The just enough budget
The long-run goal, of course, is to have a highly trained and productive workforce and to sustain high rates of growth and improved standards of living. In order to achieve that goal, one needs to move beyond the easy comfort of recent successes in the service sector and recognise the need to reform the higher education system. Our current system, like that of many former colonies, was set up to produce an elite cadre of graduates to feed the colonial bureaucracy, which it continues to do well, with the difference that its graduates now staff top corporate jobs in India and around the world. But to catch the next wave of innovation and to unlock the demographic dividend of a young workforce, we will need to produce more and better graduates on a vast scale. With currently only a handful of top-200 (or even -300, -400, or -500) ranked universities, the system needs higher standards, investment, and more entry and competition.
At the same time, there is an acute shortage of well-trained medical professionals. Research in both rural and urban settings has shown that the poor receive a shockingly low quality of care. Particularly telling is the finding by Jishnu Das and Jeffrey Hammer of the World Bank that private practitioners tend to provide better treatment despite, on average, having lower qualifications than the staff at public health centres. Reform is an imperative, not a luxury.
Democracy and the market economy share common strengths and weaknesses. Unlocking a multiplicity of views and ideas is empowering both politically and economically. Yet, both systems, for different reasons, have the danger of producing leaders who are short-run optimisers, who know how to (or at least try to) win the next election or satisfy investors in their next earnings call. In the calculus of democratic politics, it's a fair bet that the Union Budget for 2013-14 will be a one-year plan that tries to do as little harm as possible to the government's chances for re-election and defers real reform to the future, and in fairness to the political process, it is unreasonable to expect otherwise. But in politics and economics, hope springs eternal.
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