Tuesday, April 8, 2014

The Roadmap

1.       Food Security
If there is one sad story about India, it must be the nation’s failure to achieve food security. Food security doesn’t end with a nation’s ability to produce food grains but its ability to ensure all its citizens can afford and access those food grains and are free from hunger and malnutrition. India’s gross food grain production [1] alone can ensure that all 1.4 billion Indians can get an average food intake of 2000 calories. Add this to fruits, vegetables, dairy and meat products and the nation should have a highly nutritious food security.

While it is true that India achieved food-grain self-sufficiency, majority of Indians are still far from free from hunger and malnutrition. No, it not the fault of the geography nor the fault of primitive farming techniques or the illiterate farmers. Even with all those inefficiencies India achieved self-sufficiency in food grain production; but it is the fault of successive governments and the administrative structures that failed to achieve food security for all Indians. Fortunately governance and administration is much easier problems to solve than adding arable land or significantly improving crop yields in short duration. In the first phase, the next government should introduce world-class food-product supply-chain technologies and processes in food collection, storage, processing, marketing and supply to India. Key aspect of this strategy is to establish the supply-chain infrastructure that makes entire India into one single food-market thus removing regional price imbalances. This will help both producers and consumers while significantly reducing wastage of perishable goods.

Another aspect of Indian agro-sector is that almost in every crop type the average yield achieved in India is significantly lower than the best in the world yield rates[2]. Just by improving the yield to half of world record levels, India can more than double it’s agro-output or reduce its ecological footprint for its food security by nearly half. By achieving these yield levels, India can save nearly 500,000 Sq.KM arable area, nearly the size of Ukraine, for future generations. This in turn will make India’s water, eco-system security a reality. In the second phase the government should identify achievable yield-goals for each crop variety and build necessary research, industrial, training facilities to achieve those goals.

In the third phase the government can identify and convert excess arable-land to produce bio-energy, renewable timber thus transforming agriculture into next generation renewable industry. These measures will bring the inflation down, introduce much needed technological and process efficiencies into this sector and most importantly facilitate smooth movement of human resources into industrial sector.

2.       Energy Security
Second problem area for India’s future growth is energy security. As far back as 1950s, Indian visionaries such as Dr. Homi Bhabha realized this challenge when they formulated three-stage nuclear programme. Indian policy makers knew all along that they will have to rely on foreign energy suppliers if they follow the same technologies of energy rich nations. Yet they consistently failed to dedicate enough national resources in pursuing an independent and sustainable energy roadmap.

In order to improve its economy, industry and HDI India will need significant amount of energy resources. If India with its $1900B GDP is currently importing energy resources worth ~$100B, we can only imagine the energy requirements as India’s GDP grows to say $20T economy by 2030. It is not simply a question of affordability of these energy resources for India, but the real question is availability and sustainability of these energy sources. There is no glory in becoming a $20T economy if that cannot be sustained for a long time.

This is where India needs to set its national vision very clear and ensure that this vision is realized. India need to identify various energy sources that it can domestically develop and sustain to meet 90% of its requirements by 2030. There is no point running behind the strategies and technologies of another nation that were built on that nation’s, not India’s, strengths. India need to pursue those energy sources and technologies that it can use to achieve self-reliance in addition to create national wealth by exporting them to other energy starving nations.

India should identify various non-crude based energy sources and focus its research and development capabilities in those areas to make them technically and economically viable solutions; be it is nuclear or solar or hydrogen based energy economy. A mix of technologies can fulfil India’s energy needs, even at developed economy levels, in a sustainable manner. For example a mix of grid-connected solar energy for domestic use, nuclear and coal power for industrial and infrastructure usage and hydro-electricity to support demand peaks and hydrogen & bio-fuel based automotive industry can significantly reduce India’s dependency on imported energy in addition to creating technologies  that can generate valuable export opportunities.

3.       Infrastructure
Key aspects to development of industrial infrastructure are access to capital, technology and human resources.

As explained before Indians will save nearly $4T in next five years and majority of that can be made available for development of industrial infrastructure by using a mix of policies and financial instruments. For example GOI (with the help of RBI) can reduce the interest rates on other savings and fixed deposits to say 5% APR (slightly lower than inflation rate) while starting a 10 year infrastructure bond that yields say 8% APR (This can be inflation adjusted with no maximum limit). Assuming GOI can attract 25% of national savings into such Infra bonds, it can generate $1T of capital for Infrastructure development. Assuming an 8% GDP growth and 10% tax revenues, GOI can make a positive return on these investments even after paying 8% interest.

Such a low yield on savings and fixed deposits will reduce interest rates banks charge for industrial/business loans thus making this sector competitive in international markets. It is important to understand that western financial markets are designed to get maximum return for their local investors and add significant premiums on FDIs using various nomenclature to complicate the risk profile of destination country. That is how even unrelated things like HDI, perception of religious freedom also included in such rating calculations. By channeling Indian savings to Indian financial & industrial sectors the profits can also be kept within India.

