Will Naidu revisit Vision 2020?
So, another Mahanadu of the Telugu Desam Party (TDP) has passed without discussing what do the members think of their experiences with economic...
Naidu, on his part, rejects any suggestion that the rout was due to the reforms per se. He believes the reforms model he followed was good. It created wealth but the fruits of that prosperity reached only a small segment and not the common people, causing discontent among them.
After the 2004 summer debacle, even as commentators kept relating those results to the economic reforms, Chandrababu himself maintained a steady silence for more than one and a half years. For the first time in February 2006, he conceded that the results of reforms had not reached the poor. Unless "necessary steps are taken the rich-poor gap may widen". Hence "priorities should change".
However, the TDP chief has never bothered to explain comprehensively what he thought of his original model of reforms, where it went wrong and how exactly he would proceed next to see that the fruits of reforms reached all. The position has remained undefined for nine years.
A few months before the 2009 elections, in his eagerness to cozy up to the Left parties, Naidu hurriedly came out with a brief note claiming that he was making amends to his position. But it was vague, superficial and did not even attempt to touch upon the basics. Moreover, his assertions that he lost not because of the reforms as such had shown that he was not thinking in terms of altering his basic positions.
In a recent interview to Economic Times, Chandrababu said: "No, I have no regrets (about reforms). In hindsight, I think I should have gone with reforms carefully in phases. Had I done so, the State would have been on a different footing altogether by now�.I am now making extra efforts to educate the public about my policies".
Naidu, who claims to be "making extra efforts to educate the public about my policies", has actually never bothered to come out with a comprehensive note on the subject. He never went beyond saying a few generalized sentences. A Then, the Vision 2020 document, presented by Naidu in early 1999, is 14 years old by now. In this period he was in power only for the first five years. Its implementation in those five years prompts Naidu to say "I should have gone with reforms carefully". He has been out of power for the 10 years during which the Congress regime has reset the economy to some extent, away from his Vision model. How will he put it on course again?
There are a few other reasons why Naidu should be revisiting his document. Economic conditions in developed countries, the targeted destination for his software exports, have altered considerably. Then the international funding he was banking upon for the planned growth has got tighter.
The aim of Vision 2020 was to make Andhra Pradesh "a model State by international standards". Naidu said in its Foreword, "�we are trying to telescope into one generation what it took decades, and possibly centuries, for other societies and other countries to achieve. But the new technologies of today, be it in the field of information and communication, biotechnology, delivery of health and education, or in a variety of other fields, give us opportunities that earlier societies did not have."
Thus the plan assured a level of development in 20 years that will enable all to have a "comfortable" life, that includes education and employment, disappearance of inequalities, eradication of poverty, opportunities to downtrodden sections and women to reach their full potential, etc.
However, all such promises were qualified. The goals can be reached if growth rates are maintained at 9 to 10 percent per annum for the next 20 years, and not due to any structural changes in the economic system as such. The expected growth will generate revenue for government which will be spent on public investment to eradicate poverty and provide basic services.
As per the focus areas chosen, such as Information Technology, Biotechnology, etc., the contribution to sectors like agriculture and industry was to get reduced and that for knowledge-based services to witness phenomenal increase. To realize these goals, the TDP administration began to develop Hyderabad city with necessary infrastructure in select zones. A huge loan was negotiated with the World Bank in the name of AP Economic Restructuring Project. Conditions were reduction in fiscal deficit, doing away with "non-merit" subsidies, reorganization of the State Electricity Board, introduction of user-charges among others. Also, Naidu was able to get additional allocations from a friendly Vajpayee administration.
However, over the next years the service sector developed at much higher rates whereas the other sectors lagged behind. Public resistance began to grow against reform-related cost increases. All this created overall deficits and a threat of debt-trap. More money came from the World Bank but even that failed to help.
It was becoming clear that mere high level growths in IT and other such sectors could not be a substitute for overall growth of all major sectors. The IT growth was almost entirely serving outside customers because of low growth of local economy which could not utilize these new IT products. In the process, the jobs that were created were only in IT sector and confined to a small section.
In these circumstances, the envisioned "dynamic growth" in agriculture and manufacturing, in addition to IT, did not materialize to take the growth to 9-10 percent levels. A In the process, society was getting divided between the section that benefited by the islands of high growth and vast reservoirs of those who lagged behind.
In these conditions, the Vision 2020 document, in its original form, raises many more questions than one encountered in 1999 or 2004 about its achievability. The ultimate question that remains is, when critics point out and as experiences show, fruits of reforms reaching a small section while large masses are deprived of it is inherent in the very system of reform model chosen by Naidu. How does he propose to change that system?