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Rediff.com  » Business » A wishlist for India's dream team

A wishlist for India's dream team

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May 05, 2006 09:27 IST

As the unshackling of the economy and external factors combine to generate economic momentum, India is set to grow strongly despite constraints, including outdated legislation and regulations. Momentum is building as in the Roaring Twenties in America. Momentum is mass multiplied by velocity, not just the strength of stock price movements. And velocity combines speed with direction; it is not only the rate of circulation of money.

So, nothing mars the prospect … except the crises from so many disparate causes, such as unsupported small farms trying to turn commercial without the scale or resources, triggered by events such as the failure of rains in Andhra, or the opposite: an overabundant onion harvest in Maharashtra. There are other crises, too, e.g. urban chaos, the ructions from oil prices, and the spectre of continuing conflict from nihilists of any persuasion inflicting terror.

A warning to learn from history and the Roaring Twenties. Those excesses led to the collapse of markets and the necessity for the creation of institutions such as the Securities & Exchange Commission. Sebi's recent strictures against 24 market intermediaries underline the need for systemic solutions.

So, one aspect of the "Requirements Definition" is to be watchful for asset bubbles, stock and commodity scams, and rent-seeking - attempts to seek economic gain without reciprocal wealth creation, including tax evasion and corruption.

This means developing systems and procedures that are institutionally sound, as well as peopled by competent individuals with integrity (difficult, but possible?). What might be other important aspects of the Requirements Definition?

Goal setting: After informed consideration

The setting of priorities and goal definition needs inputs with the requisite expertise. This means going beyond the charmed circle of economists, civil servants, academics, and politicians. It needs the practical perspectives of the managers/organisers, engineers, and financiers, who create enterprises or the conditions to build them, and make projects work.

It means a meeting of minds on a small set of the most important (critical) objectives. By definition, the emphasis is on "a small set", because "critical" lists that are long laundry lists are useless for galvanising action and achievement. Prioritisation has to be applied, and the small set has to converge to be achievable, not be divergent or contradictory.

Therefore, the first item on my wish list is for the Dream Team to do more informed, explicit goal setting.

Speak with one voice

The following instances of divergence show how mixed messages can be, even though well-intentioned:

Manufacturing & services: Manmohan Singh reportedly said at the Asia Society Conference in March at Mumbai: "… there has been a relative neglect of manufacturing in India in recent years ... we have unveiled ten-year national manufacturing initiatives. Emphasis will be placed on labour-intensive sectors ... focused attention would be given to the growth of India's dynamic services sector ..."

No Budget support for services: Meanwhile, FM Chidambaram said on TV after his Budget presentation that services were doing well enough, so the government did not need to do more for them in this year's Budget.

Agriculture top priority: Deputy Chairman of the Planning Commission Montek Singh Ahluwalia reportedly said at the Mumbai conference, "... development of agriculture would remain the top priority of the government." To be fair, he added that nothing was possible without adequate infrastructure.

Recognising the need for political statements, nitpicking armchair critics, etc. this highlights one requirement of leaders: objectives and priorities stated clearly with one voice. True, several objectives can be pursued in parallel, but the clearer the priorities, plans, and phasing, the better the chances of achieving them. Therefore, it would help immensely if the government addressed these and articulated its position consistently.

Teamwork & organization

Most of us recognise that teamwork and organisation can achieve far more than individual brilliance. This is not because there is less impact from external factors and circumstances beyond the group's control, but more from better management of the factors within the group's control. Without teamwork and organisation, we are back to "herding cats".

Teamwork requires open-minded listening to views/disciplines other than one's own, and developing an informed consensus. It does not require accepting all opinions, nor withholding one's own.

It does require a receptive stance (respect for other views), the willingness to engage on group objectives, and to accommodate to domain knowledge that goes beyond one's own, and the willingness to be educated.

Organisation: The essential process is detailed next steps, spelling out tasks, funding, material, people, time and effort (resources), with time lines and responsibilities. The emphasis: build institutions with systematic processes, not around personalities.

Prioritisation and phasing

Prioritisation: The critical leadership function is to prioritise matters, based on inputs on objectives, resources, and efficiency.

Integrated phasing - A "Balloon" approach: The level of resources and capabilities at India's stage of development will always be short of its needs. Where we have erred is in building one aspect, e.g. Jawaharlal Nehru Port (JNPT), without addressing the entire system, leaving bottlenecks.

Instead, we could plan and upgrade in a limited way along the entire chain (like an under-inflated, large balloon) while leaving scope for expanding to full capacity over time (the full balloon), e.g., Curzon Road/Kasturba Gandhi Marg in Delhi and not South Extension, at a simplified level.

Examples: Possible applications

Input intensity in agriculture: A study in 1998 reported that agriculture needs higher inputs of infrastructure compared to other sectors.* If this is still true, the need is for strategic changes towards "smart agriculture", rather than more funding to perpetuate the original inefficiencies.

Energy intensity: A Planning Commission report states that India's energy intensity at 0.19 kg of oil equivalent per dollar of GDP (PPP; Brazil's is 0.15) can be reduced by 25%.** But how do we achieve this? The Planning Commission needs to spell this out through execution plans with associated financing.

Strategy & operating plans with financing (Budgets): The successful private-sector approach to large projects is to first set objectives, then develop a strategy, then an operating plan with the financing, and finally execute well. Perhaps the government could do these steps better. The point is not that fund allocation is unimportant, but that (a) good plans and (b) the use of funds (good execution) are most important.

* 'Energy And Infrastructure Needs In India: An Input-Output Analysis', Roy & Mukhopadyay, 1998: inforumweb.umd.edu/WorkPaper/IOPAP/joy1.pdf

** 'Draft Report of the Expert Committee on Integrated Energy Policy Integrated Energy Policy-Draft Report', December 2005: http://planningcommission.nic.in/reports/genrep/intengpol.pdf

Shyam Ponappa
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