Feb. 7, 2007

Achieving sustainable and long term economic growth through a eight step process.

0. God Governance: Institutionalization of efficient & effective governance through structural changes & induced autonomy in the various establishments. Re-establishing meritocracy and building the environment for excellence in administration.

I can make out from the emerging pattern & methods in the chief ministers initiative as this to be already the case. Anyway, prime responsibility for this lies in hand of state government.

1. Increase Urbanization: Working to the plan instead of stepping everywhere. State ought to decide how much people it wants to be dependent on rural economy and what % it would it like to move to urban growth centre. We will have to remember that our rural economy is a fine case of underemployment and also incidences of hidden unemployment are quite common. In my opinion state need to achieve 60-40 ratio by 2015 to optimize its developmental process. We need to conceptualize and develop six or seven mega cities of over 40 lac population in the state. We will have to ensure planned development of these cities; JNNURM should be taken optimum advantage of in this process.

However, in building these mega cities state will have to plan among other things as to what will drive the economy of the cities. Cities will have to be developed alongside the industrial clusters, befitting their competitive strength.

State will have to plan all these angles about mega cities, central government need to put them under JNNURM to support in developing the urban amenities.

2. Revive Rural Economy: Rural economy needs to be energized through cooperatives like COMFED in the other segments of "Potentially Rural Productivity" including in agro-processing, food processing, and animal husbandry and so on, with liberal dose of upstream corporate retailing linkages involving Bharti, Reliance, Tata & Birlas. State should take initiative to bring home contract farming, contract food processing / animal products processing and contract agro processing in association with these corporate groups.

3. Build Financial Infrastructure: As far the basic ingredients for economy goes state has advantage of land ( raw material) and labor (though skill enhancement is definitely needed) but lacks in Capital, Management & Entrepreneurs. It is not a hidden secret that Bihar lacks in home grown Capital Market & Financial Infrastructure. Market outside is plagued by many stereotypes about the state putting it at the disadvantage. Creation of homegrown financial market is a pre-requisite for development of the state. Ready access to capital market, awareness & understanding of capital market is very much adds in availing the capital so badly needed for industrial development.

Some of the financial market Apex (Regulatory) Bodies, and also a few PSU's, need to be headquartered in the state. May be state can ask Pension Fund Regulatory Authority to be located in State. Advent of the apex body itself will make it mandatory for all the governed entities to set up a shop in the state.

Building a culture of "Financial Excellence" is simply an imperative.

4. Institutions as Growth Drivers: Setting up of "Centre of Excellences" in Higher Education, Specialized Education Centers (as under various ministries at centre other than the ones under HRD) Technical Education, Research, and Vocational Institutes & Training Centers. This institution acts as the nucleus for "Economic Capability Building" and results in a definite competitive advantage in knowledge economy.

If we go by what has happened elsewhere, these "Center of Excellences" has been set up by central government only. State has got a short shrift in allocation of these assets. Regional Interest active at central level did never thought of building India. People at the helm of affairs were busy building there own native states. Bihar & UP lost out as they lulled themselves in the belief of being one India.

Though state can go ahead and create these institutions and it should be doing so, It should also fight for its right till the skewed situation in rectified in states favour. Under the garb of military principle of strategic depth, national asset can not be made repository of southern region. Bureaucrats & Ministers from heartland so get all those policies which militates against these states shelved, be it freight equalization, or the current policy of taking infrastructure development to the developed areas. Developed areas should sustain themselves through user charges & private investment. Public Investment should go to underdeveloped region.

State can not afford to loose out its elite through brain drain. Large Scale Migration warrants charges of criminal negligence of Eastern UP & Bihar. If central government does not proceed to rectify the situation, it should be prosecuted on this count.

5. Building Backbone Infrastructure: It is pity that state is being accorded the lowest priority under NHDP and also the GAIL Gas Grid has not been extended to the state even after a lapse of two decades, when it was brought to Jagdishpur in UP.