JAN ANDOLAN(For Turning Around India)

R.P. Gupta

MUMBAI NEW DELHI NAGPUR BENGALURU HYDERABAD CHENNAI PUNE LUCKNOW AHMEDABAD ERNAKULAM BHUBANESWAR INDORE KOLKATA GUWAHATI

© AuthorNo part of this publication may be reproduced, stored in a retrieval system, or transmitted in anyform or by any means, electronic, mechanical, photocopying, recording and/or otherwise withoutthe prior written permission of the publisher.

First Edition: 2015

Published by : Mrs. Meena Pandey for Himalaya Publishing House Pvt. Ltd.,“Ramdoot”, Dr. Bhalerao Marg, Girgaon, Mumbai - 400 004.Phone: 022-23860170/23863863, Fax: 022-23877178E-mail: himpub@vsnl.com; Website: www.himpub.com

Branch Offices :New Delhi : “Pooja Apartments”, 4-B, Murari Lal Street, Ansari Road,

Darya Ganj, New Delhi - 110 002. Phone: 011-23270392,23278631; Fax: 011-23256286

Nagpur : Kundanlal Chandak Industrial Estate, Ghat Road,Nagpur - 440 018. Phone: 0712-2738731, 3296733;Telefax: 0712-2721215

Bengaluru : No. 16/1 (Old 12/1), 1st Floor, Next to Hotel Highlands,Madhava Nagar, Race Course Road, Bengaluru - 560 001.Phone: 080-22286611, 22385461, 4113 8821, 22281541

Hyderabad : No. 3-4-184, Lingampally, Besides Raghavendra SwamyMatham, Kachiguda, Hyderabad - 500 027.Phone: 040-27560041, 27550139

Chennai : New-20, Old-59, Thirumalai Pillai Road, T. Nagar,Chennai - 600 017. Mobile: 9380460419

Pune : First Floor, "Laksha" Apartment, No. 527, Mehunpura,Shaniwarpeth (Near Prabhat Theatre), Pune - 411 030.Phone: 020-24496323/24496333;Mobile: 09370579333

Lucknow : House No 731, Shekhupura Colony, Near B.D. Convent School,Aliganj, Lucknow - 226 022. Phone: 0522-4012353;Mobile: 09307501549

Ahmedabad : 114, “SHAIL”, 1st Floor, Opp. Madhu Sudan House, C.G. Road,Navrang Pura, Ahmedabad - 380 009. Phone: 079-26560126;Mobile: 09377088847

Ernakulam : 39/176 (New No: 60/251) 1st Floor, Karikkamuri Road, Ernakulam,Kochi – 682011. Phone: 0484-2378012, 2378016;Mobile: 09387122121

Bhubaneswar : 5 Station Square, Bhubaneswar - 751 001 (Odisha).Phone: 0674-2532129, Mobile: 09338746007

Indore : Kesardeep Avenue Extension, 73, Narayan Bagh, Flat No. 302,IIIrd Floor, Near Humpty Dumpty School, Indore - 452 007 (M.P.).Mobile: 09303399304

Kolkata : 108/4, Beliaghata Main Road, Near ID Hospital, Opp. SBI Bank,Kolkata - 700 010, Phone: 033-32449649, Mobile: 7439040301

Guwahati : House No. 15, Behind Pragjyotish College, Near Sharma PrintingPress, P.O. Bharalumukh, Guwahati - 781009, (Assam).Mobile: 09883055590, 08486355289, 7439040301

DTP by : SunandaPrinted at : M/s Sri Sai Art Printer Hyderabad. On behalf of HPH.

R.P. Gupta“The author of this book is a graduate engineer with brilliant

academic record and having experience of over four decades inmanaging a small corporate. His articles on Indian Economy are

seen quite often in different magazines and newspapers.”

Sri Narendra Modi is inaugurating the first book “Turn Around India”(Through Inclusive Governance and Team Spirit)

at Ahmedabad on 4th April 2013

ACCOLADES

Innovation par excellence has always been the drivingforce for the ways and means of improvedenvironmental performance, energy efficiency andproductivity. I have received the letter along with themagazine, which contains your article. Your effortsand concern regarding the nature and industries areappreciable.

