Some thoughts on development

The coming year 2009 will be crucial in many respects. As the President had said it will be the Year of Triumph over Terrorism. That means the almost three decade old war has entered its final stage which will reach its conclusion next year. The end of the war would bring us face to face with the gigantic task of reconstruction and rehabilitation including the resettlement of thousands of internally displaced persons.

It would be futile to expect the developed world, now beset with their own economic and financial problems to come to our assistance in a big way with aid. In any case, our past experience has been that their conditions for assistance would include many that would infringe on our sovereignty as was demonstrated in relation to the GSP+ facility.

The end of the war would bring development to the forefront of the agenda.

The twin problems of cost of living and unemployment would bring significant pressures on the government.

The global financial crisis is unlikely to ease in 2009. All evidence points to its escalation. The rise of unemployment in the Western counties and elsewhere where our expatriate labour is employed would tend to narrow opportunities for economic emigration. The fall of currencies of these countries has already affected the remittances from these countries. It would not be possible to compensate this fall with an increase in the number of migrant workers as the labour market in those countries would contract as a result of the crisis.

The pressure for the devaluation of the Rupee is already felt. It is likely to grow further in 2009.While our exports will be less competitive without devaluation of currency such devaluation would lead to a steep rise in prices in the local market. Rupee depreciation whether by deliberate decision or due to free floating would also affect our foreign debt. Debt servicing would be more expensive.

We enumerate all these difficulties not to draw a gloomy picture or to cause panic. We would only like to emphasize the gravity of the situation that has arisen from factors external and beyond our control and to underline the need for conscious long-term as well as short-term strategy for economic development within such a negative macro-economic environment.

Fortunately, we have been spared the worst so far due to the relatively low integration with the world economy and thanks to our intransigent policy of not listening to the dictates of the international financial institutions regarding our agricultural policy. Had we abandoned paddy for commercial crops the world food crisis that broke out in the middle of this year would have brought starvation to our doorsteps. The government deserves credit for continuing with the fertilizer subsidy despite many constraints.

Now the time has come to develop an indigenous development strategy that gives more weight to local production and local technology. Though considered a pivotal aspect of development export orientation has not brought us the required capital for accumulation and investment due to the unfair practices in the world market. With the West monopolizing science and technology and refusing to give up subsidies for their farmers and industrialists, developing countries have not been able to gain from such a strategy.

It is no secret that low productivity in our country makes it impossible for us to sell our commodities at competitive prices in the world market.

Therefore, it is imperative that we invest heavily in science and technology and human resource development, two essential pre-requisites for achieving higher productivity. We have to look for cutting-edge technology at least for developing industries that have a stable and promising market such as tea, gems and jewellery, software etc.

It should be noted that all Asian Tigers, China, Japan, Korea invested heavily in education before they could take a leap in development.

Repeating age old mantrams that the educated are idling due to the poor quality of education is not enough. They are idling mainly because there are no opportunities for the youth due to the snail's rate at which the economy, basically production is expanding and developing.

Our Universities are hardly centres of research and innovation. They are not linked with industry and agriculture. No attempts are made by them even to utilize the meagre funds available in a rational way. We could take an example from our neighbour India. There Universities conduct research collectively pooling their resources and also combining with industry and agriculture.

Another potential we could tap for development lies with solar and bio-energy. We have to develop technology for harvesting solar power. It is quite feasible to develop these alternate sources of power with a strategy that prioritizes medium scale projects with community participation. The mentality to do big, to develop the 'world's largest', mega projects should be replaced with affordable, implementable small and middle scale projects using advanced technology and popular participation.

We need innovation, entrepreneurship, local talent blended in an indigenous development model.