i got this interesting mail from a gentleman with an investment bank. i always listen carefully to investment bankers :-)
hi v
i am not against SEZz or *light* manufacturing. but agriculture can also be highly productive. for instance, vanilla cultivators get rs. 3000/kg. and secondly, high value added agricultural products (eg. ready to eat meals) can give the same kind of density you're talking about.
i have a larger strategic issue or two: food security and comparative advantage. india needs to not depend on others for its food, and in fact it's good if we can make others depend on us. second, we have a strong advantage in agriculture, and so we should take advantage of it. anybody can put up heavy industry, even desert nations. but only an india with water, good genetic variation and good land can be an agricultural superpower.
we have woefully underinvested in agriculture, and that's why it's not a strength for the country. if we invest: in transportation, refrigeration, processing and preservation technologies, marketing, etc., it'll be a huge success. the nehruvian fixation with heavy industry is, in my humble opinion, myopic.
Dear Rajeev,
I have enjoyed your columns over the years and want to compliment you for
your wonderful work. Visit your blog regularly too.
There is however, one area where I disagree. You have frequently mentioned
in your columns that the way out for India is not heavy industry but
agriculture-related growth. I humbly disagree. While there is clearly a lot
more that we can do in upgrading our agriculture productivity (read Mukesh
Ambani's v interesting interview on that subject on Rediff) and which
companies such as Olam International (Indian promoters and Management based
out of Singapore) are doing wonderful work in building agri supply chains,
it cannot be a substitute for industry.
In fact, heavy engineering does not pollute. The worst culprits there are
chemicals and petrochem guys but a number of segments in manufacturing are
highly labour intensive and totally non-polluting.
The average yield per acre in India is currently Rs25,000 (that too for
land with access to water). Arguably, we can raise it to Rs 1lac. But
that's basically it. However, you can have thousands of female employees
working in a factory over an acre with each making Rs 4000-5000. In terms
of productivity, therefore, agriculture simply cannot compete. This is not
to say we develop SEZs over fertile land but to abandon them will be a
grave mistake. The very fact that the JamatE Islami is opposed to them
should make you reconsider. There again, read the commerce secretary's
(some Mr Nair) interview on rediff on the argument for SEZs.
Rajeev -- the reason we are struggling is captured in one amazing statistic
that I saw last week on the TOI (which makes one wonder its veracity !!)
which says that 45% of women in India get married below the age of 18. No
wonder they support kids who grow up supporting the kind of politicians who
seem to flourish in India. If you can make these women economically
independent, you will be able to trigger a social evolution in the
hinterland of the nation. The best way to do so is to move labour-intensive
jobs to India -- this is the only way to gainfully employ crores of
semi-literate women. Once they earn 3-4 thousnd a month, they will
transform the next generation automatically.
China is ageing rapidly which presents us with a wonderful opportunity to
strike. I read a number somewhere that their total labour force is set to
start declining in another 1- 2 yrs. Garments factories or shoe
manufacturers or electronics manufacturers are not necessarily polluting
but have the potential to trigger a wave of social upliftment in India. To
make that possible, we need SEZs.
With warm regards,
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