THE ECONOMIC TIMES
DELHI EDITION – EDITORIAL PAGE | 12th MAY 2014
By Anil Agarwal
Chanakya said about 2,300 years ago, "In the absence of fruitful economic activity, both current prosperity and future growth are in danger of destruction". India is the world's third largest economy.
But uncertainty prevails towards large national projects. We have a rising import bill of about $500 billion and are losing opportunities to explore, produce and utilize our natural resources.
Here is what the new government should do.
India's falling GDP is primarily a function of manufacturing slowdown. Though India has abundant reserves of bauxite, coal, iron ore, copper and gold, it is spending billions of dollars on imports. Hundreds and thousands of large, medium and small scale industries can be set up across the nation to process our raw material and further manufacturing, which can create 10-15 crore jobs and infrastructure.
Energy security is a key priority. We need another 20 large companies to enter the energy sector to unlock its potential. The supply of coal through a single company is hampering power generation.
Auctions The Only Way
We must auction natural resources in the most sustainable and transparent manner, on a revenue sharing basis or highest royalty. Also, encourage Indian entrepreneurs who will bring world-class technology, build modern plants and big investments in our country. Only this will ensure the highest standards of environment, health and safety. Unleash the hidden potential of public sector units (PSUs) by divesting 51% stake in each of them. In most democratic countries, the government does not run businesses. In India public sector companies can grow 10 times bigger if we divest at least 51% of their stake and sell them to the public at large.
Divestment should be such that no institution or individual can hold more than 10% of equity. Employees must be guaranteed their jobs and stock options to participate in the upside of the company's performance. We can find many successful examples like Larsen & Toubro, HDFC Bank, BSE 1.82 %, ICICI Bank, BSE 1.38 % and ITCBSE 1.71 %, which are not owner driven but CEO driven companies. ONGCBSE 2.56 % can become another Exxon, and SAILBSE 0.43 % can become another Vale.
The government should form a new ministry of natural resource development. To strengthen the country's economy, we must form a single large ministry to deal with development of all natural resources, and bring oil and gas, mines, coal and steel under a single umbrella and under a strong visionary leader. This new ministry of natural resources would look into the optimum development of our precious mineral resources.
The government should end discrimination between the public and private sectors. In recent incidents, ONGC has been allowed to explore shale gas while the private sector companies are awaiting approvals.
Despite the iron ore mining ban in Goa and Karnataka (now lifted), NMDC (BSE 0.63 %) has been continuing mining of iron ore. Similarly, Power Grid Corporation of India (BSE 0.66 %) is reaping the benefits of being a public sector firm in the transmission business while private players are struggling.
Nalco is exporting alumina at much lower rate than being offered by domestic companies. Discrimination only hurts business sentiments and sends a wrong signal to the community of global investors.
Simplify The Rules
The government should reinforce its focus on women and child development. Two thirds of our population are children and women and their priorities like education, nutrition and health have to be addressed.
Rural women have immense potential to adopt and develop the liberal arts and make that a regular source of livelihood. Our women must become socially and economically empowered. For the dignity of our rural women, it is also important to it is also important to construct household toilets in each rural house.
India has the largest number of children in the world, with 160 million children of less than six years of age. Around 50% of them are malnourished. The 14 lakh government run Anganwadis need a transformation.
Infrastructure, education, water and sanitation, sufficient nutrition, and regular health checkups are necessary. We need a visionary minister to achieve all this. Bring in public-private partnerships ( PPP) in this area.
The country needs a simpler regulatory framework, based on transparent policies and processes with emphasis on self-declaration and strong deterrents and penalties for non compliance.
India is well positioned to become a powerhouse, and over a period of time the above measures can generate additional revenue of $1 trillion for the economy. People have high hopes from the new government, and so has every section of industry.