There are many administrators and intellectuals among our leaders who cling to traditional thinking. Times have changed; our economy has moved beyond its agrarian past, and yet the mindset has not changed whereby the view is still clogged. Agriculture too is growing, and should grow. However, the share of agriculture in the economy is declining; it will decline even more and should do so for the good of our people. If we can maintain a seven per cent growth rate, by the year 2020 the share of agriculture will dwindle to 10 per cent. Admittedly, the hope these days is not about primary agriculture but on its more glamorous variation of food processing. No doubt, food processing offers better scope than agriculture by itself. Even then, the share of food consumption, which is currently around 50 per cent, will go down by 2020 to 25-30 per cent even as the consumption of non-food items will increase from the current level of 50 per cent to 70 per cent or so.
As per Engel’s Law says that in a growing economy, consumption of luxury goods will grow faster than the consumption of necessities. Hence, if we want to wish anyone well, we should direct them towards the production of luxury goods. In the backward areas, economic growth is the panacea for political ills. The government has announced large financial packages, and creation of new jobs. Higher budgets are a sign of quantitative progress, but they will not necessarily guarantee greater progress, nor will they guarantee a better quality of life.
When a state becomes more prosperous, consumption of luxury goods will naturally increase. A smaller and smaller proportion of luxury goods will be produced locally, and a larger and a larger share will be procured from outside. To balance such purchases, the state will have to produce more goods that are saleable outside its boundaries. Such goods will have to be globally competitive both in cost and in quality. Backward states will need new entrepreneurs, new technologies. Money does help. However, even large sums of the kind promised will not fructify unless they are accompanied by an infusion of competent entrepreneurship and competitive technology.
Unfortunately, political leaders of backward parts of the country are reluctant to outsiders however competent and valuable they may be. They do not welcome out- side talent, nor do they welcome new ideas. In the past and in modern times too, many poor nations have grown rapidly; many others with far greater growth potential have languished or even dwindled. The nature of their culture made that difference. Bangalore and Mumbai are rich because they kept their doors open; Kashmir, the North East and tribal areas have remained poor because they have kept their doors shut.
Most insurgent leaders in our country are of that type; they prefer to make others more miserable than to make them happier. There is little hope that these insular people will open their doors to others. The backward states are poor not because the government has given them too little money but because they have no vision of their own. They are simply insular and avoid the mainstream.