Dt.: 23/01/2014 Sri Narendra ModiChief Minister,

Government of Gujarat

Thanks for sending the magazine highlighting yourarticle on ‘Green Laws’. Dr. Kalam has seen thearticle and he conveys his thanks to you for sendingthe article and magazine for his reading.

Dt.: 02/01/2014

Dr. APJ KalamFormer President of

India

The Minister is pleased to receive your articlespublished in the magazine “Steel 360” and “The AsianAge”. The Hon’ble Minister has also extended hisgreetings and wishing on success in your futureendeavor.

Dt.: 15/11/2014

Sri Nitin GadkariMinister of Road

Transport & Shipping,Government of India

Shri Jual Oram, Hon’ble Minister of Tribal Affairs hasdirected me to convey his congratulations to you forpublication of your articles in magazine “Steel 360”and in newspaper “The Asian Age”. He hopes you willkeep contributing to the society with the samedevotion and dedication.

Dt.: 12/11/2014

Shri Jual Oram, Hon’ble Minister of Tribal Affairs hasdirected me to convey his congratulations to you forpublication of your article on “India must be Globallycompetitive to check Inflation & Trade Deficit” in themagazine “Steel 360”. He hopes you will keepcontributing to the society with the same devotion anddedication.

Dt.: 02/01/2015

Sri Jual OramMinister of Tribal

Affairs,Government of India

I acknowledge with thanks the receipt of themagazine. Thank you very much for your kind wisheson my assumption of the Office of Union Minister forChemicals & Fertilizers.

I hope to receive your continued support andcoordination, which will go a long way in helping meto fulfill the aspirations of the people of our country.

Dt.: 01/07/2014Sri Ananth Kumar

Minister for Chemicals& Fertilizers,

Government of India

I acknowledge receipt of your letter dtd. 17th July,2014 and have gone through the contents of yourarticle in the magazine and found it very insightful.We wish you the very best.

Dt.: 19/08/2014

Sri Piyush GoyalMinister of State for

Power & Coal,Government of India

Your article “Regulatory Reforms – An Urgent Needfor Economy Revival” vividly describes differenttopics addressing the economic activities of the nationcovered in the Steel 360 magazine are veryinformative and analytical. The deficits in every areaare to be curtailed for building the strong economy ofthe country. The present Government is formed with alot of aspirations, hopes and expectations of the peopleand owes the faith of the people to fulfill them.

I convey my congratulation for your meaningfulmagazine and my best wishes for all the success.

Dt.: 08/07/2014

An article Road Map for the Adarsh Gram Yojana ispublished in this magazine which very well describesyour ideas and thoughts on Sansad Adarsh GramYojana – a scheme announced by our PM ShreeNarendra Modiji. I congratulate you for yourmeaningful write-up in the magazine.

Dt.: 19/12/2014

Ms. Anandiben PatelChief Minister,

Government of Gujarat

Your article on mineral resources is indeedinformative. Sectors like steel, cement, fertilizers andpower play an important role in Indian economy.Boosting production, cutting transportation costs andreducing import dependency are vital for giving a fillipto the Nation’s economy. I hope that you wouldcontinue to enrich the readers with your thoughtprovoking articles in future as well.

Dt.: 28/08/2014

Sri Akhilesh YadavChief Minister,Government ofUttar Pradesh

I am in receipt of your letter dtd. 19th June, 2014enclosing therewith an article titled “RegulatoryReforms – An Urgent Need for Economy Revival” inthe magazine “Steel 360”.

I have found the article interesting and informative.

Dt.: 16/07/2014

Dr. Najma HeptullaMinister of Minority

Affairs,Government of India

I am thankful for a copy of the magazine containing anarticle written by you. The issues pertaining to changein economic laws, to attract more and more investmentfrom entrepreneurs, will enhance the economicgrowth.

Dt.: 15/04/2014

Sri PrithvirajChavan

Chief Minister,Government ofMaharashtra

I have received your letter dtd. 12/08/2014 forwardingme a copy of your article “Mineral ShortageConverting India to a High Cost Economy” asappeared in the journal and urging to redesign policiesto address these problems.

I am glad you are keeping an eye on the importantissues. These matters are under active consideration ofGovernment and appropriate measures are being totaken to redress these issues.

