I am fed up with Arvind Kejriwal;
with the Robert Vadra—Haryana government—DLF
shenanigans; and screaming television anchors. When
India has to face myriad challenges, nautanki
tamaasha has been the staple menu for weeks on end.
May I, therefore, use this opportunity to reflect on
the last 21 years? On 24 July 1991, when Manmohan
Singh concluded his first Budget Speech with Victor
Hugo’s words: “No power on earth can stop an idea
whose time has come”, the economy was in tatters.
Inflation was at 13%. The combined fiscal deficit
was almost 11% of GDP. Entrepreneurship was
stultified by a pervasive environment of industrial
licensing, public sector reservations, a
dysfunctional anti-monopolies law, severe
limitations on use of foreign exchange and over 900
products reserved for small scale industries. We had
a peak tariff of 350%, an average import duty of
87%, and quantitative import restrictions. Poor
income recognition, along with
inadequate provisioning of bad debts led to a
weakened banking system. A hugely over-valued fixed
exchange rate had rapidly weakened our balance of
Soon, non-resident Indians began to withdraw their
dollar deposits and international banks stopped
lending to India. Suddenly, our foreign currency
reserves barely covered two weeks of imports.
The reforms of the Narasimha Rao government in its
first two and half years let loose huge
entrepreneurial energy that was straining at the
leash. No doubt that our reforms are far from
perfect. Some sectors have been more reformed than
others; some not at all. Yet, none can doubt the
enormous strides that we have made. Consider this.
Between 1991-92 and 2011-12, India’s real GDP has
grown at a trend rate of over 6.6% per year. What it
means is that, barring China, no country in the
world with a GDP greater than India has grown faster
than us. We could have done better. Yet, we have
almost trebled our real GDP in 21 years.
The single dominant factor that explains this growth
is entrepreneurship across the length and breadth of
India. Here are some facts regarding listed
• Sales and other income of all companies listed on
the Bombay Stock Exchange (BSE) increased 22 times
from Rs.165,903 crore in 1991 to Rs.3,637,987 crore
• Profits after tax increased 46 times — from
Rs.7,948 crore in 1991 to Rs.363,882 crore in 2011.
• Thanks to consistent capital market reforms, the
market capitalisation of listed companies on the BSE
rose 101 times from Rs.675,880 crore in April 1991
to Rs.68,581,336 crore at end March 2011.
The story of entrepreneurship is wider. It is of an
increasingly mass of successful but unknown
entrepreneurs, involved in hundreds of activities
across the land. People involved in car, tractor and
motorcycle dealerships; selling mobiles, smartphones,
data and SIM cards; white goods stores; property
developers — large, medium and small; salons where
saas and bahu go to experiment with hair colouring.
You see entrepreneurs everywhere —devoid of caste,
creed and business royalty.
In such a milieu, there are four worrying trends.
The first relates to our population. We talk of
‘demographic dividend’ without acknowledging its
challenges. By 2020, there will be 251 million
children between zero to nine years. Will we be able
to take care of their health, nutrition and early
learning? Another 248 million will be from 10 to 19
years. What about their schooling and post-school
training? And there will be 239 million between 20
and 29 years. Where will they get the skills to
secure jobs in a rapidly digital world?
My second worry is about the spatial differences in
development. I have written on this earlier — of the
two India’s to the west and east of Kanpur. The
poorest districts are in Jharkhand, Bihar,
Chhattisgarh, Orissa, south-eastern Maharashtra and
parts of lower Assam. Not surprisingly, there is a
an almost perfect correlation between such districts
and Maoist insurgency.
The third concern relates to the three resources
that we need to utilise in a balanced manner to
generate greater growth and employment. These are
spectrum (aasman ke upar); natural mineral resources
(zamin ke neechey); and land. Decisions regarding
all three are stuck in such deep ruts that it will
need serious vision as well as political capital and
courage to decisively move forward.
The fourth worry is the gradual resurrection of
aspects of the permit raj. Some of it coming through
judicial interventions; others through audit
observations; and yet others by executive action per
se, based on a belief that civil servants don’t get
punished for creating shackles; but can be
incarcerated for crafting growth-oriented reforms.
These are serious concerns. Yet, looking back to
1991, India has it in her to continue growing. All
we need is that our entrepreneurial energies be
allowed to thrive. And our democracy.
Published: Business World, November