India’s economic gurus, now in hibernation somewhere deep inside Raisina Hill, should wake up and look at the world’s latest poster-child of reform – Mongolia. Growth there is 10% and is expected to cross 20% by 2013. Mining is big business, but citizens of this democratic country have not started to fret about any adverse impact on the environment. Markets are up more than 25% this year, even after cooling off substantially.
Overseas capital is rushing in. But the most remarkable thing that the Mongolian government is doing is pursuing its own version of inclusive growth. In order to let citizens share in the boom, it has given away – yes, for free – 538 shares in state-owned mining giant Erdenes-Tavan Tolgoi to each Mongolian. Currently at price zero, there’s surely a significant upside for people when the stock lists, in an IPO scheduled for later this year. Under Ghenggis Khan, the Mongols fanned out to occupy much of Central Asia, Europe and China. China is back again in the crosshairs of the Mongols, but this time as the main buyer of much of its mineral wealth, and the source of manufactured imports. At around $2,000, Mongolia’s per capita income is relatively low.
The government wants people to spend without worrying too much, so it recently gave $55 to each person to do what they want. It also sweetened the handout with a monthly stipend of $15 for everyone. India, which lacks for many things but not trained economists, has worked itself into a lather debating how to reform our creaking subsidy and food delivery system, and how to make cash transfers work. It’s time to export some economists to Ulan Bator, and import some Mongol commonsense. The economists are welcome, of course, to suggest substituting members of the National Advisory Council for themselves.
Source: Economic Times