A CASE FOR IMPROVING THE SOUTH ASIAN ECONOMIES

We have all along been following blindly the concept of measuring the economic growth based on the GDP of the nation. This is just based on the production of goods and services that varies from time to time. You put more money in the hands of the people so that they will buy more goods and services and this increase in demand will act as a catalyst for increase in production and create more jobs. The Central Bank keeps cutting bank rates hoping that the banks’ increased liquidity will help them to lend more.

Conceptually it looks good. But in their haste to find a genuine business, the banks often end up playing into the hands of Mallyas and Chokshis who, in the end, flee the country leaving behind a sizable amount of their borrowings as Non Performing Assets in the Balance Sheet of the lending institutions. These guys go unpunished because of the tremendous political clouts they wield, leave aside the length of time the courts take to dispose of their cases.

 In addition, there is this credit card business which simply increases the purchasing power in our hands and, as a result, we end up buying things which we don’t need. America lives on credit. Many of them live a life of pay check to pay check which means, if they don’t get paid by the 15th of the month, their life would come to a standstill. The credit cards are extensively used in every transaction which, in fact, means buying in the present against a future income. The accumulated balances on credit cards have always been a problem, especially during a global catastrophe, like Corona Virus, ultimately ending up bankruptcy of the card holder and making domestic life miserable often leading to violence.

When the recession towards the end of the last decade made the world economies to run for cover, India survived because of the saving habits of the people. In the recent past, a lot of noise was made in India about the affordable prices of onion. There was a lot of panic around. The simple solution would have been to reduce your consumption and look for alternative food. You are not going to die if you don’t eat onion for a while. When the demand goes down, the prices will come down. Again look at the crude prices today. It has gone to sub zero levels. The national lockdown declared by most of the countries has pushed the vehicles off the road resulting in a drop demand. The end result: The oil companies operate at lower capacity and so many jobs are lost. All these are vicious circles.

In any assessment of economic performance of a country, the happiness of the population is another factor to be considered. If you look back, a few decades ago, before the technology brought us television, computers, cell phones, internet, etc., were people not happy living?  While technology helped in connecting the global population, it had its own disadvantages in that cyber crimes increased, countries started spending more on military and other allied services regardless of whether they could afford the spending or not. The newly acquired technology is being used more for the improvisation of the military capability than to quench the hunger of the masses and treating millions of sick all over the world.

Recently, India placed an order for 36 Raffle jet fighters from France at a whooping cost of 35 billion to counter the challenge from F-16 fighter aircraft that Pakistan acquired from the USA. While this puts the two nuclear neighbors in a balanced position, the people who really gained are the business entities who supply the warplanes.  That means the governments equip themselves to guard against a possible threat from the neighbor which is just notional and if there are no wars in the near future, the investment in the technology becomes not only a waste but, over a period of time, it becomes obsolete and you start investing again to replace the old machines with newer one, of course at the tax payers cost. Imagine, if all these resources are deployed for the development of the economy, to what extent we can improve life quality of the poor and downtrodden. The USA, China and India put together have an estimated annual budget of 1064 billion US Dollars for their military, and even a reduction b y 50% will make available plenty of resources for development. The economists never link the happiness of the masses when they put the figures together.

How can we solve this riddle? If you stop for a moment to think on the following proposal, the economies of South Asian nations will grow rapidly, and with their brainpower and skilled lab our force, can compete with the best in the world.  Full openness and trust between the nations is a must to achieve this. The nations with a common borders  like India, Pakistan, China, Bangladesh, Nepal, Myanmar an Sri Lanka have to come together and  sign a NO WAR PACT FOR THE NEXT 50 YEARS, leaving the border disputes where they are. This will ensure peace and tranquility in the region and there being no fear of war, all the partied concerned can concentrate on the development of their respective countries. This will become all the more relevant now, when the world nations are trying to recover from the onslaught of the deadly Corona virus. This idea, to be successful, the concerned nations have to come to the negotiating table throwing out of the window, the attitude of suspicion they had for each other. If we come to a common understanding and start working towards this achievable goal, I am sure this planet will become a beautiful place for human in-habitation. Remember the old adage, “there is no winner in a war”. But all we need the political will.