Dt.: 15/09/2014

Sri Shripad NaikMinister of State forCulture & Tourism,Government of India

Many thanks for sending me your article published inSteel 360. I read the article with interest.

Dt.: 23/08/2013

Sri Yashwant SinhaMember of Parliament,

Chairman –Parliamentary

Standing Committee onFinance

The article on Top Agenda for the New Government isuseful and knowledgeable. On behalf of the Hon’bleMOS (Agri & FPI) Dr. Sanjeev Kumar Balyan, Iconvey best wishes to you for the endeavour.

Dt.: 11/06/2014

I am pleased to receive a copy of Magazine titled“Steel 360” in which your article on “India must beglobally competitive to check Inflation and Tradedeficit” is published. The literature is very informativeand enlightening. I wish you a grand success in allfuture endeavours.

Dt.: 20/01/2015

Dr. Sanjeev Ku.Balyan

Minister of State forAgriculture & FPI,

Government of India

I acknowledge the receipt of your article “India NeedsInnovative Tax Reforms” published in the magazineSteel 360. The article is worthwhile and meritsconsideration.

Dt.: 28/04/2014

Sri G.C. MurmuPrincipal Secretary,

Government of Gujarat

I acknowledge the receipt of your article onRegulatory Reforms – An Urgent Need for EconomyRevival in the magazine Steel 360. Thanking you forsharing your views on Regulatory Reforms.

Dt.: 22/07/2014

Sri Prabhat KumarSarangi

Joint Secretary,Department of Land

Resources,Ministry of Rural

Development,Government of India

Thank you very much for your article. I am sure yourviews are being read in the right places.

Dt.: 04/07/2014

Sri M.J. AkbarThe Sunday Guardian

I am grateful to you for sending me a copy of yourarticle on “Railway Restructuring”, published in themagazine “Steel 360”. I look forward to reading thesame with interest.

Dt.: 29/08/2013

Sri N.R. NarayanaMurthy

Executive Chairman,Infosys Limited

I thank you for your letter enclosing a copy of themagazine wherein your article has been published. Iwent through the article. I agree with your statementthat “we must adopt logical and productive use ofland”. Your concern for the environment and for therural and tribal population deserves appreciation.

Dt.: 28/11/2013

I appreciate the analytical viewpoint expressed in yourcolumn appearing in the magazine. I agree with you inyour statement that “we must act with positive attitudebringing our Nation to the heights of development….”

Dt.: 05/03/2014

I went through your article on inflation and am quiteimpressed by the depth of your knowledge ineconomics. It is generally accepted that interest ratesalone cannot control inflation, because inflation isdependent on so many other factors. But interest rates isone tool available with RBI to moderate inflation andensure growth at the same moment. I agree with yourpoint that agri sector requires investment andtechnology. Banks, especially public sector banks, playsa key role in extending finance to agriculture sector.

Dt.: 13/03/2014

Browsing through your contributions in Steel 360across many issues, I could observe the versatility anddepth in your knowledge. In a world where peopleonly grumble about the happenings, your essays listingout suggestions are very welcoming. I wish thesesuggestions reach the policymakers either through thismagazine or some other forum, for their consideration.

Converting personal income tax into expenditure taxand then merging it with indirect tax is an innovativesuggestion. I also feel that there is a need for broadbasing of tax and eliminate black money from oureconomy.

Dt.: 13/05/2014

Sri M. NarendraChairman & MD,

Indian Overseas Bank

Thank you very much for sending me your article onRailway Restructuring. I have gone through it. In fact,you may be aware that some of the senior executivesin the Indian Railways are also thinking in similarlines including potential of PPP in certain activities ofthe railways.

I find this very interesting and look forward todiscussing with some of my friends in IndianRailways.

Dt.: 22/08/2013

I have gone through your article about the interest ratehike and inflation control in India. In my opinion, youare absolutely right and I also hold the same view thatthe inflation has to be controlled by increasing supplyof goods and services and not by reducing liquidity ordemand for money. The monetary policies areappropriate for developed economies where supply isnot a major constraint. In a growing economy like ours,there would be increased purchasing power in thehands of consumers and they would demand superiorquality life.

Dt.: 27/01/2014

As always, I completely agree with your views. Let ushope that we would now get a more stable governmentwhich would relook at all the major policies and takethe country forward towards higher GDP growth andoverall economic prosperity.

