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Economic Progress in India Depends Upon Rural Telecommunications

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By William G. Korver, Reporter,

WASHINGTON, July 2 – In order for India’s phenomenal economic success to continue, telecommunications must be extended into rural areas, said Indian expert Swaminathan Aiyar, speaking at a Wednesday discussion about the growing economic clout of India.

Aiyar was speaking at a discussion of Arvind Panagariya’s new work, India: The Emerging Giant, at the Cato Institute.

Aiyar, described as one of “the lonely voices” of liberal reform in India during the 1970s, agreed with Panagariya’s assertion that India’s most successful economic reforms have been those related to telecommunications. Aiyar said that the annual 9 percent increase in gross domestic product that India has experienced for the last five years would slow if communications infrastructure is not brought into villages with populations in the tens, but not hundreds, of thousands.

Aiyar offered a more pessimistic description of an India haunted by “corrupt and opportunistic rascals” within the government, sabotaging the ability of India to improve. By contrast, Panagariya dwelled on the positive developments in India that seem bound to continue.

Due to the increase in exports and imports, an increase in mergers and acquisitions , a blossoming cellular and automobile market, and an increase in Indian billionaires to 54, India has emerged as a world power, Panagariya said. For example, Tata Motors recently acquired Jaguar and Land Rover; and Tata Steel bought Britain’s Corus.

Panagariya agreed that regional and rural inequality is on the rise, but believed that the future would continue to bring prosperity to India. He was optimistic about the government's ability to address rural poverty.

Not Aiyar. He said that the governmental corruption was a leading cause of poor education and poverty within India. Due to waste and corruption, education receives about 15 percent of the funds allotted to them by the government, he said.

Aiyar and Panagariya agreed that the government must improve the poor record of public primary schools. Panagariya also said that the government can no longer afford to remain “asleep at the wheel” regarding higher education, while Aiyar said he thought the government should invite foreign universities to establish schools in India.

Panagariya said that because the economic system is more open than it was in the 1980s, investment rates are climbing. Entrepreneurs are dealt “a free hand” in India, he said.

In addition to increasing energy prices, food may also be a subject of concern for India, the panelists said in response to a question posed by the audience.

Despite recognizing the issue of malnourishment among Indian children, the government has taken little action to curb the problem of “archaic” and “contradictory” food laws, said Panagariya.

Statistics indicate that people are eating less, and yet hunger is disappearing, Aiyar said. With only around 1.5 percent of Indians saying that they do not get enough to eat, nutritionists’ concern for Indian malnutrition is probably unfounded, he said.

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