sen.

IT and TI

Professor Sen used this evening's short address to refer to a favourite topic, the argumentative Indian. He ascribed the success of the Indian IT industry to the fact that Indians discuss, debate and of course argue. "I think whether the IT industry has done well because of TI, meaning, Talkative Indians," he says.

Morality Is Related To Knowledge & Information

Information Technology is the hub of social morality, says Professor Sen. But for more on this, you will have to wait a day !

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