Dt.: 21/03/2014

Sri P.K. ChoudhuryChairman & Group

CEO,ICRA Limited

I have gone through your article “What Does IndiaNeed? – A populist or Development Politics”. It is asincere attempt in analyzing the contemporarypolitical, economic and administrative scenario of thecountry in the last decade or so.

I suggest a talisman for eradicating corruption. If wemaximize production, we generate more employment,better utilization of our resources, better balancing ofpricing through logical competitiveness, largerclientele’s satisfaction thus living small room forpopulist programmes and policies. However, we can’tignore the cardinal touchstone and there is noalternative to good governance. I appreciate your effort.

Dt.: 13/03/2014

Sri Naveen JindalMember of Parliament,

ParliamentaryStanding Committee on

Home Affairs

I have read your column “India Needs Productive andEfficient Use of Land” and wish to congratulate youfor the extremely enlightening article. The soundstatistical presentation on the subject is highlyappreciated. I truly agree to your perspective thatimproper usage of land has really been a cause ofhindrance to the economic development. The primaryreason for artificial shortage of land needs to bediscovered and effective steps to be taken to reclassifythe land and further plan needs to be devised andimplemented to achieve productive growth of land ashighlighted in your column.

I again wish to thank you for the superb article andlook forward to more contribution of inscriptions fromyou.

Dt.: 05/08/2014

Sri Gaurav AthaManaging Director,Narbheram Power &

Steel Ltd.

ACKNOWLEDGEMENT

It was indeed a difficult task to spare time from my profession andwrite articles on regular basis. My both sons Akash and Vikashencouraged me to do so, by taking over part of my responsibilities.Without their support, it was not possible for me to present this book.Special thanks to my son-in-law Bharat, my friend S.S. Jangid andDr. Ashok Panda; they provided me vital inputs for the value addition.

My sincere regards to Sri Dilip Ray, Ex-Member of Parliament andSri Jual Oram, Minister for Tribal Affairs, Govt. of India; they motivatedme for this noble cause. This book is an outcome of all such support andencouragement by my friends and well-wishers. I express my sinceregratitude to all of them.

My deep and sincere regards to Sri Narendra Modi and otherRespected Dignitaries; who encouraged me through their inspiringmessages, as mentioned in the beginning of this book. I am indeed obligedto all of them.

I also like to express my appreciation to all officers and staff ofShiva Cement Ltd. and my personal secretariat for their immenseassistance and cooperation without which, the book would not have seenthe light of the day.

I am also thankful to Mr. Kappil Jaswani, Managing Editor of theMagazine Steel-360. He was regularly publishing my articles. My thanksto Mr. Akshaya Kumar Sahoo; he helped me in publishing many articles innewspapers. Mr. P.K. Maitra and Mr. Bimbadhara Mishra aided inproviding appropriate cartoons so as to make the reading interesting.Thanks to them.

I express my gratitude to Mr. Anuj Pandey, Director of HimalayaPublishing House Pvt. Ltd., who extended all possible support forpublishing and printing this book at a short notice. Rather he motivated meto compile up all the articles in shape of a book.

May 25th, 2015 R.P. Gupta

PROLOGUE

My first book “Turn Around India” was launched by Sri Narendra Modiin April 2013. I have been writing articles on Indian Economy for quite sometime and many of them were published in different magazines and newspapers.An overwhelming response from the readers encouraged me to present some ofthese articles in shape of a book. Most of these are on the theme; how to turnaround Indian economy? I firmly hope that simple and practical suggestionstherein will be appreciated by many of you.

Since May 2014, new government led by Sri Narendra Modi took over thecharge. For the first time, election was fought on the development agenda.Public supported him with enormous mandate. Discontent was prevailingamong the public due to low growth, high inflation and poor infrastructure.Public is now looking for such a leader, who can develop and turn around Indiain a quick manner. For developing a Nation, good governance is the beginningand the present government is indeed capable of this.

Good governance does not mean framing the regulations alone. Rather itshould ensure true freedom and facilitate every Indian for carrying out theeconomic activities. Entrepreneurial spirit must be recaptured by all means. Wemust know that, they are the drivers of growth and development.Manufacturing sector in general and core sector in particular, must be taken outfrom the financial stress as those are the growth engines of economy.Infrastructure, in general, energy and transport in particular, must be boosted interms of capacity and cost efficiency. Failing which, high growth will not besustainable and inflation will continue to remain in the system. For this,participation of private capital is most crucial, since government can’t takeentire burden.

