India Forever A Developing Economy?
India has underperformed to its potential in the first seventy years of Independence.
We have emerged as the third largest economy in purchasing power parity terms adding a trillion USD, that has pulled 150 million Indians out of the poverty trap, enabling dignified living for a large section of the deprived. Growth has catalysed substantial and sustainable social mobility for the middle class; stimulated holistic progress for most others i.e., the emerging middle class.
*Economic growth key to securing the future of our demography
In 10 years, we will have about a billion Indians in the ‘emerging’ middle and the middle class bracket. They have high expectations, higher aspirations, and will demand better outcomes.
A Crux study titled ‘India forever a developing economy’ across 12 states in eight key industries contributing to 70 per cent to the economy has several lessons. The 2,000 business owners, 80 academicians, economists, specialists, and thinkers identified the key drivers for India to emerge as a developed economy.
The study articulates that India needs to cross the $10 trillion GDP and $7, 000 per capita number to reach the ‘developed’ inflection point. It also highlights that while ‘business as usual’ tugs along the growth engine, it is not enough to propel India into the league of developed nations.
We need to create 10 million jobs over the next 10 years, to achieve which a nine per cent growth rate is necessary. The study cautions that even this growth (mostly jobless, largely exclusive) may not be enough to radically improve our Human Development Index. The Crux study calls for a holistic, collaborative, and concerted effort from businesses, entrepreneurs, investors, and policymakers.
We have several positives, accompanied by potent demography, social harmony, and a healthy democracy. School enrollment and life expectancy is on the rise. The expansion of healthcare facilities and Swachh Bharat initiatives have enhanced health outcomes.
*Re-Building India. Infrastructure is a ‘work in progress’
India has lighted almost every village, fired every kitchen, and provided access to toilets and safe drinking water to most Indians. Every fourth Indian rides a vehicle, every 20th Indian flies.
Its socio-economic impact spans generations. The Rs 150 lakh crore-plus infrastructure pipeline, Gati Shakti project, doubling the gas pipeline, trebling renewable energy capacity, highway network, 200 airports, 11 industrial corridors, are national assets. They auger well for a significant leap.
Investment in the logistics sector has linked rural India to the economic hubs and created an ecosystem for a holistic rural development. The 4G connectivity in all villages is empowering rural India and enhancing ‘ease of living’.
India has begun to ‘unlock’ delayed, stuck, or financially ‘overrun’ projects, and monetise and commercialise assets to optimise value. India is emerging as the knowledge capital of the eastern world. Information Technology and telecommunications have transformed the landscape, created opportunities such as e-commerce and attracted a new breed of tech-pruners, with global ambitions.
We are less impacted by the global recession, as over two thirds of our economy is focused on the domestic economy. However, there are several goals that need to be achieved. India still has many who are deprived, particularly farmers and the oft ignored and largely forgotten urban poor.
Leveraging the digital and ancillary digital asset opportunity alone has the potential to contribute to 20 per cent of the GDP over the next five years. India’s digital economy already has a home-grown hero i.e., UPI. The JAM trinity (Jan-Dhan, mobile and Aadhaar) has enabled financial inclusion for 90 per cent of the unbanked, more than in the previous 70 years.
*Economic levers moving optimally. Redistribution not a solution
There has been a clear shift in policy focus. The Prime Minister has nudged a series of reforms that will lift the country’s productive capacity and catalyse the economy.
The Crux study highlights that resources alone will not do it. No economy, however efficient, can solve the problems of a billion people in a generation. It is even more challenging for a democracy; and none have been able to pull it off. Innovation-based solutions are resource efficient and optimally effective, costing only 70 per cent compared to the traditional solution. The study estimates that these solutions will contribute toward a third of India’s $10 trillion economy by 2033.
*Analogue to digital: equity, equality, enabling and empowering
The study articulates that we need to leapfrog from the analogue to the digital model to propel us beyond the ‘developing ‘tag.
India needs about two million hospital beds, one lakh doctors, three lakh nurses this decade to serve a growing and ageing population. But this sector, faces an investment challenge. Similarly, India needs to deliver high-quality, formal education to 70 lakh additional children every year over the next 15 years. Education investments of three per cent of GDP won’t be sufficient.
These challenges can be met by addressing the root cause, designing an innovative platform, robust strategy, solution centric approach and creating an enabling ecosystem for ‘efficiency in scale’.
Wider Technology adoption aided by Artificial Intelligence and Machine Learning can help in prevention; telemedicine can enhance and optimise health delivery. Soft (not buildings) educational infrastructure (teachers), digital delivery is enabling, efficient and cost effective. However, several institutions are in the analogue mode, with neither the capacity to plan, nor the intent to create the digital framework.
*Inter-dependent & integrating economy
The policymakers need a holistic and innovate policy framework to address the challenges across different sectors, including tourism, agriculture, retail, utilities, manufacturing, financial services and urban infrastructure. These sectors are at an inflection point, interconnected and causal. A setback in one sector spawns setbacks in others.
Investment in education and health hatches healthier, more skilled workers, and power growth. Providing uninterrupted power will benefit the economy multiple times the investment made.
*Policy not about numbers, but direction
History also tells us that India was the fifth largest economy when the great industrial revolution ‘arrived’. The western world seized the baton, even as India ‘ignored’ the reality and then grappled with industrialisation for the next few decades, albeit unsuccessfully.
The policymakers must recognise roadblocks, but focus on possibilities, while solving a wide set of challenges. We may need a different approach, furrow a radically different development path, deploying solutions for rapid, inclusive, sustainable, and resource-efficient growth.
Intertwining economic reforms and social mobility where each citizen takes a small step culminating into a giant leap is a force multiplier.
