Having said that, the 15% of GDP exports, as we say, traders, are already in the price. The question is to know how much PLUS it takes to export to arrive at 10%, which gives a decent chance to catch up with China in order to escape its marginalization or even its balkanization?
For 4% additional growth, we need 20% of GDP in additional savings from abroad through REITs and FDI. To serve these additional savings, you will need to earn an additional 20% of GDP in the form of exports through this investment, [over a period of time of course] which means that we have to increase exports by at least 20 percentage points, – over a period of time – which means that exports in turn have to double from the current $ 450 billion to around $ 900 billion per year.
These are the numbers.
Summary of the challenge
â¢ To catch up with China, India needs to increase the GDP growth rate from 6% Alpha to 10% Alpha as quickly as possible.
â¢ To achieve the additional GDP growth of 4%, at an ICOR of 5, India needs to increase the savings available in the economy from 30% of GDP to 50% of GDP at current levels.
â¢ All of the above additional savings, 20% of GDP, or some $ 600 billion must come from FDI or FDI, as domestic sources have been exhausted by government borrowing + demand for local investment.
(For scale and perspective, note that existing FDI + REITs barely reach $ 100 billion per year)
â¢ The scale of foreign investment we need overshadows what the government is talking about, like 51% equity in insurance or 50% in banks or 74% in defense-related industries. All of these foods are relative to what we need chicken feed.
And that will not happen by celebrating a “Yoga dayâOnce a year, and asking to be appointed Vishwa Guru to the world and collect rent for it.
The world pays little Guru Dakishina delude Gurus Vishwa. The world knows and understands our economy and our needs better than we do. It’s just that they’re too polite to tell us in the face that we missed the bus a long time ago; and that we also risk losing our seat on the next bus to our neighbors, due to flawed policies.
So in a nutshell, we need 4% of GDP as incremental growth per year, and that means we need to double our exports from $ 450 billion to $ 900 billion per year, for which we need around $ 600 billion. additional FDI + REIT dollars over the next 2-3 years.
Where is the foreign policy?
This is the true economic meaning of Kautilian imperative for the Indian economy: grow our economy at more than 10% per year with 900 billion exports.
But where is the credible foreign policy to achieve this goal? Where is the credible national security doctrine to make this possible?
Who are our friends, who are our enemies in this business? Who should we partner with in this endeavor and under what conditions? Where do we start to build initial credibility for others to join the bandwagon? Who were we going with? What is the price of such an alignment? What tough choices do we have to make?
These things are the nuts and bolts of security and foreign policy; and not some wacky masterpiece like the following that our scholar EAM springs up at every fleeting opportunity.
“Now is the time for us to engage America, manage China, cultivate Europe, reassure Russia, play Japan, attract neighbors, expand the neighborhood and expand traditional constituencies of support. “ – Jaishankar, S.
I dare say that what precedes is more a poetic prayer than a policy, but hardly commands respect, even as a master key; that’s why I think he’s a bigger disaster than Modi himself.
To come back to the link between economics, strategy and security policies, at the heart of our strategy, we must understand labor arbitration in a fair amount of detail and depth. This is a conceptually difficult subject, as any trade-off is inherently counterintuitive, but once understood the concept is easy to apply.
So, I’m going to defer this discussion to another article, and after that I go back to my original topic, which was and is: “How can we break free from Chinese containment policies for us? “
In the meantime, keep in mind the Kautilyan imperative:
Add 4 percentage points to our alpha GDP growth, doubling exports from $ 450 billion to $ 900 billion, for which we need $ 600 billion [annually] of FDI over the next 3-5 years.
Be careful, it is quite feasible. And so should be done. Without it, we will continue to sink to the bottom of the global heap of prosperity, power and prestige.
Here are the links to the first three parts of the essay for those who may have missed reading them.: