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Modi has a McKinsey-type plan for a New India. Question is, can he make it happen

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By definition, anything that hopes to create a ‘New India’ in less than four years (i.e. by Independence Day in 2022) should invite scepticism.

One of the features of the Modi government is its willingness to set ambitious targets for various programmes, and then to make a determined effort to achieve the goals set. Such ambition is amply in evidence in the document that the NITI Aayog has released, called Strategy for New India @ 75. By definition, anything that hopes to create a “New India” in less than four years (i.e. by Independence Day in 2022) should invite scepticism. Still, the details are worth exploring. The overarching objective is to deliver 9-10 per cent GDP growth in 2022-23. To get there, a number of sub-targets are laid out. How realistic are these? To find out, sample some of what is laid out (comments are in italics):

Double the rate of manufacturing growth, from 7.7 per cent.

Accelerate the growth of the mining sector from 3 per cent in 2017-18 to 14 per cent, with an average growth rate of 8.5 per cent during 2018-23.

Provide irrigation to all farms.

Expand airport capacity more than five times to handle one billion trips a year.

Double government spending on education to 6 per cent of GDP. (This is a hoary chestnut.)

Increase the proportion of formally skilled labour from the current 5.4 per cent of the workforce to at least 15 per cent. (This translates into about 10 million workers being skilled every year.)

Raise the tax-GDP ratio from the 16-17 per cent range over the last several years to 22 per cent.

Increase public investment from 4 per cent to 7 per cent of GDP. (Question: While farm loan waivers proliferate?)

Increase India’s share in global international tourist arrivals from 1.18 per cent to 3 per cent. But (in seeming contradiction), increase the number of foreign tourist arrivals from 8.8 million to only 12 million.

Double the length of national highways to 200,000 km by 2022-23 from the existing 122,000 km. (Actually, that increase would be 64 per cent, and would involve building 60 km of national highways every day, over and above the construction of state highways and other roads.)

Reduce the number of road accidents and fatalities by 50 per cent by 2020, while also achieving zero fatalities on the railways.

Achieve 100 per cent electrification of broad gauge track, from 40 per cent in 2016-17.

Take R&D expenditure from 0.7 per cent to 2 per cent of GDP.

For mining, double the area explored from 10 per cent of the obvious geological potential (OGP) area to 20 per cent.

Reduce the turnaround time at major ports from about 3.44 days (2016-17) to the global average of 1-2 days. Also, reduce the border compliance time to 24 hours for exports and to 48 hours for imports by 2020.

Deliver all government services at the state, district, and gram panchayat levels digitally by 2022-23, thereby eliminating the digital divide.


Also read: Modi ji, stop repeating Vajpayee’s mistake on the economy


Separately from these physical targets, there is a whole range of policy prescriptions in every sector. It is not clear whether these are merely exhortations, in the style of the annual Economic Surveys and the old five-year plans, or required to achieve the stated targets. Still, here are some of the policy prescriptions:

Put in place an economy that is predominantly formal.

Exit central public sector enterprises (CPSEs) that are not strategic in nature… For larger CPSEs, the goal should be to create widely-held companies by offloading stake to the public to create entities where no single promoter (including the government?) has control.

Privatise state power distribution utilities.

Rationalise power tariffs to ensure global competitiveness of Indian industries. (That means high industrial power tariffs will no longer subsidise agricultural and domestic powers users?)

Revisit rail tariffs, to make the passenger and freight segments sustainable. Freight tariffs should be competitive with the cost of road transportation. (Sustainability may conflict with competitiveness.)

Abolish the Essential Commodities Act.

Some years ago, when Atal Bihari Vajpayee as prime minister was presented by McKinsey with a similarly ambitious set of goals, his pithy response was: Yeh sab kaise hoga? (How will all this happen?) The old Scottish saying was ruder: If wishes were horses, beggars would ride.


Also read: Modi, after all, had no solution to the poor and nasty lives of most Indians


By Special Arrangement with Business Standard

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5 COMMENTS

  1. You cannot call this article simply GAS; you’ll have to specify “which gas?” And the answer will be, N2O — Nitrous Oxide, also called “laughing gas”. Read this:

    “One of the features of the Modi government is its willingness to set ambitious targets for various programmes, and then to make a determined effort to achieve the goals set. Such ambition is amply in evidence in the document that the NITI Aayog has released, called Strategy for New India @ 75…”

    A seasoned economist like T.N. Ninan couldn’t be serious while saying that (the Modi government) makes a determined effort to achieve the goals set. Just today there is a news item in I think The Indian Express that says the GST collection in all states for the period April to November has massively fallen short. Income tax FILINGS have gone up impressively, but apparently all the new guys in the loop have filed for REFUNDS, because there was another news item on a TV channel saying that the government has a backlog of sending ONE LAKH CRORE rupees worth of refunds back to the people who have filed returns. Then, we keep hearing how the government is trying to put a hand into RBI’s pocket to dig for money, something that has raised the hackles of economists and novices alike. And here we have NITI Ayog spinning a long, pink colored yarn about 9-10% GDP growth and what not!

    If wishes were horses, beggars would ride, Mr Ninan remarks in the end. Children too would ride, because they are also gullible like beggars. Mr Modi owns a new, big horse ranch called NITI Ayog, and we are all children.

  2. Provide irrigation to all farms … Maharashtra’s geography and geology rule that out completely. What will be done in the next four years will appear more exciting when it is anchored in what has been achieved in the last four.

  3. I am not sure what Niti Ayog was thinking of when they wrote the report! It reads more like a term paper prepared by someone who were under pressure for time and submitted their assignment to a teacher who was only looking for submission deadline to be met. A second year student at a reasonably good MBA college would have done a better job of analysing cause-effect relationships and presenting the possible choices that the government had. I hope the India@75 was not a report where our hard-earned money was paid as a fee to a consultant!!!

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