As the next-door neighbour, Bangladesh has to be extremely cautious over trends in the economy of India. The Bangladesh economy has so long withstood the pressures of the overall global crises, belying sceptics. Two major fronts - readymade garment (RMG) and manpower exports - did not face the fallout from the western market squeeze resulting from the worst recession since 1930s.
This is because most of our expatriate workers are working in Gulf countries, so far insulated from the winds of recession. On the other hand, Bangladesh's garment exports did not see any drastic fall in its volume although earnings fell a little bit as western importers now favour buying low-priced apparels.
When India faces a downturn in its economy, Bangladesh has to be alert. Bangladesh has many things to learn from the Indian experience to prepare itself against any future odds that might be beyond our control. We should study how India is trying to come out of the global crisis trap and learn from the Indian experience.
Indian Commerce, Industry and Textile Minister Anand Sharma in a recent interview said, when developments like the Eurozone crisis occur, it has an impact elsewhere also. He said, "When you are living in a world which is globalised, interconnected and interdependent, the developments in one part of the world do have an impact positive or negative, depending on the nature of the development in other regions of the world."
Sharma mentioned that Indian growth rate was consistent at nine to nine and a half per cent for almost five years. India aimed at double digit growth but was pulled down to below seven per cent. The growth rate climbed back to eight per cent plus in 2011 but was pushed back again. "Last two years i.e 2011 and 2012 both have been difficult years," he observed.
But he is optimistic that recovery would take place and the fall as such should bottom out and India should see more investments, both domestic and foreign. The fundamentals of the Indian economy, he noted, are strong and when one looks at the national savings rate, it is 32-33 per cent and can further go up. The national investment rate has to go up. Presently, it is at 30-31 per cent and it could rise up to 35-36 per cent which will lead to growth in gross domestic product (GDP) by many a percentage point. This is an endeavour, which the Indian government and the industry will have to work together for, the Minister opined.
The global economic crisis did not only affect the flow of capital but it also led to a contraction of the global trade and a very sharp one. Sharma said, "India also was pushed into the red territory and it stayed there for a long time." For the Indian foreign trade policy of 2009, which is for five years so that there is stability and predictability about the policy which helps the industry and the exporters, India looked at those regions of the world where its presence was weak. It could not have waited for recovery to take place and complete recovery takes time in the traditional destination of Indian exports and India went in consciously for market diversification.
India has added 39 new markets (26 under one policy, i.e. the focus markets policy and the market linked focused products) and then added China and Japan later. In total, it reached out to 41 new markets and tried to give support through various policy measures and interventions. That does not mean that India has disengaged from the traditional destinations. It still remains present there. The largest issue before India as a country is that it is dependent on imports for many commodities, particularly petroleum products, fertilisers. Petroleum products alone accounted for US$ 162 billion.
The energy needs of the growing Indian economy, as Ananda Sharma pointed out, have to be met. And there have been developments which have led to global ballooning of the petroleum prices. This has put a huge pressure on its trade account and India, in any case, has a deficit of the trade account but it has to be kept in manageable limits. The only way to do it, as Indian planners have found out, is that India pushes exports, attracts foreign trade investment (FDI) and remains competitive globally.
India has created an investor-friendly regime through various policy measures. The comfort and ease of doing business there has been improved considerably in particular with the rollout of its national manufacturing policy, one of the biggest policy initiatives India has taken, which aims to take the share of manufacturing its GDP from a low of 16 per cent to at least 25-26 per cent in one decade and create 100 million skilled jobs.
One of the most significant instruments India has used to pursue this is the establishment of integrated self-governing industrial manufacturing and investment zones, which are called the National Investment and Manufacturing Zones. These will be integrated industrial townships. This will not only be transformative for India but is also an investment in the future of the country. All the places where these zones have been notified, India has put in place a very effective single window clearance mechanism. Each one of these zones will have their own authority for approvals. These are being developed by the government of India in partnership with the states where the issue of land is also addressed as it concerns equity of the states. One has to look at what India offers. For the next few decades, it will continue to grow. India will continue to invest in building infrastructure in the country and offers a US$ 1.0 trillion opportunity over the next five years. But when one looks at other areas, there again hundreds of billions of investments will be made -- that is why India attracts investors from across the world.
The National Manufacturing Policy (NMP) was approved by the Indian government in October, 2011. The major objectives of the policy are for enhancing the share of manufacturing in GDP to 25 per cent and creating additional 100 million over a decade or so. The NMP aims at creation of appropriate skill sets among the rural migrant and urban poor to make growth inclusive; increase in domestic value addition and technological depth in manufacturing; enhancement of global competitiveness of Indian manufacturing through appropriate policy support; ensuring sustainability of growth, particularly with regard to the environment including energy efficiency, optimal utilisation of natural resources and restoration of damaged/ degraded eco-systems etc.
A recent Reuters poll projected overall Asian economies recording weaker growth in 2013 but foresaw the Indian economy gathering steam this year 'after its worst performance in a decade'.
The initiatives taken to raise Indian GDP (gross domestic product) should inspire Bangladesh's policymakers to adopt steps for attracting more and more domestic and foreign investors. As different chambers have already highlighted, nothing can help Bangladesh in this regard if adequate energy and infrastructure support facilities are not in place. These are the two vitals for Bangladesh to scale higher growth rate in the days ahead.