View: A ten-step guide to reach $5 trillion GDP goal
November 4, 2019 was a sad day. Prime Minister Narendra Modi decided to walk out of the Regional Comprehensive Economic Partnership (RCEP) negotiations at the eleventh hour, admitting that India couldn’t compete with Asia, especially China. It was a big and painful decision as this is no ordinary trade agreement. Had India joined, RCEP would have become the world’s largest free trade area comprising 16 countries, half the world’s population, 40% of global trade and 35% of world’s wealth in the fastest growing area of the world.
India should have joined RCEP. The deal on offer was a reasonably good one and many of our fears had been allayed. Our farmers had been given protection from imports of agricultural products and milk (say from New Zealand). A quarter of Chinese products had been excluded, and for the rest a long period of tariffs was allowed from 5 to 25 years. The deal offered a unique safeguard from a sudden surge of imports from China to India for 60 of the most sensitive products.
If much smaller countries in Asia – Vietnam, Thailand, the Philippines, Laos, Myanmar – can compete and have joined RCEP, why can’t India? Why does it need tariff protection, normally meant for infant industries? Why are India’s companies still infants after 72 years of Independence?
No nation has become prosperous without exports; open economies have consistently outperformed closed ones. The $5 trillion target cannot be achieved without exports. The lesson from this fiasco is that India must act single mindedly and execute bold reforms to become competitive. We can still join RCEP by March 2020. Consider this period a pause to get our house in order. It’s never too late to do the right thing. Here are ten ways to make the nation competitive.
First, get over an inferiority complex and change our old mindset of export pessimism that has limited our share of world exports to 1.7%. Pessimists fear a growing trade deficit. They forget that low cost, high quality imports are necessary to join global supply chains. Competition from imports is a school in which entrepreneurs learn to hone their skills. Ditch the bad idea of import substitution that has made a recent comeback. ‘Make in India’ should be ‘Make in India for the World’. To the voices moaning about bleak global trade prospects: Vietnam’s exports have grown 300% from 2013 to 2018 while India’s have remained stagnant. India’s share of world trade is so small – growing it will bring acche din.
Second, lower our tariffs, which are amongst the highest in the world, and have worsened in recent years through nine rounds of tariff increases in the past three years. Smart countries have a sunset clause to every tariff. Cheaper inputs from abroad will not only make our entrepreneurs more competitive but will also improve domestic productivity.
Third, national competitiveness requires collaboration across a dozen ministries and the states. It cannot be left to the ill-equipped commerce ministry. It needs a high-powered initiative under a senior Cabinet minister. Like the US trade representative, the minister should be empowered to monitor and implement reforms across ministries to enhance competitiveness. No one listens to the commerce ministry.
Fourth, a key roadblock is red tape. Keep a relentless focus on improving the ease of doing business where the country has been rewarded with significant gains in recent years. Minimise the interface of officials and citizens by transferring all paperwork online. Reduce the time it takes to enforce contracts in particular, where India’s performance is amongst the worst in the world.
Fifth, let the overvalued rupee slide, say to 80 to a dollar, which will mitigate the many cost penalties that our exporters pay. Exchange rate should not be a badge of national honour but reflect sound economic sense and competitiveness. Meanwhile, keep lowering interest rates, bringing them closer to our competitors’ levels.
Sixth, reform our rigid labour laws that protect jobs not workers. Companies have to survive in a downturn. When orders decline, you either cut workers or go bankrupt. Successful nations allow employers to ‘hire and fire’ but protect the laid off with a safety net. India should have a labour welfare fund (with contribution from employers and go nment) to finance transitory unemployment and re-training. We should not insist on lifetime jobs.
Seventh, acquiring an acre of land for industry is not only lengthy but also expensive. The present law, enacted durin UPA-2, requires hundreds of signatures. This bureaucratic nightmare needs to be replaced by a sensible law.
Eighth, treat farmers as business persons, not peasants. Have a predictable export-import re gie for farm products – stop the present ‘switch on, switch off’ policy which harms both farmers and foreign customers. Ninth, Indian entrepreneurs bear a huge penalty versus our competitors in the cost of electricity, freight and logistics. Stop subsidising railway passengers through freight; stop subsidising electricity to farmers through industry; and bring down taxes on aviation fuel that make air cargo rates highest in the world. Tenth, keep reforming our dreadful educational system, focussing on outcomes not inputs to produce employable graduates.
There is nothing new about these ten ways to make India competitive. Fortunately, India is in the midst of an economic crisis. A crisis brings urgency to reform as the go nment has shown by dramatically lowering corporate tax to competitive levels. Now is the time to act. And always remember that rulebased trade and open markets are the best way to lift India’s living standards and build shared prosperity.
译文来源：三泰虎 http://www.santaihu.com/48919.html 译者：Joyceliu
cant agree more
Tenth, keep reforming our dreadful educational system, focusing on outcomes not inputs to produce employable graduates -- whatever you meant, this should be the first priority - not tenth on the list. All the rest 9 steps are meaningless. MHRD and all other ministries are useless; they deliver too little too slow. So $5T we get slowly in 20 years.
Zero probability of this ever becoming reality. We will get to $5 Trillion, but if reforms like these are enacted, we could get from 5T to 10T even faster than from 3T to 5T.
