FIGHTING FIT
THAN EVER BEFORE
Dr.
S. Narayan*
India is now a key
player in the world’s political, strategic and economic arenas
and exerts considerable influence on global decision-making in
various spheres.
The elevation
to our present status has not happened in a day. It has taken
years of resolve, effort and determination to reach where we have.
Of course, this is not to suggest that we have overcome all our
problems. We have several hurdles to cross before we attain the
level of progress which our founding fathers had dreamt of. But
even then there is no doubt that we have achieved a lot. We have
done so despite numerous constraints. It is our ability to overcome
obstacles and reach our goals that has been the hallmark of our
progress. As a nation, we have demonstrated innate resilience
on various occasions to surmount critical handicaps. And nothing
exemplifies this resilience better than our economic performance
in recent years.
Let us, at this
juncture, try to recollect what all happened over the last few
years, and how our economy performed regardless of those adversities.
Several unfortunate
developments have occurred over the last few years. Among these
are natural calamities taking a heavy toll on human and material
resources. Two most striking instances of such catastrophies are
the Orissa cyclone and the Gujarat earthquake. The country faced
a war in Kargil and was on the threshold of another in the middle
of last year. The weather gods, after being kind to us for several
monsoons, decided to deprive us last year, leading to drought-like
conditions in the country. Our cup of woes was nearly full to
the brim, as we also had to cope with a depressed world economy,
which was further shaken after September 11, 2001.
All the above
took place within a short span of the last four to five years.
Each of the events could have seriously damaged our economic performance.
Yet, what do we see at the beginning of 2003?
We are likely
to end the current financial year (2002-03) with an overall growth
of around 5.5 per cent. This would make us one of the best performers
in the world economy. We are holding record levels of foreign
exchange reserves and are among the top emerging market economies
in this regard. Our granaries are overflowing with food stocks.
In the past, lack of rainfall would wreak havoc on our economy
by creating supply shortages and raising prices of essential commodities.
Nothing of the sort has happened this year despite one of the
poorest monsoons in recent times. Adequate food stocks have mitigated
supply concerns by keeping the prices in check. Domestic industry
has revived, courtesy a buoyant manufacturing sector. Our exports
are rising fast signaling greater absorption of our products in
overseas markets.
The scenario
is actually too good to be true. The readers would obviously be
wondering how all these happened despite the adversities. We have
no magic wand for undoing the damages caused by natural disasters
and other setbacks. But what we do have in place is a set of policies
which have been designed carefully after detailed considerations,
for taking care of the fundamentals of the economy. These policies,
coupled with the intrinsic resilience of our economy, have enabled
us to successfully combat unexpected systemic threats.
The capability
of our economy to resist setbacks has not developed overnight.
This has been an outcome of the gradual metamorphosis undergone
by our economic system over the last decade and more. The transformations
have equipped our economy to handle unforeseen exigencies and
have enhanced its ability to withstand shocks.
An example will
be illustrative. Right now, the Persian Gulf is threatened by
the ominous possibility of a major conflict. A similar situation
had arisen during the Iraqi invasion of Kuwait in 1990-91. At
that time, the effects of the Gulf War had manifested in a critical
balance of payments crisis for our economy. Our foreign exchange
reserves had reduced to an all-time low. At a point of time, we
had resources for buying only a fortnight’s imports. To overcome
the crisis, we had to resort to emergency measures like shipping
a part of our gold reserves overseas to pledge for securing precious
foreign exchange.
Today, the repercussions
of the impending conflict in the Middle East are quite different.
Our high volume of foreign exchange reserves has raised our comfort
level by providing us an adequate cushion. Obviously, we are aware
of the likely fallout of a war on global oil prices and the consequent
effect on our import bill. Nevertheless, the Government is in
control of the situation. There is little possibility of history
repeating itself through any balance of payments difficulties.
The high level
of foreign exchange reserves is one of the many weapons that have
improved our defences. Various other stable and healthy macro-economic
fundamentals are the other sources of our strength. We have built
up ample resilience for protecting our economy from adverse consequences.
Our capabilities
are the source of our confidence. These, in turn, are results
of the fundamental changes in economic policies that have taken
place over the last ten to twelve years. Moving away from the
paradigms that dictated our economic policies in the first four
decades after Independence, we have moved to a decontrolled, liberal
economic regime. We have allowed each economic agent to perform
the role it does the best. Business and commerce in our country
are now guided entirely by the market. The Government has refrained
from doing business. It has increasingly adopted the role of a
facilitator and is focusing upon its core responsibilities of
providing good governance by taking care of law and order, administration
and provision of basic human needs.
In line with
the changed thinking, domestic economic institutions, agencies
and regulations have undergone transformations. Many departments
and enterprises, which have been rendered redundant in the changed
scenario, have either been wound up or radically transformed with
new responsibilities. New laws have replaced the old ones. Mindsets
have changed, along with the approaches to resolution of economic
problems. In other words, the game is now being played under a
totally different set of rules.
The new policies
have yielded large dividends. Throughout the last decade, India
was one of the fastest growing economies in the world. We have
bottled the genie of inflation by securing large food stocks.
We have built up an enviable reservoir of skilled human resources.
The information technology revolution has swept the length and
breadth of the country, connecting remote corners. We are making
phenomenal progress in connecting places and people through conventional
means like roads, highways, railways and ports. We have made our
presence felt globally in highly competitive knowledge-based industries
like software, biotechnology and food processing. The world has
taken note of our progress and has acknowledged us as one of the
best locations for doing business by progressively increasing
investment in our economy.
We, however,
must admit that problems are still there. Economic growth does
not become meaningful unless it improves the living conditions
of the marginal sections of the society. The sharp decline in
poverty levels vindicates our policies. But we still have a long
way to go. We cannot afford to rest on our laurels. We must join
hands for making our country a nation free of poverty and squalor,
a country that is proud and strong by its sovereign achievements
and capable of guaranteeing a dignified existence to all its citizens.
We are firmly
on our way. Let us hope we would achieve more by our collective
efforts. (PIB Features)
