Without Foreign Direct Investment of $ 10 billions every year, we cannot achieve 8% growth’, said an ´expert’. He wanted the full opening of the country to FDI. See what is happening today. We are actually growing when FDI is factually going down. The FDI this year is less by 50%. But instead of falling by 50%, our economy is forging ahead by almost that number. Says the Central Statistical Organisation; we are likely to top 7% growth in GDP this year. Had the Prime Minister not intervened, the ´expert’ would have opened the country for sale. The lesson: the country can grow, even if the FDI declines. FDI and growth are not necessarily companions.
´Unless we deliberately depreciate the Rupee our exports cannot grow’ counselled ´experts’. Last year our exports rose by 20% plus and continue to grow this year. But simultaneously our Rupee value has appreciated by almost 10%. The lesson: our exports can grow even if the Rupee does not depreciate, even if it appreciates instead.
In the year 2000, had some one asked ´why should India globalise ahead of the WTO schedule’ the response from the ´experts’ would have been like this: ´If we didn’t globalise fast enough, the foreign investors can turn their back on us. Our forex position is not strong. We will be at the doors of the IMF and World Bank. They will finish us. Remember we went nuclear under their nose’. The forex reserves then were $ 30 billions. Today it is $86 billions plus. Not knowing what to do with it, we are pre-paying our foreign debts. Yet the same policy persists. Now the experts invent other reasons to support the very same policy. The lesson: reasons will change but the policy will not.
The Indian manufacturing companies are doing well this year. Data reveals rise in profits, more than rise in business turnover. What is the implication? The manufacturing sector has shed the extra cost and become lean. Once the fat is cut, growth follows. This means that the Indian manufacturing has finally gained in confidence and is moving ahead. Seshasayee, a professional CEO and my friend, told me years back when there was a temporary rise in auto sector, ´we do not know why we are doing well’. That was the extent of the confusion in Indian manufacturing. Recalling his earlier comment, last week he told me ´now I can say why we are doing well’. He spoke of the Indian auto sector globally partnering development of future fuel technologies! Today Tata Motors, Ashok Leyland, Mahindras, TVS Motors, and Bajaj are planning to penetrate the world. What a contrast! In early 1990s, Finance Secretary of our own government used to advise the Indian manufacturers to sell out forthwith before their factories turn scrap. Obviously Indian manufacturing has escaped all efforts to destroy its confidence. The lesson: national business can succeed despite the government.
Harshad Mehta was the hero of the stock market in 1991. And he was its devil in 1992. Ketan Parekh was the star in 2000, and also the evil in 2001. Today our stock markets are on the rise. The BSE index stands at over 4400 points, from less than 3100 in April 2003. There is no Harshad or Ketan, hidden or open, driving the market today. It is more investor, rather than speculation, driven rise. Of course the futures market is driving the sentiments partly. This risk will require regulatory watch. The lesson: the stock market can grow without celebrity speculators like Harshads and Ketans.
More. Now global experts are comparing and contrasting India and China. Many see that it is a matter of time that India leaps ahead of China. India has risked far less to grow, while China has risked enormously for its growth. The risks that they took are making their calls on China now. Just a couple of years back, the very experts who wrote off India in comparison to China –´because we were not liberalising fast enough’ — have U-turned to say, ´see how we are growing, and moving ahead of them’!
Finally. The rest of the world, including Japan and China, is lending money to the US and getting it to buy their goods, that is, they chase the US consumption for their growth. If the US consumption declines, the rest of the world will go for a six. But not India. Why and how? For, India has seen and overcome US sanctions. India is growing largely on its own savings, mostly on its own investment, mainly on its own consumption and primarily on its own efforts. The lesson: the external can only be the additive, not the core.
The core has to be, and can only be, Indian. That is, as Suresh Krishna said, when no one else would dare say, ´India shall be built by us’. Not by the US. That is, India is on the rise. And steadily.