Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Wednesday, December 12, 2007

India's planning should be different than the model used in Western countries particularly USA

Having lived in USA for nearly 3 decades and having worked in the large Engineering companies, I am clear that the purpose of India's planning should be different than the model used in Western countries particularly USA. This is because I also worked a decade and a half in India for GOO.
USA population density is 31 vs. 366/Sq.mile of India, about 11.5 times lower. The western countries always go for technologies thus that are high capital and low in labor because there has been always a huge shortage of skilled labor. I remember in a seminar in 70s, in Institute of Engineers one of the invitees, a planning commission member stating that employment potential in agriculture is 23 times that in Industry. Today with more automation, the ratio must have increased, not decreased, though mechanization would move in the opposite direction.
But till today India's problem(and more so in Orissa) is how to generate employment/work for the working age large population among our 1.2 billion people. Unfortunately, we give all kinds of incentive to the industry and very little to the employment generating industry that agriculture is. The very fact that we write off 1000s of crores of loans from public sector banks to various industries. Yet in 60 years we have not been able to set up a mechanism to finance our farmers, who commit suicide in thousands, tells the story of our bias. Eminent journalist Sainath has extensively written on this issue. We have largely neglected facilitating major employment generating areas, thus bringing misery and destitution to our people:
  • Education
  • Health
  • Agriculture
  • Animal Husbandary
  • Infrastructure - Road, residential houses, Railways, transportation et el.

The pretext has been that Govt does not have money since late sixties. Yet give aways have continued. The sale of electricity cheap to Hirakud Aluminum and Brajarajnagar Paper Mill are case in point. Due huge undue incentives and bad contract with to these private industries the Orissa State Electricity Board was at a perpetual loss while these Industries made roaring profits. The give away to these industries were not even compensated by the taxes they paid, draining the state coffer perpetually. I remember we were selling power at one paisa to Hirakud Aluminum while producing it at more than 15 paisa.

We are in the process of a second set up such contracts soon when POSCOs, Vedantas, Mittals set up their plants in Orissa and convert their MOUs to Contracts. We have jotted down as per the present MOUs free water, practically free Iron Ore, practically free coal, no taxes for 1st 5 years(when all the equipment will come in so no taxes) and then another 5 years of 50% taxes, almost free land (now getting changed to some extent) etc etc. The true value of these is staggering and mind boggling.

I have only calculated what it will costing Govt of Orissa(GOO) to go ahead as is for the currently mined Iron Ore and POSCO's plant. Here is my blog on the subject which is self explanatory: Unless the current MOU terms are nixed and Royalty raised our goose will be cooked. Best wishes, Sandip.

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