Is the 'asking rate' already too high?

We seem to be playing a T-20 match and chasing down a 200-run total. The problem is the required run rate – a lofty 10 runs per over.

It’s been over a year since the Modi government came to power. Despite all the promises of economic revival, corporate India is still struggling. Profitability isn’t improving, and yet, business sentiment continues to stay strong – no visible downward recalibration. Like many others, I have been pondering over this seeming contradiction. And recently, thanks to Pramath Raj Sinha, I chanced upon an analogy that might explain it.
We seem to be playing a T-20 match and chasing down a 200-run total. After five years of having a team that played five-day test matches aiming for a draw, we now have a captain who seems to understand the new T-20 format, and also wants to win. He’s rallying the team, making some bold changes to the field and raising the spectators’ expectations. The problem is the required run rate – a lofty 10 runs per over.
So what’s the similarity with the economic environment? Let’s consider some of these examples. Between 2015 and 2020, we need to find 44 million jobs i.e 9 million every year. While our unemployment rate has dropped from 9.4 per cent in 2009 to 4.9 per cent in 2013, the number of jobless people is increasing at an even faster rate. In higher education, to achieve a gross enrolment ratio of 30 per cent (which is the global average) and a 1:20 teacher-student ratio, we need 200,000 teachers every year till 2020. Currently, in government institutions alone 40 percent faculty positions are lying vacant, what can one say of additional teachers?
We’re trailing other teams in the league on several other fronts – for example, we have only 0.65 doctors per 1000 of the population compared to 3.9 in Argentina, 3.5 in Ukraine and 2 in China.
These numbers are daunting. If we aren’t careful, they will overtake us, leaving us in a dangerous middle income trap of the kind that the biggest stars of the early part of this decade – Brazil, Russia and South Africa – are headed towards. We can’t afford to get stuck as a middle-income economy because the asking rate to solve our social problems will then become insurmountable. We need not just growth but double-digit growth to create opportunities for investment.
Easier said than done? Of course. Our new team has already played out the first six powerplay overs. The run rate in these overs, though a steady 8 runs per over, has raised the asking rate of the remaining overs to a staggering 11.
But we – Team India’s supporters, sponsors and observers – are still filled with an overwhelming sense of hope. So what if we haven’t met the asking rate in the first few overs? A couple of boundaries in every over from here till the death, and we’ll be back in business!
This incurable optimism is dangerous though, because if the captain and his team don’t start hitting those boundaries right about now, we will have an asking rate that makes victory out-of-bounds. And once again, we will be looking at an economy that resembles a five-day match likely to end in a draw. I think it is time we began pushing for the boundaries.
But what do you think?

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