India's position in the global arena has come to a crucial stage. On one hand, it is a fast-developing economy having experienced almost a decade of structural economic reforms. On the other hand, as the world becomes smaller and smaller, the importance of a large consumer market (of a billion heads and growing still) can hardly be downplayed. At this juncture, India needs not only to ensure that dollar-induced development does not acquire a lop-sided path and lead to another Mexico or Argentina, but also that its own developmental crises are resolved.For one, the population of the region is its biggest problem and ironically also the most powerful redeeming feature as far as economic growth and development is concerned. The high population levels and its equally high growth rates constitute an enormous developmental challenge for the region.
The foremost pressure that a large population exerts is on the resource base, leading to its steady depletion. Unsustainable use of resources adversely impacts the developmental process as less and less is available for a steadily increasing population. Over the years, it has been increasingly recognised that the relationship between population growth and development is much more complex.
Population, Planning and Development
In the early fifties, socio-economic implications of population growth were a matter of concern largely in the context of the argument that rapid population growth is an obstacle to development. Indications of adverse implications of rapid population growth indirectly provided justification for investment in development planning, and the Five-Year Plans (FYP) seemed to provide what is termed as the macro or 'systems' approach towards development. As it was, successive FYPs, by way of providing increasing emphasis on the population problem, have highlighted the key role of population in the developmental process. Inevitably, more emphasis placed on the poverty issue. The recognition of the poverty-population nexus reached a peak during the 1970s when the infamous Programme on birth control that was launched by the Indian Government was almost simultaneous in its inception with the war cry for poverty alleviation, as distinct from poverty eradication.
The New Age Factor
Since the opening up of the Indian economy in the early 1990s, the challenge for development assumed a different perspective.
serious concern that has been voiced often in this New Era of WTO and GATT rules and legislation is whether increased competition and exorbitant demands for higher efficiency levels in production processes would lead to total disappearance of the indigenous sector that has been so carefully nurtured by the good-old "protectionist regimes"of the past. That such a sudden transition would lead to the death of age-old industries producing items in traditional ways; or worse still if they are relegated as items of a tourist's delight. There is no doubt that foreign investment in the core (infrastructure) sector of the country is quite welcome, and that joint ventures in the cement, power, steel, telecom and such other sectors do serve to raise efficiency levels domestically. However, our experience has clearly shown that joint venture projects have largely been attracted to the high-growth sector. Further, the volatile nature of foreign capital flows into the financial markets and in some cases the investment flows into the domestic economy have been more than brought home by the crises in East Asia, Mexico and now Argentina. Although the nature of the crisis was different in each case, the botttomline remains that the economy of the host country is left out in the cold to handle the crisis.
On the other hand, there are examples of countries that have been able to channelise foreign investments in a prudent fashion have served to gain. To do the above, the individual, state/national Governments have to play a stellar role, and not necessarily an interfering one. Governments e for governance: policy setting is their role. If the Government takes on the additional burden of acting as the industry as it did during the first three decades after Independence, or tries to set too many rules as it did during the License Raj, then the net result would always be the sick PSU, an Enron or a Cogentrix, or something as dismal as the series of scams, kickbacks and other financial disasters that have tainted the face of Indian Industry. For industry to thrive and contribute to an economy's sustainability, governance needs to adopt a firm but passive approach. The same applies for taking advantage of the opportunities provided by globalisation.
The question therefore posed is if a large section of our population is equipped to participate in the type of development process envisaged by the new era of privatisation and globalisation or whether they will be marginalised by the market forces. It is largely against the backdrop of this concern that the country's approach to development has to be looked again, and in a fresh light.