The second aspect is access to Technology. There is no easy way for India on this except innovation, strategic acquisitions and trial and error. The good news is that India should be able to acquire all technologies that it needs to develop the basic industrial infrastructure thru outright technology transfer purchases and strategic acquisitions. The technology requirements for India of 2025-2050 must come from indigenous innovation and international partnerships. The national leadership must prepare necessary policy framework for each of these different goals and allocate necessary resources, financial as well as human resources.

That brings us to the third aspect of national infrastructure that is a national pool of quality human resources. As a mix of first (Agriculture) and second (Industrial) wave economy, India has much to do in this area. A previous analysis [3] estimated that India will have to spend nearly $2T to train and transform majority of its existing agricultural labor force into manufacturing sector. This can be planned in the first phase (2014-2025) while the nation builds the necessary infrastructure to build the national human resource pool that are educated, trained to innovate and enterprise. A new education system, different from the educational paradigm India followed so far, with emphasis on critical thinking and innovation is a must to build the necessary human resource pool of next century. It is this human resource pool that will lead and implement the 2nd and 3rd phases of food and energy security roadmap.

4.       Civic Infrastructure
Civic infrastructure is the realm where Indians would enjoy the fruits of their hard work in the form of roads, housing, water supply, electricity, recreation, civic amenities and hospitals etc. This is the structure that supports the Indian nation to provide and achieve highest levels of Human Development Indicators. The necessary technology, industry and human resources are already available in India as we can see in the some of the modern communities build in various cities. The missing link is a planned and standardized implementation of development plans. An effective and efficient government can remove the lethargy in the administrative system and build a sound civic infrastructure throughout India with 10 years.

The government has to not only provide this multi-dimensional infrastructure but also ensure that all these places of social interaction remain secure for all Indians. This is where a key aspect of governance, Internal Security, comes into picture. India has no dearth of external challenges. Unfortunately the successive Congress governments allowed these external challenges creep into internal society in the form of various interest groups. Over years these interest groups developed their own mafia-like networks stoking communal, social and economic tensions costing the nation enormously.

The final aspect of Civic infrastructure is rule of law and delivery of justice. There should be clarity and reassurance to all Indians that the law will treat all Indians same irrespective of their personal networks and ideologies. The next government must bring in a Uniform Civil Code so there is no confusion between Indians on how their social interactions should be conducted and will be viewed by rule of law. The second part of this governance aspect is delivery of justice. Over decades delivery of justice became a joke with even simplest civil cases taking decades and criminal cases taking so long that many complete their punishment as under-trials. The next government must bring in necessary structures and resources such that any (civil or criminal) case is resolved within one year, with very few exceptions in extreme cases.

5.       Foreign Policy
The founding fathers of independent India made the first misstep in our foreign policy by denying the millennia old existence and accumulated energy of Bharatiya civilization and limiting its imagination to a very constrained western-idea of India. This is like putting an elephant in a rat-cage and it made both India and its observers very imbalanced over decades. Even with all its poverty, illiteracy, abysmal infrastructure and heavily constrained military, India is ranked fourth in National Power Index by International Futures Model [4]. Yet neither Indian society nor the industry or the government conduct themselves in a manner suitable to its national power. The elephant doesn’t know its potential and is behaving like a rat running on a pointless running-wheel and the nations observing this are very scared of this running elephant.

The next political dispensation must re-educate the whole nation for what it truly is; a civilization that withstood 1400 years of double colonization and yet stood victorious and strong. India, as the latest transformation of that great civilization Bharat, has its natural destiny as world intellectual leader. This nation’s foreign policy must come this self-awareness. Such assertive foreign policy is not only necessary for Indians but in the best interests of the world. India cannot be a willing candidate for another round of overt/covert colonization with all its 1.2 billion population and economic potential for it will invite other world powers to compete for this crown jewel and may cause next world war.

Once India defines a foreign policy fit to its national posture many, other nations will follow India’s lead in becoming truly independent civilizations. That in itself will lead to a multi-polar world and a mutually respecting Vasudhaika Kutumbam.

6.       Ecological Security
A key aspect of national power that is often lost in translation its ecological security. This includes flora fauna in addition to quality of air, water resources and their sustenance. The nation cannot survive for long when the ecology around it is destroyed. A sound ecological system also reduces the in-direct economic costs of other economic pursuits of humanity.

Securing the ecology of a nation also includes protection and preservation of native and natural crops and their natural genetic evolution. While it is very tempting to encash a sudden opportunity that arises from a genetically modified seed/crop, as a nation we have a responsibility to our future generations to pass on the natural ecosystem.

India must develop an ecological blueprint that safeguards the national forests, animal species, crops, water resources and river systems etc and interconnect them in such a way that the animal and bird migrations are unhindered by human growth and development.

With a long-term vision, careful planning and meticulous execution India can set aside ~40 of its land area to have interconnected eco-system that acts as the natural incubator for human evolution, sustenance and more than anything happiness.

[1] India Food grain production estimates for 2012-13
[2] Agricultural Output in India in comparison with worlds most productive
[3] Cost of retraining and employing Agricultural labor force in manufacturing industry
[4] National Power Index

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