After Acche Din they will now keep the nation busy with 5 trillion dream. The hoodwinking continues
The other day a BJP MP said that there is nothing called as GDP and none of the BJP Ministers objected to it.
good article ....digitisation of work between different ministries is the need of the hour .... or we are doomed
Guess someone is confused we will reach $5 billion GDP at this rate.
Actually the Indian Industry has become uncompetitive even internally due to high input costs on account of higher GST rates, leave alone competing even in South Asia. GST had a multiplier effect on all raw materials to the entire chain in between till consumption, each one pays GST at different rates and accounts for it and invest time in accounting for goverment to benefit. And that''s what is called competitiveness in India.
i use to regard the author as a knowledgeable person but this article breaks that idea. chona from the begining has been an export oriented economy as compared to india which is a consumption based economy. we are more close to the US system. with this in mind we become uncompetitive as compared to china, vietnam is a small export oriented economy as well. so no comparison. if we accept RCEP we lose or rather walk into the chinese trap. they export and we consume. moreover with most major rcep economies we. have bilateral agreements and also the Asean helps. Japan is also walking out of the arrangement taking clue from India.the entire RCeP is conceived by china to push its products. its politics in the guise of economics.
Indian go nment stand was correct as this could harm economy adversely as well as poor people. this article seems to be paid article as the behest of certain funding agencies. Why Japan reacted India way??
Duh - because Japan cannot react the China way. China wants to EAT Japan , not India
India''s voters are still uneducated and can be easily feared by opposition,, spread fake news, etc. first do you have solution for that?
India is a domestic driven economy to be an export driven one India has to first remove layers of bureaucratic red tape.
I AM SSK
Write letter to Modi.....and say him to do this than doing other things in parliament which he think is daring.
Gosh could you please form a political party and stand for election ? You are the ONLY person that can take INDIA where it rightfully is capable of going .
All steps are valid though discussed several times. How can exports increase if we don''t produce quality products competitively? The industrial plots occupied by investors who are not running industries, should be taken back and given to industries that can flourish. GST rules must be simplified and labour reforms are a must.Though interest rates can''t go below a limit, export finance should be made cheaper.
The author is absolutely right, India should have joined RCEP. We should open our economy and not be afraid of imports. Imports also creates income not only for the big importer but also for the the smallest retailer. Imports also make the markets competitive. It would not only get us consumer durables but also help in getting manufacturing machines at competitive rates, creating new jobs. Hope the Government takes the right decision towards creating a 5 Trillion economy
Rameshwar Singh Thakur
At some point some go nment will have to do these. The masses mead to be weaned away from freeloading. Subsidy and free lunches are opioms which keep the masses poor and shackled. The political leaders have benefited from the opiom and are unwilling to let go. Same for education system. A better education system is against the interest of the politicians. But a day will come like July 1991, when there will be no option.
Indian Private Sector is so inefficient and the fellows working there so unqualified that they know only to survive via subsidies, handouts, waivers and largesse by the go nment. Something is very wrong with our inefficient companies and that it is their hiring policies where no one can get hired only on basis of talent and hardwork but references from company insiders and bribes to HR play the most important role. This makes them talent averse and hence inefficient. These fellows can't crack even a single examination and rely only on bootlicking and co ption. Favoritism is the norm there.Hence, these guys and their firms can never become inefficient and competitive.
TEN STEPS TOWARDS 5tn -STOP CORRUPTION AND LOOTING BY POLITICIANS, BUSINESS PEOPLE x10
Whatever has been said in this article is already known... The real issue is whether any go nment has courage to adopt these because rationalising rail and bus fares and electricity rates stopping cross subsidies means anti people stance in India...People have become addicted to freebies and it''s not only limited to the poor who actually need support but also the rich so as to amass wealth at the cost of others and game the system whenever it''s possible...
why so much obsession with 5 trillion dollar economy ? Our people are not confident about earning well in current & future context that''s more important
kindly reform administration bureaucracy police judiciary
ONLY STEP FROM THE PM TO MAKE WORLD COUNTRIES ECONOMIES TO REACH ANY FIGURES HE PUTS LIKE THE DEMO N SUBSEQUENT GST....
Great article with very valid steps - each one necessary to grow the Indian economy. One question By the author summarised the reason for tHe 10 steps : "Why are India’s companies still infants after 72 years of Independence?"Governmentsd past and present, have adopted a protectionist attitude towards industry and agriculture which makes both less competitive in the long run. the focus seems to be on 5-year political party timeline rather than the long term approach
Now a days, media is not in a mood to give view regarding doubling farmers'' income by 2020. Our policymakers have every right to forget the target. But media and people of India must not forget. Must not forget not because the BJP leadership have forgotten, but to appraise the targets and promises and the end result of those targets and promises. The Swachh Bharat Mission, the mission to clean Ganga everything. What is the achievement percentage? If a person started his/her journey for a destination, how can that person set a new destination farther than the present goal without achieving the first goal first?
Target (numbers) is not important. The actual detailed goal is important. If it is 5 trillion, what is the break up? How exactly do we want the cities to look like? How much should be the tourism? For that tourism, what should be the level of convenience? And for that how much should be the positivity in the media and society? We need more such qualitative discussion than bravery with numbers.
Is anybody Listening ???