Author: Nextelegent

Recently Indian government decided to invest $11 billion to revive its state-owned Bharat Sanchar Nigam Limited (BSNL). BSNL has posted annual financial losses for the last twelve straight years. Currently, BSNL has over $7.3 billion in debt and was funded in the amount of $2.3 billion to keep it alive in 2022.

India’s telecom sector was opened to private enterprises in 1992. Today, over 85% of the market is controlled by private companies such as Jio, Bharti Airtel, Vodaphone, Tata, and other smaller companies. As in other hundreds of India’s government-funded companies, there is really no need for the government to fund another competitor in India’s telecom industry where rules of competition do not apply to government-owned entities. They can provide poor-quality service and lose any amount of money without any consequences. Not only BSNL investment is a waste of India’s tax-payers money, but fundamentally it puts downward pressure on retail telecommunication services hurting the overall industry. All earlier investments by the government in BSNL and continued funding are just guaranteed employment of 63,000 employees of BSNL.

India’s telecom industry employs over 4.5 million employees across its public and private telecom companies. If BSNL stopped providing services tomorrow, it would not be missed. Its assets will be acquired by one of the private companies and its employees will be absorbed easily in the marketplace. And at the same time, India’s government will be able to invest this money in its key responsibilities such as improving the education of its children.

When the government is investing over $11 billion in BSNL, in 2023, India’s education sector received its highest-ever allocation of $13.66 Bn in its 2023-24 budget. In 2022, India spent a total of $103 per K-12 child in comparison to $5,600 per student in China and $15,120 per student in the US.

India has been borrowing at an unprecedented rate over the last few years. Since 2018, India’s national debt is expected to double from $1.6 trillion in 2018 to $3.2 trillion in 2023. At this rate of borrowing, India’s national debt is expected to reach $5.2 trillion in 2028. India’s debt to GDP ratio has increased from 68.3 percent in 2019 to 90% in 2022. But a minimal amount of money has gone into educating its citizens – the key priority of a country’s government.

To build a first-world economy India must educate its citizens to be able to compete globally. Today’s world economy is led by technological innovation. First-world countries lead in technological innovations in industries such as renewable energy, semiconductors, telecommunications, transportation, and all other spheres of human life. Countries leading in all aspects of technology innovation have first and foremost made and continue to make investments in educating their population from K-12 to university education. Without a competitive workforce, India will continue to lag behind the developed world. Even after thirty years of mandates of dismantling the government control in industry, India’s taxpayers continue to fund mega money-losing government-run businesses. India still does not produce one single product used by the world. India’s lack of innovation can be directly attributed to its poor education system.  

Today, India has more young people than any other country in the world going through an education system of thousands of public and private schools and colleges with outdated curriculums and teachers with little training. In a 2018 article, a former secretary for school education estimated that 16,000 colleges are handing out bachelor’s degrees to teachers without any qualifications. Another study found that out of 1.5 million engineering graduates coming out of India’s colleges every year, only 3.8% of engineers have the skills needed to be employed in software-related jobs at startups. Another five million students graduating every year from non-engineering disciplines are worse than engineering students. On top of it all, a large proportion of qualified students are leaving India for a better life outside India.  As per yet another study, over 3 million college graduates left India in the last 6 years and the numbers continue to grow year-over-year with 770,000 students leaving in 2022 alone.

For India to provide a better future for its citizens and have any chance of becoming a developed nation, India must dismantle its thousands of government-run businesses by either selling them to the public or to private enterprises. Part of the money from such sales should be invested in improving its public education system by building new schools and improving the existing ones to international standards, updating its curriculums to world standards, and enforcing government oversight to improve teacher quality. Finally, the government must make sure that the public and private schools and colleges are in the business of educating their students rather than just being a business of defrauding its citizens and the future of India’s children and the country itself.

India is shining again with the building of new infrastructure, bringing in a few key reforms to provide transparency and the shedding of money-losing assets to private enterprises.

Over the last few years, India has added over 10,000 kilometers of highways per year. India projects to reach 200,000 kilometers of highways by the end of 2024, almost doubling the total kilometers of highways since 2016. India has also become the third-largest producer of renewable energy over the last decade. India is now producing over 175 Giga Watts of renewable energy, a 400% increase over the last 8.5 years. India has also successfully launched a major push for all businesses and citizens to open bank accounts to track all financial transactions, a biometric citizen tracking system able to track all activities by its citizens, including banking, travel, real estate, education, government benefits, and all other activities and made a push to build toilets for millions of citizens to stop defecating in open.

Additionally, the Indian government has been able to bring transparency in business transactions thereby tripling its total tax collection in the last decade (mostly due to the introduction of the General Services Tax) and successfully divesting a few money-losing assets especially Air India – a government-run national airline losing billions of taxpayer dollars annually to a private enterprise. Finally, the international turn of events and India’s push to offer itself as a direct foreign investment destination has brought several American, Japanese, South Korean, and some European companies to diversify their manufacturing and sell their products to the 100 million affluent Indians. These are major achievements especially with a country becoming the most populous and reaching 1.4 billion in population in 2023.

