Thursday, September 06, 2018

If it seems scholarly we will believe.

East Asian and Western economies used a "farm-to-factory development model" to grow their economies, but India is different, wrote Jayant Sinha, Minister of State for Civil Aviation. Apparently, we are using a "farm-to-frontier model" which are "innovation driven service industries that are at the global productivity frontier". "Services account for 57% of Indian GDP, while manufacturing accounts for 15%." Because of poor infrastructure and a corrupt unhelpful government India cannot manufacture figurines of Hindu gods or even buttons, but has to import them from China, wrote Prof FJ Contractor. So what does Sinha recommend? "Rather than adopting a mercantilist approach prioritising export-oriented suppliers and repressing consumer demand, we have prioritised domestic consumption. There has been enormous innovation to ensure affordability ranging from low-cost service delivery to 'sachet' type packaging and pricing. The net result is that our economy is increasingly plugging our young people into technology-driven ecosystems of highly competitive industries." What does this gobbledygook mean? It means young people are being recruited as couriers and delivery boys for e-commerce firms like Amazon. Earlier, US company Walmart bought our e-commerce company Flipkart. They are earning money but if you asked these people they would consider themselves lower than cyber coolies, who do mind-numbing work in call centers and back offices. "Similarly, our fast growing airline industry is hiring thousands of young people to work as maintenance engineers, cabin crew and service agents." As a minister in civil aviation, Sinha should know that the airline industry is looking at losses of $1.65-1.90 billion this year. Jet Airways is trying very hard to avoid financial collapse. Taxes are killing the industry. There is GST on tickets, passenger service fee, user development fee and other charges. "Fuel accounts for about 24.2% an airline's average cost structure. In India, it is 34%, making India's carriers particularly sensitive in this area," said CEO of International Air Transport Association, IATA, A de Juniac. "If you kill the goose that lays golden eggs, there are no more eggs." Perhaps if the government got rid of ministers it may be able to reduce taxes and save thousands of jobs. To export against international competition a country has to increase productivity and quality through innovation, wrote Prof R Hausmann. "India's economy cannot survive without exports," wrote CEO of Niti Aayog A Kant. IIT Delhi, University of Pennsylvania and Harvard, Jayant Sinha has an impeccable CV. Why then did he write such tosh? Because he wants to whitewash government failure. We are stupid enough to believe him.

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