What are the highlights of Modis Madison Square speech? - Akand Sitra I shall not give the excerpts/summary of the speech, as Im sure almost all of us have seen the eccentric extempore live. Moreover, Bhuvi Jain maam has given a brilliant write-up on this already in the other answer. So, lets delve into the Public Administration concepts he has used and how radical they really are. And the extent to which these can affect the nation. I am not concentrating on the speech tactics, like snake-charmer to mouse, reaching Mars with under Rs.7/km etc. All these are for adding spice to the speech so that everyone gets enthused and motivated. But, lets discuss about the serious issues and the brilliant solutions Modi has raised. 1) Demographic Dividend I am studying Public Administration optional for my CSE exam, and if one reads the question papers for the past 20 years, one realizes that this is an oft-repeated concept. Every one in the academic circle knows about the utilization of the demographic dividend. China and India had the exact same GDP in 1991, but since China opened up in early 70s and had a demographic dividend from 1990s, it grew manifold. Its GDP is currently 5 times that of India. China - 9.24 trillion, India - 1.87 trillion USD (2014) China - 309 billion, India - 301 billion USD (1989) So, we can see that India is exactly in the position of China, when it was in 1990. But, China screwed up big time, by bringing its One Child policy, it has reduced the young population, and the number of girls are very very less too. So, it has now lost its advantage, and moreover China is an investment-driven economy, so if investment stops, China will implode. And this is about to happen. All Chinese hubs are thoroughly polluted and the foreign investments are drastically reducing. Whereas, Indias is a savings-driven economy. Most of the GDP is internally generated, and with the demographic dividend, India will shoot up in the next 20 years. And our economy is much more stabilized than Chinas. This is a proven theory which will see its practicality in the next 2 decades. Now, we can see that India is all set. But, this can go majorly wrong too, if we take one wrong step. Modi nicely highlights that 65% is under 35 - Around 70,00,00,000 people. Now, this huge number can be an asset or a liability. Our primary education quality is pathetic, as shown by the ASER reports. So, we have many kids who are not educated properly, and this might become a HUGE problem for India. If all these people are unemployed, then a huge fiscal deficit will arise just feeding this population. So, for the past 10 years, there was atleast one question in the exam, where the answer for this question was - Skill Development. Almost all of us knew the answers, but none of us knew what to do. Lets assume that 40,00,00,000 people need skills to be of any use to this country. Lets assume that they have to be skilled by the year 2020. Now, we have exactly 6 years - 2190 days. That means, we have to impart some kind of skills at the rate of 181818 Men per day! Can one realize the magnitude? EVERY SINGLE DAY, we need to impart skills to 1.8 lakh people! Is this even literally possible? And usually these skill imparting sessions, (Maybe knitting, blacksmith, utensils manufacturing, bangles etc.) anything will take atleast 3 months. This is a huge burden on the govt now. I dont know how this will be realized. I literally cringe when I see this numbers. This is why I am depressed these days maybe. I am constantly worried about the future of this country, by just reading these sheer numbers. And I am sure Modi also knows this, and he is taking the right steps at the right time. Now, even if those 40 crore people do menial jobs, our GDP will double. If they do skilled work, then India will overtake China within 15 years. (Provided we give jobs to 40,00,00,000 people) If not, India will collapse just trying to feed them. 2) Banking penetration Till now, majority of the population saves money/gold by hiding under their beds or cupboards. These are out of the banking system. If banks do not have enough money, they cannot lend it to budding entrepreneurs or even farmers. The more money the banks have, the greater will be the liquidity and the money circulation. The greater the money circulation, the stronger will be the economy and faster will be the growth. Because, if I can take a loan from the bank easily, I will tend to spend it faster, thus creating a demand. And once there is demand, be it a cup of tea or an iPhone, the economy starts running to satisfy that demand. Thus, having a direct impact on the GDP growth. Now, more than 50% of the population do not use bank accounts, so, their money is not being used for money circulation. We need more people to get bank accounts! Thus, the Jan Dhan Yojana is a major major major important scheme to do exactly that. Before this, Indira Gandhi took another brilliant step in nationalizing banks. Since that is done, banks were legally needed to open more branches in rural areas, thus increasing our savings rate to over 30% of the GDP. Now, the next phase has arrived. Modi himself said that 1500 crores was deposited within two weeks. This means, the banks can lend 1500 crores more at a lower interest, and the farmers money which was hidden inside his pillow cover is being utilized now to fund solar panels! Money circulation is the key. Statistics say that the 50% of Indian population who dont use banks now, even if they put in Rs.1000 per head in their bank accounts per year, India will be flooded with 60,000 crores per year to lend. That is a huge boost. Now, next great usage is in Direct Cash Benefits Transfer. India will leap forward if it gives cash deposits instead of food/fertilizer subsidies. Lets discuss it with a small example. A kg of rice is maybe Rs.25 in market. But, the farmer sells it to the Retailer at Rs.10 maybe. But, the govts FCI procures it for its PDS at MSP of Rs.15 maybe. (Note the Rs.5 loss to the govt) And then, sells the same rice at its ration shops for Rs. 15 maybe. (Note the Rs.10 loss from the market) Now, the govt has given Rs.15 subsidy. This is 2.25 lakh crore subsidy per year I guess in real life. But, the complications start when people divert the rice from PDS to open market. (Note the Rs.10 profit they can make) And the inefficiency costs of govt - godowns wastage, trucks, transport, salaries to PDS employees, bureaucratic complications etc. On top of this, corruption at ration shops, ghost cards, invisible beneficiaries etc. It is seen that more than 40% of these grains do not reach the final beneficiary. So, the govt is paying a whopping 2.25 lakh crore, and on top of it, it is inefficient, and on top of it, it benefits the corrupt people, and moreover it does not benefit the ones in need. If the beneficiary, simply had a bank account, with one click, the govt could have transferred the huge Rs.15 subsidy that it anyway gives. And the poor person could have directly bought from the market. This would ensure that the govt would not involve in the PDS, MSP system, no godowns, no transport, no ration shops setting, no bureaucrats needed, no corruption, no ghost ID cards, nothing. Moreover, since all the food grains are available in the market (and not procured by the govt.) the price would drop drastically. So, the beneficiary gets all his money electronically, lesser price in market, more options to buy from without any govt inefficiency or corruption at all. This should be the ideal system, where subsidies are given without any human interference at all. This is why all people need a bank account. This is why I love the Jan Dhan scheme so much. This one scheme has all the answers - Fiscal deficit to food security, corruption annihilation to efficiency. At this rate, maybe within 2-3 years, all people will have bank accounts, and we can easily ensure aadhar-linked DBT cash transfer program, not just in food, but in scholarship, fertilizer subsidy, LPG, kerosene subsidy. In almost everything. 3) Sanitation by 2019 All of us know its benefits - Health, cleanliness, lesser diseases etc. Im not talking much about this. 4) Housing by 2022 Urban migration, slum development, a better life and livelihood. 5) Pravasi Diwas in 2015 With such a great diaspora, India has done the right thing with visa-on-arrival, merging of PIO cards and CIO cards etc. 6) Development is a national movement! All in all, it was a typical awesome Modi speech, with a special emphasis on Namami Gange. Lets hope that we cross all obstacles and will reach our destination soon enough. A glorious India is soon coming, and I want to serve that India. I wish I can be a part of this movement soon.
Posted on: Wed, 01 Oct 2014 07:27:31 +0000