Last Friday’s budget did one positive thing at least – it pushed behind a thick curtain all the bad things of the past year. It went into a more concrete and down-to-earth pursuit than the miraculous highfalutin and elusive statements made in the past year.In so doing, it confronted frontally a social and economic reality previous decision-makers were abstracting from. The downward revision of the estimated GDP growth rate – though it still errs on the high side – acknowledges the over-blowing spirit in which things were being contemplated.
But the task is enormous. This is not only because previous governments did not set the right course when there was a need to do so. The government’s task is rendered more difficult in that it has to overcome those shortcomings from the past, which have remained in place. Instead of addressing firmly the economic priority, the present government, caught in the hubris of power after unexpectedly gaining power, started indulging in an amateurish disruptive economic power game which sapped morale across the board.
Can we then say that we can put all this previous bad chapter to rest and turn our sight to the future, as the budget seems to state? While the consequences of past bad decisions will not automatically go away, we have perforce to turn our attention to the future. Our capacity to ride over various internal and external handicaps depends on the extent to which we manage to put our act together in favour of a constructive future.
This is where the new budget could have helped chart out the course to a more sustainable social and economic future. It recognizes certain areas needing to be repaired and sets out measures to address them. While there is a genuine effort to mitigate – ill-advisedly – certain social problems, keen observers of the economic situation realize that the budget doesn’t go far enough to state how exactly it will practically turn the situation around.
As in the past, it is in the implementation of measures that results will be obtained. The means that the path to realisation of the laudable objective to turn the situation around is unclear and, many say, insufficient in terms of the means to do so. While it may pacify recipients of enhanced social aid to whom additional aid is targeted, state aid alone will not deal with the structural reason why those people have kept remaining in absolute poverty. It may actually entrench bad practice.
There was a need not only to enunciate the economic strategies required to break the bottleneck. It was also necessary to go beyond a sheer statement of intent by demonstrating how to incapacitate the implementation of the strategies which normally follow a sequence and have a time-path. There was no conviction in the budget statement that this aspect has been fully grasped or dealt with or articulated with convincing clarity.
Certainly, decisions to rationalise public bodies and make them perform more efficiently are in the nature of required reforms to get to the ultimate goal of opening up economic scope. They would also save on public funds and improve the ease of doing business. All this is all right. But the basic question was about helping the economy build up beyond the platform – which appears to be shrinking due to internal and external factors – on which it has been operating so far.
The measures announced towards this objective – such as improving to a better performing electronics based platform – do not impart the degree of conviction required to trigger another wave of relevant investments for this purpose. Business is constructed one after the other on a solid base. Unless we show comparative advantages of doing business from Mauritius, neither the required investments nor the entrepreneurs capable of pulling up the production stage to a higher level will manifest themselves.
There is merit in the fact that the Minister has recognised the various constraints and shortcomings standing in the way of our economic uptake. There is also merit screening off the memory of the recent past which have added to an already tough economic situation for the country. Recognition that skewed income distribution has downcast certain categories of the population and remedies are required to redress the situation also goes in this direction.
We have formidable challenges however from both the internal and external fronts.
For example, it is far from clear whether we have been sharpening up our younger generation effectively through the provision of an apt training and education system to adapt them to the much changed and continuously changing global production platforms. Or, whether we’ve been merely patching up bits and pieces to cope with inadequacies of a substandard system? This may be among issues at the heart of our next wave of economic uplift for an economy concentrated on export services. Spending more money is not the answer to the fundamental question. Spending where most it is relevant is.
Things appear to be breaking down on external markets. That has been happening for us not only since the international instability of the ‘Brexit’. For quite some time now, our manufacturing sector has signalled that it is becoming increasingly inadequate to respond to the constraints of competitiveness, availability of markets, etc.
Our diplomatic sector can help do the openings, not necessarily the one contemplated in Saudi Arabia. There is an urgent need to go beyond the electoral arithmetic of the style of the Leader of the Opposition. We have to become realistic once again and focus on precise targets of do-able external trades which overcome obstacles and get our alliances and markets firmly in hand. A new critical mass of economic activity in sustainable external trade conditions should help.
The government is not solely to blame for the cumbersome economic situation we are finding ourselves in. Factors beyond its control are impinging and will continue to impinge upon its capacity to produce plausible results on the economic front. It should therefore concentrate to put our house in order, mobilise the right resources in the right amounts and give back the lost confidence to operators. If it manages to make a successful symbolic inroad in one convincing new sector of activity, it might well pierce the now apparently impenetrable canopy of our economic opportunities. It must not allow itself to be distracted by useless pursuits.
* Published in print edition on 5 August 2016