Good Morning – India on an average is not poor any more!

Getting up early in the morning can help one get over the worst of blues. So if you have recently been feeling that your world (of family and friends) does not really acknowledge your existence, give it a try. It also gives you enough time to catch up on news.

Primarily on the basis of published (and available for free on the internet) reports I had reasoned in one of my first posts on this blog in June 2004, (http://bottomofpyramid.blogspot.com/2004/06/macro-environment-of-india-favours.html), that the Indian economy looked poised for a virtuous growth cycle, and given some inherent structural strengths that the country possesses, consistent economic growth would enhance productive economic opportunities. Niranjan Rajadhyaksha, writing in the daily “mint”(Life Beyond Poverty, August 1, 2007, see http://www.livemint.com/2007/07/31200826/life-beyond-poverty.html?atype=tp) informs “in a report submitted on July 12, 2007, the Prime Minister’s economic advisory council estimated that per capita income in 2007-08 is likely to be $1,021. It was $561 in 2003-04.”

He also raises an interesting question, “ ..the Indian government will have to take a hard look at the various poverty alleviation strategies and programmes that were designed for an economy that was moving ahead at a tortoise trot. Perhaps the most interesting thing to watch out for is how well India and its government adjust to the strategic challenges of being a middle income nation.”

I am tempted to argue that India’s core structural strength would ensure appropriate governance. While we would continue to see populist practices for short term gains on the one hand, the odds on the future secular trend, on the other, appear much more favorable. Economic opportunities will continue to increase, administrative and tax reforms will ensure transparency and accountability. However, addressing basic concerns such as health and education for all will remain a challenge for the government.

I dare contend that it is beyond the government to address these needs. For the middle income India, its an imperative that its rich private sector makes substantial investments in these areas. It is indeed a “great need” for them to make these investments for deepening their own markets. But these investments would generate public goods (in the form of markets) which are equally available to every body. And expecting the private sector to invest heavily in public goods may be too much.

But a task of such magnitude can be undertaken by a Joint Venture of several companies or an industry association. So far, several companies and rich individuals have devoted a chunk of their wealth for noble causes. They have also evolved sustainable models. However, these have not scaled to any significance and appear largely isolated and ill-covered, given the populist focus on profit churning companies and record breaking stock indices. But if these companies come together and promote a widely held, for-profit organization that sells quality education and quality basic health services on a large scale, using innovative revenue models, there could be a more tangible impact.

The “no more” poor India offers unique opportunities. This is an important point in time, and how we fare in the long run would depend a lot on how courageous we were in seizing these opportunities.