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  The Road To Economic Development  


By: Rasik Sanghvi
July 25, 2003

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The Road To Economic Development Rasik S

There is a report that genetically engineered food is discouraged in Europe as a result of which African export is negatively affected. There is no evidence that genetically engineered food is harmful to human beings. Here lies the great opportunity for India.

The elementary principle of economics shows that a country prospers with production. In a global economics environment a specialized and economized production of services or manufactured goods in a country, ideally, brings the same results by exporting specialized manufactured goods or services and importing the specialized and economized goods and services. The word ideally inserted above has meaning. If the complicated economic principles are not understood, it creates lop sided development, poverty and havoc. With that in mind India should not solely depend on development of service industry like call answering for foreign banks or maintenance of soft wares etc. but should produce manufactured goods complementing its specialization in service sector. BUT India can take advantage of global economics and import from Africa economized products and help Africa to import India’s specialized goods and services.

How this happens?

To understand global economics we should understand both basic economic principle and the general deterrence of political, military and technological interference which skews the result from prosperity to poverty as happened in India since 1820 reducing India’s share of world trade from sometimes up to 40% to .01% and Great Britain’s share of world trade from 7/% to 45% at its peak.

Let us understand the basic economic principle in the absence of global economics. If the production is lop sided and a specialized 500% increase, in say service industry, will increase the income of mutually dependent sectors, their employees etc. to say 400%, the rest going to ancillary sectors. With other production remaining stagnant

the increased purchasing power will simply inflate the price. If the increased income does not increase the consumption of goods and services and state part of efficiently managed revenue, there is no prosperity and development.

Supposing there are two villages on the two opposite sides of a river with equal resources. Both sides can produce many things. If one village assesses its different needs, consults and communicates with the residents, coordinates and produces the different products as per needs that town will be enjoying the higher standard of living with great many products than the other town which produces in excess some items and/or does not produce or other items at all or in insufficient number without proper organization.

This is the simplest example. The key is vision and understanding. The special skill of management, implementation, execution and organization is required. That will bring to the imperative need of result orientedness, accountability, efficiency, timeliness and integrity (non corruption). The vision flowing through many accountable honest people will lead to the necessities of infrastructures and logistics of supplies and raw materials at each level for the production at mass level which is the key and secret of affordable products and key to the wealth of people and a nation. And here Africa can be helpful, just as Central and South America are helpful to USA.

The prosperity is the result of mass circulation of money and tapping of resources. In the circulation at every point a value is added and depleted when consumed spurring further rhythms of activities. An efficient administration recovers the cost of providing initial infrastructure and putting in motion the new avenues of economic activities in the form of different minimum taxes. But the true rewards of the administration is the increase in the wealth of the people. For defensive and vigilante purposes as well as for safety net and health reasons so that their population do not become beggars any time or domestic servants, an efficient administration lays down, administers and collects taxes by self supporting and self generating economic activities. Like toll money going to the building of new bridges and maintenance or selling new frequencies to new cable companies, for example, the administration provides new services to the people, additional economic and transportation activities which people and industry do not mind to spare.

IT SHOULD BE REMEMBERED THAT EACH HUMAN BEING IS CAPABLE OF PRODUCING MORE THAN WHAT HE CONSUMES IN LIFE TIME. If the human resources are efficiently tapped this can quickly amass wealth for thousand of years. Therefore, only population increase excuses are not acceptable. People claim India is very crowded because of the huge population. This is not true. It is due to wrong perception and

management. Japan, for example, has more people per square feet than India but because their transportation companies provide enough number of buses or subway cars required for sittings of all commuters even larger number of Tokyo citizens are moved around without perception of crowd and chaos.

An alternative to family planning is building spacious roads, streets and highways, more transport and utilization and increasing productivity of human beings which are hundreds of times more capable of producing than consuming in their life times. This is not an utopian thought. In Europe, USA and Canada where there are snow nine months in a year some places or in hundreds of miles of desert, people are producing thousands of times more than what they are consuming in life times with the help of easy flow of capital, efficient use of land, trained and utilized labor and above all technology and superb organization with concepts of macro management of resources.

If the services are provided, safety nets are built, affordable health cares are available, if the infrastructure in place for smooth flow of raw materials and finished products, if finances are easily procured and if the administration is accountable and corruption free, if the transactions are conducted through Banks only and banks are monitored and audited regularly, the taxes can be collected from water consumption and garbage removal, from electricity, line charges and portable charges, from State, city and Federal Income taxes, from sales, property and business taxes, from franchise and real estate and mortgage taxes, from telephone and cable taxes, from use and corporation taxes, from registration of cars and Parking violation fines, from speeding tickets and bridge and highway tolls. The key is provide the service and employment, affordable housing and tangible personal property, clothes and shoes and take administration cuts being careful to not harm the economic activities. More people more employment more consumption, more production more taxes.

The above reasons make it imperative why the computer should be made affordable for the people and the govt. The computer can be widely used and linked by the government for efficient administration and preventing corruption and increasing the accountability.

Here is another example of how the social upliftment and economic growth go hand in hand by applying vision.

By providing easy opportunity, training and measured and limited stiff Chartered Accountant examination thousands of commerce graduate could be given a C.A. certification recognized by the govt. All the business transactions should be heavily encouraged to be done through bank. Even small businesses financial statements and Other tax preparation should be required to be prepared or certified by C.A.s. The businesses will not be extra burdened because the body of C.A.s will work as a buffer between business and Govt. officers all the way to Chief Minister. Any impropriety in tax and collection department can be directly reported to the tax commissioner and the Chief Minister. That will be the main role of this CA buffers against a decent compensation for their tax services opportunities at the widest level. The tax payers will be actually paying less than they have to spent in dealing with harassing peons and low level clerks and babus who do not pay taxes on their illegal income. The income by buffer class will be all gladly taxed and paid by. The government will gain in millions of rupees otherwise would have been lost in corruption and untaxed income. A several thousand strong buffer class will create new jobs, new demands and economic activities. This one example of how the wealth is created and revenue created for the administration by charging commission in the form of taxes, in properly circulating and accounting money. There are thousands of such ways to make India a prosperous country and ultimately playing its part of contributing to the advancement of civilization just as she did it every time when she was prosperous, secured and strong.

The secret of real development is the all round increase of the production and smooth inflow and outflow of economized goods and services keeping price constant allowing people benefits of science and technology, health, housing, sanitation, infrastructure,

Education, cultural and religious security, defense etc. and strong state revenue for well being of the people in safety net, research, development of civilization and security of country with powerful army and own ideology.

Rasik Sanghvi

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