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The Strategy for Economic Reform in a Globalised World continues....
We can add to this level of investment by more FDI for which it will require that we deregulate more and create world-class infrastructures, even if in pockets such as in SEZs. Although India may have low labour costs, this is offset by high transaction costs caused by delays, a socialistic labour law and corruption. Streamlining procedures through e-governance will help cut transaction costs, but this too will require a major attitudinal change in bureaucracy. All this will imply the need for second generational reforms.
This is however the supply side of the equation. On the demand side to match the rise of goods and services implicit in the 10
per cent growth rate of GDP we need to aggressively export. This can be done by exploiting our comparative advantage which requires developing a new work culture of honouring contracts, work culture of keeping to schedules, and transparency in decision making. We should have to foster the ethos of risk taking, shaking off the socialist hangover of personally seeking a secure future at all costs. At present, Indians prefer guaranteed poverty to a risky prosperity. We should also adopt policies such as inter-linking of rivers and other mega projects to put purchasing power at the earliest with the common people so that not only assets are created, and there is greater economic integration, but the poor come to feel that they too have a place in the Vision 2020.
With the developing new concepts in business of co-creation between firms and consumers [as expounded by Prahalad and Ramaswamy in Future of Competition (Double Day, 2004)], globalization has become crucial for India’s development.
Globalization may be defined as the process of re-location, restructuring and outsourcing of productive economic activity characterized by more and more free movement of factors of
production, knowledge, technology and services, and by the mutual interaction and effects of such movements. It marks a decisive shift in the proportion of the world output being produced in a transnational framework.
to be continued...
( This account is maintained by Har Anand Publication)