Various government functionaries down the line prefer to regulate than tofacilitate. Good economic policies are often superseded by the regressive lawsand regulations. New interpretations of economic laws are invented throughmagnifying glass with a single motto to penalize the producers. Any non-compliance is equated with grave criminal offence. This is indeed a bigdisincentive. Even Modijee has described this as “Kanoon ka Jungle”. Lawsand regulations must be simple and compliable. It should change with time andresult into developmental outcome. For this, all the wings of government needto be growth-centric. They must also know about the economic needs ofcountry. If needed, training programmes may be organized.

Good governance essentially need team spirit without which the Ministryalone can’t deliver the result. We should, therefore, bring everybody on board

including non-economic wings of the government, regulators, field officials andtaxmen and team spirit be built. Even opposition benches must also be includedin “Team India”. Failing which, good policy cannot be framed. If it is framed,it cannot be implemented smoothly.

In absence of coordination between center and states, a Nation as a wholecan’t be developed. While framing the policy, state governments must be anintegral part of the team. Good policies alone will not deliver the result, unlessimplemented with a team spirit. Growth target may be fixed for each state anddistrict for enlarging the participation and creating team spirit among all thefunctionaries. Competition for growth may be crafted and achievers berewarded. States must appreciate that, income disparity between the states is anoutcome of non-congenial investment climate in the backward states. Blamingthe center may attribute to political score; but it will never be useful for thegrowth, development and prosperity.

Besides developing a team spirit among government functionaries, we alsoneed public participation for achieving the goal. In the past six decades, wehave created such an atmosphere; that will usually not be conducive for theeconomic activities. Pro-growth policies are termed as pro-rich policies.Decision makers are branded as corrupt. Entrepreneurs are equated with thecriminals. On the other hand, activists are glorified. This has crafted a vitiatingatmosphere. Most of the governments are opting for populist policies anddelaying true economic reforms. Entrepreneurs are shying away from newinvestments. These will never lead to the desired growth. We have to runawareness campaign among public about the economic needs of country, so asto promote participation of every Indian in the development journey of theNation.

Every Indian must know that, public income will rise along with GDPgrowth and there is no substitute to this. Government subsidy can be an interimrelief for survival that too, for the most deprived persons. It can never providelong-term solution for self-dependency. Rather in absence of GDP growth,government will lose its social spending capacity also. Growth will come fromthe production of goods and services only. Such productive activities are to beperformed by the team of entrepreneurs only. For growth and development ofthe Nation, we need both private capital and a team of entrepreneurs.Government should enter into such areas, which are difficult for the privateentrepreneurs due to low commercial viability, but essential for the country.

We should remember the pre-1991 era; when there was restriction on theprivate capital. For which, we suffered due to low growth for nearly fourdecades. Infrastructure and human development couldn’t take place. If this istrue, why do we oppose pro-growth policies? We must know that, in ademocracy, no government can frame a policy without the public support.Yes – if there is any alternative model we must debate in a constructive manner.

Before criticizing the government, we must introspect. What did wecontribute for the development of our Nation? Democracy has certainly given usa right for protesting. But such agitations should be led with responsibility andwithout damaging the democratic institutions. Whole world is watching ourcountry; since we are the largest democracy. In the process of development,some side-effects might happen; but we should learn from our mistakes andrectify the same. Criticism and mud-slinging will only promote the conflicts andstop our growth and development. Empowerment without responsibility is nevergood for the country; that we must know.

After realizing these facts, Sri Narendra Modi has rightly told that, “JANANDOLAN” for development journey must be participated by the public in asimilar manner – what Mahatma Gandhi did for the freedom movement. Goodslogans and sympathy towards poor can fetch the votes, but cannot remove thepoverty. It is only the economic growth, which can create income earningopportunity for the public. This has been well established in India andelsewhere also. We must, therefore, build a team of entrepreneurs; who cancreate such opportunities and eradicate poverty. All must extend whole heartedsupport through constructive participation.