All the above developments have brought pride back to India’s citizenry. Indian populace does believe that if they continue on this path, India could join the ranks of developed nations over the next few decades.

A closer look at India’s development seems that the shine of all the above developments is putting the real India under the rug. Fifty percent of Indian households’ annual income still remains close to 50,000 INR. At the same time, the rich seem to be getting richer. Major cities which were earlier full of Suzuki cars can be seen with a sharp increase of European luxury cars. The rich urban residential areas are now upgraded to newly renovated or custom-built bungalows.

Underneath the wide highways, India of old stays the same. India continues to lack the key building blocks of what makes a democratic country join the ranks of developed nations. A developing democratic nation to become a developed nation requires educating its citizens, providing good healthcare and jobs, and building local governance systems to provide law and order, judicial infrastructure, and access to clean air, water, and security.

India’s public education continues to lack advanced economies dramatically. In 2022, India spent a total of $13 billion on K-12 education with $103 per student, whereas China spent $575 billion on K-12 education with $5,600 per student and the US spent $767 billion on K-12 education with $15,120 per student. India continues to lose a large number of college students to advanced economies as much as 750K in 2022 alone.

Local governance has continued to be ignored by the policymakers. The public areas even in the rich neighborhoods are as they have been for the last thirty years. Unmaintained public roads filled with trash, stray dogs, and patched-up repair work are still showcasing India’s poor local governance across the Indian cities and towns. As an example of the same are the old local markets across the major business hubs still stuck in the nineteen fifties.  Every morning shopkeepers broom their trash to the middle of the road and trash is picked all day by hand in manually driven rickshaws. Millions of old structures continue to remain without any building code. One can imagine the same in smaller cities and towns across India. The unruly traffic across smaller and large cities with trash strewn on the local roads has stayed as of the old India.

The presence of law-and-order personnel in day-to-day life, another key component of a thriving democracy continues to lack in India. Unruly traffic on congested roads, crowded markets with unauthorized vendors, lack of enforcement of any laws to manage traffic, lack of any planned public policy for trash collection, misuse of public property, and disregard for community resources have remained as usual.  A simple example is in a country over-crowded with cars, anyone can park wherever an open space can be found. A trip to any local court shows a lack of investment in the legal infrastructure. The local court infrastructure has not changed much over the last thirty years. A dilapidated court building with lawyers sitting under open tents in 40-degree Celsius temperatures is a common practice. As per most public accounts, India still needs over 70,000 additional judges to clear 40 million pending cases. Lack of resources is visible even in the most publicized government initiative such as the new biometric identity card. In a city of over a million inhabitants, a small team of two-three government employees is assigned to help hundreds of Indian citizens navigate through the application process with decade-old equipment used for fingerprinting and scanning documents.

At the same time, India seems to be moving to take back freedoms mostly available in a thriving democracy around the world. India’s Aadhar card, which is based on an individual’s biometric identity is now a government property. The Indian government has total control of its citizens’ movements, financial and medical history, and every other aspect of an individual’s life. Such government control of its citizens’ privacy is more akin to communist and autocratic countries and is less associated with developed democracies around the world.

India has been slow in relinquishing governmental control of major industries and businesses. India’s twenty million employees across the central and state governments continue to run businesses connected with the day-to-day lives of its citizens. Government organizations continue to run fifty percent of power generation and almost one hundred percent of power distribution, over sixty-five percent of oil refinery business, over eighty percent of CNG and coal production, and over sixty percent of all banking market. The list of government organizations running businesses is the same as thirty years ago. Additionally, the government continues to run businesses in most sectors of industry including all state transport, railways, fertilizer production, major insurance businesses, paper mills, steel, aluminum, and other manufacturing, space exploration, and telecommunications industries. All these businesses continue to be a huge burden on taxpayers’ money thereby restricting the government’s ability to invest in areas of public education, health, and law and order. In FY 2023, the Indian government’s total tax receipts were INR 16.61 trillion from individual and private businesses. Just the salaries of over 20 million state and government employees were higher than such tax receipts.  India has been borrowing heavily to fund its infrastructure and social programs. In 2021-22, India funded almost fifty percent of its expenses through borrowings.

The net effect of such policy failures of not investing in education, lack of local governance, and government control of major industries have resulted in a decade of lost opportunity. Even before the pandemic, between 2011-12 and 2017-18, total employment declined by 9 million jobs, while at the same time, 2 million new workers joined the workforce every month. In April 2023, India’s unemployment rate was over 8%.

India’s environment continues to deteriorate year after year. Feb 2023 with a temperature of 29.5 degrees Celsius was the hottest February since temperature records have been recorded in India in 1901. According to a 2020 McKinsey sustainability report, as early as the next decade, India’s heat waves will make India an inhospitable place for humans to work. India faces significant challenges to provide basics such as drinking water and clean air to its population.

To join the ranks of developed countries, India must invest in democratic reforms to educate its children, continue to reduce government involvement in running its daily businesses and shift its focus on local governance, law, and order, and make India sustainable for its citizens.