By Fakir Hassen, IANS,
Chennai : The outflow from India of $18 billion in the past six months as the global financial crisis took hold has created good investment opportunities in the country, according to C.K. Prahlad of the Michigan Business School in the US.
“India is the safest market that you will find, currently, not the US or Japan,” Prahlad said as the keynote speaker at a session on the current economic crisis at the annual Pravasi Bharatiya Divas taking place here.
Explaining his somewhat paradoxical view, Prahlad said India’s position in the crisis was quite unique. “India does not suffer from zero growth like the US and Japan. The real crisis is for India to address the slowdown in domestic growth.”
Prahlad recommended ways for India to emerge triumphant from the crisis. “A global perspective is necessary but local solutions are the way to go.”
“India’s policies must turn to fuelling domestic growth (and) India needs a growth strategy as soon as possible.”
Prahlad advocated the introduction of affordable prices, even if it meant eliminating taxes on all kinds of items, including durable goods, to boost local spending.
Waxing paradoxical again, Prahlad said: “In the US, my prescription is to save while in India it is to spend. Banks must start to lend, people must start to shop.”
Prahlad cited several lessons that India could learn from the economic crisis. “The world needs a regulatory system that allows innovation but not permissiveness. India regulates but must keep in mind that innovation is at the heart of progress.
“We need to go beyond mathematics and develop models for a deeper understanding of the underlying assumptions.”
“India must seize this moment when there is turmoil all around to move forward rapidly,” Prahlad said, as he proposed a three-pronged plan for India to take the lead in changing the game on a global basis.
“(The first) is creating a viable economy by reducing dependency on fossil fuels. India has the opportunity to develop using a portfolio of energy that is not so dependent on fossil fuels, such as solar, wind and biofuels.
“(We should) mandate renewable energy solutions to all new developments – houses, offices – for lighting and recycling of energy and water. The capital expenditure may be more but the operating costs will be a fraction of that for renewable energy.
“What is needed is a willingness to fight the lobbies (that argue against this).(Secondly), create an educated India through new technological and pedagogical innovations by thinking outside of the traditional schooling system.
“Within ten years, India will have to train 500 million professional artisans of world class at affordable prices. Europe and Japan have ageing populations and India by developing fundamental skills of world class can become a knowledge hub for the rest of the world.
“(Thirdly), create a connected India to address inequalities by building a device that connects all Indians so they can download information they need at a fraction of (current) cost.”
Prahlad also dwelt on the role of corruption. “India has to stop corruption as an impediment to global development. No country that is corrupt is rich or can develop its people. Collectively, all Indians, including the Diaspora, must fight corruption. India is holding herself back otherwise.”