Media prefers promoting the conflicts among political parties. Misdeeds ofgovernment and productive sector are very much highlighted. But the positivehappenings are rarely covered; as this suits to their viewership and readership. Ibelieve media must play pro-active role in spreading awareness about economicneeds of the Nation. They have prowess to influence public opinion in eitherdirection, be it negative or positive. Frequent exposure of corruption and blamegame can create a thrilling story, but it will certainly damage the investmentclimate; as we are in the process of rebuilding. Freedom of expression must beused with utmost responsibility.

No doubt, there is overall improvement in the public sentiments. But it isalso true that, no significant change is noticed at the ground level. Initialmoratorium period for the new government is almost getting over and public isbecoming desperate. At this critical juncture, we need bold reforms; that canturn around India in the true sense. Crony socialism a synonym of communism,must end since, that has not delivered the results in past six decades. Challengesare too many and time is short.

We have a talented youth team full of energy and vigor. We must use theirenergy in the right direction. Current leadership is fully aware about all thestrengths and weaknesses. I am quite hopeful that, they will take the Nation inthe right direction. We all must join TEAM INDIA and extend a supportinghand for a prosperous and vibrant India.

May 25th, 2015 R.P. Gupta

“Secrets of the Nation’s Prosperity”

INDEX

Article Description PageNos.

1 Inter-mixing of Growth, Development andHuman Development

1 - 4

2 Inclusive Growth – A Political Slogan 5 - 9

3 Poverty Alleviation Scheme – A Mirage 10 - 12

4 Revised Scheme of Gold Monetization Could bea Game Changer

13 - 17

5 Boost Infrastructure Spending to Stimulate Economy 18 - 22

6 Transform India Through Ease of Doing Business 23 - 26

7 Land Acquisition – A Road Blockade to Development 27 - 31

8 When Indian Economy Will be at 10 Trillion USD? 32 - 35

9 Whether High Interest is Good for India? 36 - 41

10 Roadmap for the Budget 2015-16 42 - 47

11 India Must be Globally Competitive to Check Inflationand Trade Deficit

48 - 52

12 Modijee Calls for Jan Andolan for Vikas Yatra 53 - 57

13 Road Map for Adarsh Gram Yojana 58 - 63

14 When Indian Economy Will Turn Around? 64 - 68

15 India’s Prosperity – Role of Entrepreneurs 69 - 73

16 Mineral Shortage is Converting India asHigh Cost Economy

74 - 79

17 India Needs Productive and Efficient Use of Land 80 - 84

18 Regulatory Reforms – An Urgent Need for EconomyRevival

85 - 90

19 What Should be Top Agenda for New Government? 91 - 96

20 India Needs Innovative Tax Reforms 97 - 101

21 Get Rid of Old British Colonial Rules and RussianEconomy Model

102 - 107

22 What India Needs – A Populist or DevelopmentPolitics?

108 - 112

23 Interest Hike Can’t Control Inflation in India 113 - 117

24 Green Laws Damaging Economy But Not ProtectingEnvironment

118 - 123

25 Land Bill Shall Deepen Crisis to Next Stage 124 - 128

26 Change Mindset and Unlock Hidden Value of Rupee 129 - 133

27 Leverage Gold Stock in the Country to OvercomePresent Crisis

134 - 137

28 Railway Needs Innovative Reforms for BoostingEconomy

138 - 142

29 Whether Food Security Bill is for Public Welfare? 143 - 147

Abbreviations 148 - 149

Inter-mixing of Growth,

Development andHuman Development

[30/06/2013]

GDP growth is a synonym ofEconomy growth that comes from increasein the production of goods and services.Here, production is having a widermeaning that covers entire economicactivities such as, Industry, Agricultureand Services. Even a vegetable vendor or ataxi driver is contributing to GDP, sinceengaged in the production of services.Industry and agriculture are the primarysources and Services are mostly theby-products. These include trade, commerce,transportation, communication, financialservices, hotels, restaurants, entertainmentsand tourism etc.

GDP (Gross domestic product) is thesum total of “Value addition” of all theseeconomic activities. This is assessed afterdeducting the value of inputs from netproduction value (excluding taxes). It isalso equated with national or public

income. GDP growth generates new jobs and upsurges public income.

Quite often, we inter-mix“Growth”, “Development”

and “Human development”that creates confusionamong masses. Growth

stands for the GDP growth.Development means

Infrastructure developmentsuch as Irrigation, Power,

Transport andCommunication etc. Human

development meansdeveloping social

infrastructures likeEducation, Health,

Sanitation, Drinking waterand community services. All

such developments needcapital resources; that will

come from GDP only.

This concludes that, productive activities are the only source of publicincome. There is no other alternative to it.

GDP also contributes to the government revenue, which can be usedfor the purpose of development and human development spending. Hence,GDP and its growth is the principal indicator for measuring the country’sprosperity. This must be the top agenda of any government for achievingoverall prosperity for the Nation.

Development stands for the general Infrastructure development thatbroadly includes energy, transport, communication, irrigation and housing.These infrastructures are the bare minimum necessities of the modernworld; those improve living standards of public. This is also known as“VIKAS” in Hindi language. Besides public comfort, these are mostessential for sustaining high growth rate also. In absence of adequateinfrastructure, growth will be jeopardized and economic efficiency willalso be affected, inviting the inflation. Currently, our Nation is facingsimilar situation and therefore, low growth and high inflation have becomealmost a permanent feature in the Indian economy.

No, Growth means – GDP growth.

Development means –Infrastructure development.

Human development means –Social infrastructure development.

Are Growthand

Developmentsame thing?

Human development means, developing social infrastructures likeeducation, health, sanitation, drinking water, etc. It also includescommunity services like entertainment, culture, sports etc. These areessential for upgrading the living standards of public. Particularly, healthand education are the most essential needs for building human capital.Drinking water and sanitation are the bare minimum needs for good health.Currently, we are far behind on all these fronts, which are causing publicdissatisfaction.

In past years till 1980s, these infrastructures (general and social) weredeveloped through government resources only. Lately, Private sector wasalso promoted to supplement these activities. Twelfth Five Year Plan hasenvisaged that, private capital participation will be up to 50% level,considering the resource constraints with government. Developedcountries could succeed in faster development with a combination ofpublic and private investment only. India is gradually adopting the sameroute, may be in a slow manner.

As per past legacy, we normally expect free or subsidized user fee foravailing these infrastructure services. This affects commercial viability ofthe infra projects. Private investment will not enter in absence of thecommercial viability. If we expect that, government will continue withsubsidized services and borrow for financing these needs, then the debtservicing will be difficult and we will land into debt trap. We are fastapproaching to similar situation; that must be avoided. We must changeour mindset and pay user fee, enabling to mobilize investible resources forthe development.

Few activists recommend for increasing the tax for financing suchdevelopment plans. Increase of indirect taxes will add to the consumer’scost and bring inflation. Increase in direct taxes will reduce savings andslowdown the process of growth and development. Therefore, raisingtaxes in general is not a prudent solution. Rather levying user fee in shapeof non-tax revenue could be a logical and better approach.

We must, therefore, focus primarily on the GDP growth forincreasing public income vis-à-vis their paying capacity of user fee; thenonly infrastructure spending can be boosted. However, some subsidy for

the poor and middle class is certainly expected. But it should be within theprudent limit. Cross subsidy on the productive sector will inflate theproduction cost of goods; that will be loaded back to public after round-tripping. However, cross subsidy can stay in a very limited manner forstriking a balance between the economic needs of the country and payingcapacity of public.

Several socialists and politicians argue that, human development willdrive the GDP growth. Even most respected economist Sri Amartya Senalso recommends in the similar line. Such statement can bring popularity,but it is misdirected. It violates the basic principle of economics. It willrather damage the prosperity of Nation in long run. The prosperity willstart from GDP growth only, which drives the national income. There is nosubstitute to it. However, public income and government revenue fromsuch growth must be judiciously spent for the development and humandevelopment and achieving prosperity. A prudent consideration for weakersection must exist in a balanced manner.

A successful model envisages high GDP growth combined with thedevelopment and proportionate human development spending. But highGDP growth must remain as the core issue failing which, the developmentor human development plan will not gear up, as discussed above. At thesame time, this requires cutting down of the revenue expenditure bygovernment so that, revenue surplus can be judiciously deployed forbuilding general and social infrastructure; that provides long-term solution.The choice is left to the policymakers that, we give priority to short-termelectoral gains or build strong foundation for a prosperous India.