conomy is defined as the system of trade and industry by which the wealth of a country or region is mobilised and used. In its broader term, this could also be viewed as a social domain that emphasises the practices, discourses and material expressions associated with the production, use and management of resources. As the situations of any two regions are not similar, the economies are also not identical. No country in the world produces everything; nor does any have all the natural resources that would satisfy its requirements.
History validates that empires and civilizations were built on the strengths of thriving trade. Nearer home, the Kalinga, Pallava and Chola kingdoms had thriving maritime trade across the oceans. Maritime transport plays a big role in boosting global economy, it carrying over 90 per cent of material for trade in the safest, cost-effective and environmentally friendly way. Without shipping, one half of the world would starve and the other half freeze, as neither food grain nor oil can be transported in bulk by any other means within reasonable logistics cost.
History has left lessons for us on how to prepare for post-Covid scenario. As the Second World War was unfolding, the United States (US) was grappling with the after effects of the Great Depression. Although the US was isolationist by nature, they recognised that the British Empire was shaking under its own weight, and prepared to step into the vacuum. To do so, the US built the military and industrial infrastructure that would allow it to dominate the world economy. Apart from building the manufacturing base, Americans also ensured that port infrastructure was in place so that seaborne trade could move seamlessly and efficiently. In addition, hinterland connectivity with ports was provided so that both raw material and finished goods could move efficiently. Alongside all the physical logistics infrastructure, they updated the legal and administrative framework to protect US business.
After the war, the Bretton Woods Conference (United Nations Monetary and Financial Conference) to regulate the international monetary and financial order ensured the dominance of the US dollar in the international economy. Concurrently, the US enacted the Marshall Plan to assist all European countries in their economic redevelopment. This benefited the American economy as the money was used to buy goods from the US, which had to be shipped on American vessels. By 1953, Western Europe was standing on its feet again. Similar investments in Japan ensured that Japan’s industrial production level recovered to pre-war levels by 1951.
Under the colonial rule, India was basically an agrarian economy, employing nearly 85 per cent of its population to supply raw materials to the British. They made use of our labour without creating any industrial production base here worth mentioning. This meant that on the eve of Independence, India was groping in the dark to meet the aspirations of an emerging nation. With limited resources available, we focused inter alia on poverty reduction, food security and employment creation through a controlled economy, and starting hydroelectric power projects. The government of the day was fairly successful in achieving its priorities. However, in the bargain, the bigger picture of building and sustaining the infrastructure necessary to promote and boost trade received less priority.
While not undermining the action required to combat the present pandemic, India needs to concurrently prepare for the post-Covid world order. Notwithstanding the problems relating to land acquisition and the bureaucratic hurdles, building the physical infrastructure is probably the easiest, though this is also the costliest part. The real challenge lies in reforming the legal and bureaucratic infrastructure upto acceptable international standards and practices. Most of the maritime related laws are archaic — dating back to the colonial period; they are in fact over a century old. When the Indian Ports Act was enacted, it included provisions relating to the safety of ships since there were no international regulations for the same. Since then, several international conventions for safety, security and protection of the environment have been adopted and incorporated into the Merchant Shipping Act. As a result, ships in Indian ports must comply with both acts, they having different standards and supervising authorities. This results in additional compliance burden.
Our maritime administrative structure has not changed since Independence. Governmental rules of business must be reformed to provide a business-friendly environment and prevent different departments from protecting their own turf. Furthermore, the government should dispense with the operation and management of ports, and this be left to the private sector. Governmental involvement should be restricted to ensuring national safety, security, and protection of environment. Not all international standards have been incorporated into Indian law. Our laws must also have a modern framework capable of adapting to international standards revised periodically through a tacit amendment procedure in international conventions. Unless international laws are incorporated into national legislation, sub-standard ships will be able to call in Indian ports while Indian ships trading internationally must comply with latest international regulations.
Indian Shipping tonnage has increased from 0.19 million tonnes in 1947 to 12.7 million tonnes. By contrast, Singapore today has a share of over 96 million tonnes because of business-friendly regulations and adoption of modern technology. The Indian-registered ships can also be commandeered in times of crisis or armed conflict to evacuate refugees and citizens from conflict zones as well as to carry goods and equipment. Thus, it would be in our national interest to provide the appropriate environment to encourage both national and international ship-owners to register their ships in India and reduce our dependence on foreign flag ships.
The world has moved a long way since 1947 and countries are competing to provide business-friendly legal and administrative infrastructure– like single window clearance, EDI, minimal governmental human interface, and simple legal requirements to further their economies. The political and bureaucratic class must recognise this and discard our colonial legacy once and for all by reforming maritime administrative and legal system to enhance our economy. Trade unions must also collaborate with authorities to increase business efficiency so that movement of goods becomes cost effective. This will boost the economy.
While continuing with efforts to manage the pandemic, India needs to concurrently reform its physical, administrative, and legal infrastructure to project the country as the preferred investment destination. All it needs is political and bureaucratic will. Once that is done, then sky is the limit.
The writer is Director (Retired), Maritime Safety Division, International Maritime Organisation, at the UN.