Wednesday, October 13, 2010

Delhi's shame could be the catalyst to unclog the economy

In our technology-driven world, no metric is rawer than that of human bodily functions. Sadly for India, it's one that keeps cropping up. Toilet shortages mean all too many of India's 1.2 billion people relieve themselves outside.

Illness, lost productivity and other consequences of fouled water and inadequate sewage treatment are cutting gross domestic product.
Advertisement: Story continues below

Toilets have also played a role in the Commonwealth Games, ending today. India's Prime Minister, Manmohan Singh, wanted the event to ''signal to the world that India is rapidly marching ahead with confidence''. The media focused instead on filthy bathrooms in the athletes' village and 100-roll packs of toilet paper for $80.

We're talking about a nation in which 828 million people live on less than $2 a day. An Indian making that could buy two rolls of Commonwealth Games toilet paper with a day's wages. The mess shines a bright spotlight on the shortcomings that hold back a $US1.3 trillion ($1.32 trillion) economy.

Yet all this bad press might be exactly what India needs. It could shame officials in New Delhi to get serious about fixing the economy. It also may just be the shove in the direction of private-sector leadership that India so clearly lacks.

Shoddy construction, excessive work delays, claims of tainted swimming pools that some athletes say caused ''Delhi belly'' and a dengue fever outbreak are products of the forces squandering the benefits of India's 8.8 per cent growth. Smart and well-intentioned as he is, Singh has made little progress since 2004. Is that about to change?

The tale of Delhi's new airport terminal, run by a company called GMR Infrastructure Ltd, shows not only why it must change but also how it can. It was finished on schedule in March. Now contrast that with government-built stadiums such as New Delhi's weightlifting hall. It was among 17 arenas that also were supposed to be finished by March.

Worse than running behind schedule, the roof at the weightlifting leaked and required frantic rebuilding efforts before the Games. After a smooth opening, the airport terminal began handling flights on July 28.

As India battles poverty, the private sector outshines the public one. Homegrown technology companies, for example, put India firmly on the global business map. The industry blossomed partly because it developed around India's political system as opposed to within it. In the beginning, there was no overbearing government ministry stifling growth. Microcredit lenders also have done far more to help the poor than the government.

India needs more of this dynamic, now, because politicians aren't up to the task. Few examples prove the point better than the Commonwealth Games, a $US4.6 billion undertaking attended by 71 nations and territories. Its staging contrasts in cartoonish ways with Beijing's hosting of the 2008 Olympics, which cost $US70 billion with 204 countries participating. Delhi's efforts have been mired in ridiculous delays and accusations of rampant corruption and mismanagement.

There's a silver lining. India must improve infrastructure to accelerate growth and broaden its benefits. Growth has averaged 8.5 per cent over the past five years but poor transport and other facilities could cost 1.1 percentage points of growth or $US200 billion by 2017-18, McKinsey & Co said in a report last year.

India needs to spend about $US1 trillion on highways, ports, airports and utilities from April 2012 to March 2017, twice the amount the nation's Planning Commission recommended in the previous five years. Given the government's missteps, the private sector can expect a far bigger share of that business.

Asia's third-biggest economy would be better off for it. It's naive to think letting companies such as GMR and Reliance Infrastructure Ltd play a bigger role in building efforts is a panacea for what ails India. It's a great start, though.

Transparency International ranked India behind Guatemala, El Salvador and Serbia in its 2009 corruption perceptions index - and six places behind China. Clearly, Indian companies have more than their fair share of crony capitalism. Yet getting politicians' hands out of the economy is the key to India's long-term prosperity.

Doing so will help create the hundreds of millions of well-paid jobs India needs to harness its enviable demographics. Thirty per cent of the population is under 15, in sharp contrast with ageing China. A young, English-speaking workforce is only useful if it has opportunities.

India has seen several false big-change moments. One came in May 2004 when voters tossed the then prime minister, Atal Bihari Vajpayee, out of office.

Another came in May last year, when Singh was re-elected with a solid mandate to retool the economy.

The ''Commonfilth Games'', as they were called, could be the real turning point. Ignoring such a cringe-inducing spectacle is impossible for Singh, his nation's people and the high-profile entrepreneurs who congregate at World Economic Forum confabs in Davos, Switzerland.

India has great potential and its economy may even outpace China's in the years ahead. Yet India desperately needs to clear the layers of dysfunction that are clogging progress. Embarrassment over toilets might just be the catalyst.

Source: www.smh.com.au

No comments:

Post a Comment