Last week, I had the opportunity to interact with number of thought leaders, corporates, fund managers etc at IIFL’s Global Investor Conference – Enterprising India -II. Dr. Jim Walker was knowledgeable as ever and Dr. Shashi Tharoor had the hall in splits with his incredible way with words punctuated regularly with an amazing sense of humour. But what I like to share with you is a few interesting points from the sessions of Shekhar Gupta , Editor-in Chief, Indian Express and Ajith Cabraal, Governor, Reserve Bank of Sri Lanka.
At a time when most of us keep cribbing about the sorry state of affairs especially in our political world, it was refreshing to listen to the knowledgeable Shekhar Gupta who painted an extremely optimistic picture. According to him, we are going through a phase of painful correction and this should actually be good in long term because big broad issues are being raised and much of the dirty linen is being washed in public. The other macro change is that states are getting more and more powerful. Now the state chief ministers have their own agendas and the Indian public seems to be voting state level performers back to power; like Nitish Kumar in Bihar and Narendra Modi in Gujarat. We also have new breed of state leaders who are relatively clean and performance-oriented, he said much to the comfort of the domestic and international investors. Implementation of progressive agenda is being done in a better manner.
He also talked about reformist ideas and path breaking ideas especially in areas like land acquisitions - something I was totally unaware of. This is a thorny issue and Punjab seems to have found an innovative solution. Take farmers, add one development officer and get real data on market prices based on recorded transactions – Add another 50% premium on the price so got and acquire land from farmers at that price. The problem of making agricultural land to non agricultural land and associated malpractices and heartburns are removed as deals get done at market prices. Farmer is happy and so is industrialist as he is now getting land without protests/ court cases, etc. The farmer, with the money he gets, buys BMWs, mansions and also land in "backward" states like Chattisgarh paving way for all round pan India development. Believe it or not, this idea has been caught on by Ms Mayavati in Uttar Pradesh and farmers who were earlier protesting against land being taken away are now turning around and asking why enough projects are not being undertaken and why government is not buying their land.
These developments augur well for India and again good ideas seem to be no one’s copyright as they seamlessly flow across parties. The key event to watch out now would be the elections in West Bengal. The other interesting pointers from Shekhar Gupta’s interaction was that the expected decimation of Left in West Bengal and Kerala will make the Third front irrelevant and all parties will move towards BJP or Congress thereby making more stable coalitions. Key economic ministries will increasingly be given to honest people, he predicts. I would love to listen more to this person who not just Walks the Talk but has a column aptly named – National Interest.
Listening to Ajith Cabraal, Governor, Central Bank of Sri Lanka, helped me (and I am sure the others too) clear some perceptions about Sri Lanka. Did you know that Sri Lanka’s per capital GDP is higher than India? Infrastructure is far better in spite of the two decade internal war. Importantly, Sri Lankan President Mahinda Rajapaksa has a clear economic agenda in his manifesto and says in the next 6 years, the per capita GDP of Sri Lanka will go to US$4000. I can’t imagine a government coming to power in India with a clear statement of economic agenda instead of wishy-washy statements that "Garibi Hathao."
The other incredible thing done in Sri Lanka is that they have successfully reduced poverty from 27% to 7% with a target to take it down to 3% in the next 5-6 years. I asked the Hon’ble Governor how did they manage, he had a simple sounding answer - they invested in infrastructure, they built roads because of which the even the farmers benefitted and they increased the support price for farmers which helped poverty alleviation. His argument was s very simple - why should the person in the city person get the benefit of subsidized prices? If prosperity is the agenda let people pay higher prices even if there is a temporary inflationary impact. Besides, Sri Lanka also got the distribution system right which plugged leakages to the minimum. Effectively, money actually went into the hands of the farmers. We clearly have a lot to learn from our neighbors; however small they may geographically be.
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