ECONOMY, A MULTIPLE JUMP

ECONOMY, A MULTIPLE JUMP

Wealth of a country is nothing but the natural resources and the people available to exploit those. India is abundantly rich in both these God given inputs. Still we prefer to remain poor, a sheer paradox. Centuries long foreign occupation, multipronged  political system prevailing, lacking proper policies for education etc may be the major causes. Since the evolution of our economy towards globalization we are putting more efforts to bring in foreign money. This has resulted in considerable growth in every segment of our society. This development is primarily achieved by Foreign Direct Investments. Depending upon the merit of each case, even though varies, FDI always remain as a liability.

Every year we forecast a growth rate of around ten per cent in our export in money value and scarcely we achieve the same. If I say 'let us have an increase in export by five hundred to thousand percent than the previous year' our financial experts shall call me mad.

Our merchandise are many. Automobile, hardware, machinery, chemicals, cloth, food items etc are few of those. All these have a common charector. These are all 'digged out' from the earth. A car of today was mere soil yesterday. When man power in different proportions is added to soil in a particular method it becomes a car. We call this 'particular method' as knowledge, expertise, or technology. We Indians are not behind many in the application of knowledge in different fronts. Our upcoming youth may be the best in the world. Until a few years back computer or mobile phone was alien to us, but today a way side technician can open, rectify and assemble these equipments. That is the spread of knowledge or the so called technology.

What is the hindrance then bringing in foreign money? Number one is will. Second one is lack of capital investment and the third is high cost of production. If the second and the third are sorted out, will can be automatic or rather forced. But the second and the third are interlinked with the first. For instance, when we are in dearth of capital investment to set up industries, let us imagine, our government constitute a law that if anybody commission an industry for manufacturing certain selected goods in a given period of time, need not reveal the source of the money invested. Within months our country will be flooded with industries of such class because that much of black money we have here.Stubborn procedures are another hindrance. Look at our banks. They have large amount of funds with them to disburse to prospective entrepreneurs but the takers become less for want of securities to offer in return to the bank. This can be redressed by the insurance companies in the same methods of life in insurance policies. Fixing a suitable limit the insurance company can guarantee the bank for the amount of loan disbursed and in turn can collect premium amount from the entrepreneur for such tenure of the loan. In case of premature closure of the industry for any reason the insurance company may pay due amount  to the bank as in the case of premature death of a policy holder who insured his life for a given amount. However, in order to prevent any malpractice by the entrepreneur the insurance company can nominate the lending bank or any other bank to watch the day to day function of the industry on a remuneration which can be recouped from the entrepreneur.

Third one is the cost of product. It is equally important to assimilate quality with cost. As far as the quality is concerned it is predominant and we must think about the the best possible in the world. Never compromise with any aspect of production. We must deviate from the conventional method of computing the cost. Necessary addition and deletion of factors to be made. In order to bring down the cost it is to be ensured that these industries are neither  set up in the government sector nor in the large private management sector. From promoting the industry to manufacture and sale of the end product should be managed by those who are promoters and workers. These industries should not fall under the prevailing wage structure but by a system of monthly subsistence allowance and annual profit sharing.

Further to this it is also to be considered that these industries are running by formerly un employed people. Huge expenditure is incurred by the  government for these people in various sectors like food subsidy, health, transport, communication etc. with no return from them. Once they are deployed in these productive units they start paying to the government in various forms like taxes, external revenue etc. This aspect also should be considered  in arriving at cost.

Once we produce goods we must plan the profit only on turn over basis. Let us imagine a glass manufacturing unit capable of manufacturing large number of glasses. Think that the operational cost of the unit is Rs 25,000/- p.m. and cost of manufacturing a drinking glass is Rs 10/- When it sells the glass at cent per cent profit the sale is 100 nos p.m. and the profit is Rs 1,000/- If the profit is slashed to fifty per cent the sale rises to 1,000 nos and the profit becomes Rs 5,000/-p.m. If the profit rate is brought further down to ten percent say the sale rises to 25,000 nos and the profit too rises to Rs 25,000/- p.m. Additional reduction in profit bring higher earnings. On reaching the brake even point provision can be made to adjust part of the increased profit to cost.. In our case as above it becomes a fact that capital investment by the entrepreneur is zero for all practical purposes in capital cost..

Goods manufactured are to be sold out abroad within the guide lines formulated by World Trade Organization and other governing bodies and also as per the law of the individual nation concerned. We may open sales outlets as many as possible in every country.

Another thing needs consideration is strengthening of rupee. To start with we must make rupee a trading currency in SAARC nations.

Oil is a major channel for dollar out flow. Oil import should be brought down to minimum. Two important steps are to be taken to achieve this. First, oil exploration should be organised in a wide spread manner. Dig where ever possible  and extract what ever possible. Oil sector, in its true meaning, should be nationalised and price should be perfectly managed.

Above all, the golden equation, more the rupee spends within the country to improve the quality and reduce the cost of the exportable goods more the earning in foreign currency. International community shall equally be the beneficiary by doing so  as far as the commodity and the price is concerned.

Our ultimate goal should be to make India a shopping mall  of the world with goods of supreme quality and at throw away prices. Then look for five fold or ten fold increase in export revenue in the shortest possible time. If this could be achieved the end result will be zero rate of unemployment and highest rate of per capita income.

KVGeorge

Kerala, India.