Overview:
Land reform, Special Economic Zones (SEZs), Exports, Infrastructure and expanding the Private Sector rapidly under strict environmental and compliance guidelines are key to expand India’s economy.
India has a landmass of approximately 3 million Sq. Km. or 1.27 million sq. miles. This translates to a population density of 368 persons per sq. km or 863 persons per square mile based on the 2000 census. Not all of India’s land is inhabitable. But this number does give an idea of the magnitude of the situation confronting India. With the forecasted growth, the population density is only going to increase. The question is how do we plan to accommodate this growth.
India needs to plan and build at least 200 metros/townships that can accommodate up to three million persons each to meet the forecasted growth in the population.
The time to plan and act is now. It is better to underestimate and over build than to continue a constrained based implementation path that we are undertaking today.
Industrialization and Urbanization are the Economic Engines that provide jobs and opportunities. Also it is easier for a person in Rural India to move to a job than to bring a job to the person.
Fuel for a Vibrant Economy:
At the macro level, India’s economic focus should keep in mind that the population is expected to be 1.5 Billion by 2050. Sustaining this population will require a major increase in availability of food (domestically produced or imported), jobs, infrastructure and affordable housing, along with attention to Quality of Life issues such as, clean air and water etc.
Liberalization has benefited Urban India primarily and Rural India as well. Some are feeling hardships, which is inevitable with change. The overall impact is positive and a plus. The key is to drive the benefits deeper to benefit more. An expanding economy require:
- An increasing consumer base fueled primarily by private organized and un-organized sectors
- Increased exports, preferably net exporter of goods and services
- Appropriate increases in government spending (infrastructure, education, defense etc.) funded by an increasing tax base
Also at a macro level (Figure 1, below) from an economic standpoint, the Rural economy would be surplus in Natural Resources, Commodities and Hard Goods (Agricultural, Manufacturing and Mining/Exploration). The Urban economy would be surplus in Soft and some Hard Goods (Soft: White Collar economy, Services and Hard: High Tech). The resulting net cash flow should be positive towards the Rural economy. Exports, FDI and remittances should result in increasing Foreign Exchange Reserves for India as a whole.
Figure 1
Urban and Rural India - Different Environments, Different Needs, Different Solutions:
Rural (Bharat) and Urban (India) are two markedly different environments and Quality of Life (QOL) translates to different issues for different demographic and economic segments.
For the Urban Poor this translates to a roof, sanitation facilities and basic amenities i.e. provide Shelters, Hostels, and Affordable Housing.
For the Urban Middle Class and the Rich it translates to better roads, transportation, and a cleaner environment.
For Rural India QOL translates to providing gainful sustained employment for the Uneducated, Unskilled and Unemployed beyond the agriculture sector.
The Rural Middle Class and the Rich enjoy the best Quality of Life in India today!
For Rural India QOL translates to providing gainful sustained employment for the Uneducated, Unskilled and Unemployed beyond the agriculture sector.
The Rural Middle Class and the Rich enjoy the best Quality of Life in India today!
Housing 1.5 Billion people in 2050
Urbanization is Inevitable. Beginning with the Industrial Age, an urban environment became essential for any growth in the job sector. Agricultural jobs shrink with increased mechanization and the surplus labour has to be absorbed by an organized sector supported by a typically larger un-organized sector.
The organized sector – Manufacturing, Food Processing, Chemicals, IT, BPO etc. form the core. Surrounding this core, is the unorganized sector comprising of shops, dealerships, restaurants, maintenance and entertainment businesses etc. Also required are primary, secondary, vocational and post secondary institutions. All of this comes together only in an urban setting.
Special Economic Zones (SEZs):
Despite all the controversies, India has rightfully embarked on building new “Urban Centres” in areas earmarked as SEZs. These Urban Centres will provide much needed relief to India’s Mega Cities. They will provide opportunities for urbanites as well as the uneducated, unemployed, unskilled (U3s) from Rural India (Bharat). Situating these SEZ’s on the periphery of existing cities and in Bharat, is inarguably the right solution for the entire country. An SEZ in Bharat i.e Rural India, will be a mixture of an Urban Economy, surrounded by a Rural Economy.
These SEZs will provide opportunities for people:
- Currently living in India’s congested cities,
- Living in Bharat,
- Migrating from Bharat to India in search of a better life.
The challenge is to build SEZs fast, build them well and build till supply catches up with demand.
Summary:
Rural India is impoverished and Urban India is bursting at its seams. By embarking on an economic policy that balances the situation will result in benefiting both these sectors.
3 comments:
This is with reference to your comment on India Together in relation to the article labeled 'SEZs: A history of injustice and abuse'.
China's example is not a good one to follow. Disproportionate growth in its economy has created a great economic divide between the urban and rural classes. The Chinese government is now working to redress the situation.
Some of the displaced farmers may be accommodated in the new local economy created by the SEZ but a majority of them will be left with no alternative but to contribute to 'Urbanization' i.e add to the slums of the indian cities.
In China all the SEZs are public sector entities. In India the equation is heavily in favour of private ones. SEZs will primarily export their services, in effect they will exploit the cheap labour available in India and make massive profits by selling their services and products abroad all under the umbrella of a tax holiday and many other sops being handed out to them. Thus no revenue in the form of tax will be collected by the government.
With a growing population India needs food security to feed its billions. With prime agricultural land being handed out to SEZs this will not be achieved. Instead India is subverting the interests of its farmers by opening up its economy to cheap imports of Wheat, etc from America, Australia and other countries where their respective governments hand out billions of dollars worth of subsidies.
Rural development is a more viable solution. An urban setting is not the key.
The above comment by Anonymous is an indication of the endemic problem India faces and that is of small mindedness. These views are espoused by little frogs who live in their little wells and view the world from the extent of their vision and experience. True our government mafia is involved in "land grab" tactics and exploiting farmers. This has to stop. Furthermore, environmental guidelines should be introduced that prohibits the conversion of fertile land for non-agricultural purposes. The fact of the matter is that the government mafia is sitting on plenty of land, but does not want to let go because there is no money making opportunity involved.
Sitting in my little well,
I still dwell upon the world outside,
Perched upon the mountain top,
Dust and clouds put a veil upon your eyes.
You are being small minded choosing only to look at the benefits of this venture while ignoring the plight of the people affected. In your reply you sidestepped all the issues and instead chose to exercise the breadth of your intelligence to come up with a rather stupid simile.
SEZs are needed but with their current structure, form and pace they are going to create a lot of jobless and landless farmers. Food security is essential for our nation.
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