I am not talking about a militant nationalism or old school protectionism, though both of those doctrines may make a comeback in the Western economies real soon. India should not, and I am confident, would not, follow the European and American models blindly, though it will hit India hard when the protectionism gathers steam in the course of next couple of years. It has to be recognized, by India and all the other developing countries, that the days of the closed economies are truly over, and any oncoming tendencies to create protected domestic markets must be met with formation of alternative trade alliances, which will undermine the competitiveness of the protected economies in the first place.
So, we are still talking about relatively free economy and democracy as a model of governance, but certain things do need to change. Here is my list of five things that are seriously out of sync, and we must make hard choices in India if we have to protect our future.
(1) Focus on Agriculture and Our Villages: It may be counter-intuitive, but we must focus back on our agriculture and our villages. The industrial revolution dream we are pursuing - mainly in terms of the service industry - will collapse if we don't put the villages and agriculture first. The reason is, of course, that we have too large a population to be accommodated and fed by the service industry alone. Besides, our cities will crumble if we can not contain the population migration from the villages, which we can not do, except by creating sustainable village economies. Our costs will soar if we can not fix agriculture, and that will soon price ourselves out of the service industry. And, above all, we are possibly looking at a world with food shortage by 2020, and we must make our agriculture much more productive, water efficient and fair in terms of wealth distribution to remain competitive.
(2) Federalism: We have spent the first 60 years of Independence moving towards a string federal administration, and it seems that we may need the next 40 moving towards devolution and greater autonomy of the states. The process seems to have started now, but it will take another few years and few successful Chief Ministers to get this process some momentum. This is not a death wish for an Indian union; this is actually an admission of maturity and the strength of the Indian state. There is not much in the states today, and also, there is a brain-drain on relative terms from state to central politics. We may need to revisit this and create strong state administrations, and ask some of our brightest politicians to return to their state politics rather than vying for ministerial positions at the centre. The Indian state should surely provide certain common services, like Defence, Financial Administration and Foreign Affairs, but the states should be asked to shoulder greater responsibilities in education, tax collection, health care, science and technology, environment, power and infrastructure. This will, in turn, require a greater devolution of power at the local level, which will make the whole political system more accountable to people.
(3) Focus on Asia: India's defence needs, and economic priorities, are closely allied with Asia. It is primarily China, Japan and the neighbouring countries, but India has so far done surprisingly little to acknowledge this. There are few trade arrangements, few incentives to do business and very few educational opportunities focused on the region. This should all change. There should be a quick realization of the growing importance of Asia on the World stage, and the fact that if we are not gearing up to trade in the world's most exciting market, we shall eventually lose out. There should be greater cooperation with neighbouring countries, which should also take into account strong cultural links some of the Indian states have with their neighbours. Besides, the government should actively encourage studies in Chinese and Japanese language and culture [and also the other Asian languages] at various levels of education, so that India has a ready workforce by 2020 to engage with these economic giants. We must prepare ourselves for an eventual Asian union, and the deliberate preparation for this should start now.
(4) Focus on Environment: India is surprisingly reticent about the environment issues, though there are some Indian companies, like Suzlon, which are doing very well. But a comprehensive focus on environment is sorely missing. This is no longer an ethical or a moral issue; this is about our future competitiveness and sustainability of our development process. We are under a mistaken notion that we can repeat the process of industrial revolution as it happened in Britain 200 years ago. We can not. It has to be a new path, created for India by India. And, we can not possibly lift our 600 million people out of poverty without causing a huge shift in world's climate. This is possible only if we do so with great new innovations in clean and sustainable technology. We haven't yet started on that front.
(5) Realign Education to our future needs: The government needs to actively focus on education and shift its focus from giving people jobs to promoting excellence in original research and innovation. Our education is aligned to a mechanistic vision of the future, and our universities are on a factory mode, interested in churning out call centre workers, software programmers at best. While this is understandable, we can not just stop there. We need to develop indigenous technology and intellectual property to solve the pressing problems that we have, or going to face. Unless our education system is realigned to our priorities, we are going to fall short. Currently, our education system is designed to serve European and American requirements; this should change in near future.
I haven't mentioned corruption, infrastructure etc because these are already on the agenda. My purpose was to highlight the areas which aren't, and we are going to hit a limit of growth unless we start addressing these areas quite quickly. I am optimistic that the Government of India has enough forward-thinking people who are already working on these directions. But, a great change is coming and we must get prepared to meet it halfway down the road.