In order to attain the Vision India@2047 plan (a project envisaged by NITI AYOG)i.e. to transform the country into a developed nation with a USD 30 trillion economy by the time it completes 100 years of Independence.
There are certain challenges which need to be addressed to realise the aspirations and beliefs of the country marking the 21st Century as “India’s Century”.
Challenges as foreseen in achieving the Target of $30 trillion by 2047:
1.Perception about income inequality and poverty:
It happens to be the notion that income inequality and poverty are fueled by the liberal reforms such as privatisation and disinvestment.
But the past experiences show otherwise.
For instance: From independence till 1991, India’s poverty rate remained around 50% despite socialist policies aimed at poverty reduction.However, post-liberalization (1991-2011), poverty dropped to about 20%. India’s growth pulled 35 crore people out of abject poverty during this period.
2. Agricultural stagnation and disguised unemployment:
About 46% of our labour force remains in agriculture, characterised by low productivity contributing just 18% of our GDP.
Ex: Many factors have led to stagnation such as disguised employment,low investment in infrastructure and high subsidy burden on the government (₹1.64tn) and monoculture in cropping patterns.
3. Stigmas attached to the Wealth Generation:
The stigma attached with Wealth Generation like only few people are generating the wealth and the majority of the population is at lower rungs.
Such criticisms and apprehensions discourage the entrepreneurial spirit as wealth creation is the most crucial incentive for entrepreneurship.
Entrepreneurship leads to employment generation. Which will eventually turn up in Trickle Down Effect (The idea that when the rich get richer and spend more money, the poor experience positive effects).
4. Low Female Labour force participation:
India’s female labour force participation rate (FLFPR) is just 37%. Most of the women seem to work in the agricultural sector. FLFPR of India is strikingly low compared to other countries such as China, Vietnam, and Japan, all between 60%-70%.
5.Under Utilised Demographic Dividend:
Of the 950 million working age population only half are employed. Which shows the dire neglect of the Demographic Dividend of the country.The UN World Population Prospects 2022 projected India to have the largest population by 2023.
India’s GDP growth path may be shaped with a view to taking better advantage of the unfolding population trends.
6. The Middle-income trap:
According to the World Bank definition, the middle-income trap “refers to a situation whereby a middle-income country is failing to transition to a high-income economy due to rising costs and declining competitiveness”.
Of 101 middle-income economies in 1960, only 23 had attained high-income status by 2018.
There are fears that India might get trapped in the status of Middle Income trap .After reaching a per capita income of USD 5,000-6,000, it will not move fast.
7. Inadequate Infrastructure:
Indian States face cost disabilities for power, logistics and financing. India ranks 38th in the Logistics Performance Index (LPI) 2023.
What is the Way Forward ?
1.Creation of the Cluster Led Model of Industrial Development:
Cluster-led model of industrial development, whereby stringent regulations are relaxed in designated areas, helps create a favourable environment for manufacturing. Building industrial clusters that are on a par with those in China and Vietnam.
2. Reaping the benefits of Public Private Partnership(PPP):
Preventing from the middle-income trap needs a market-led economy that lets private enterprise thrive, without the government, or perceptions of factory jobs, getting in the -Minimum Government, Maximum Governance.
Leaving behind the legacy of Red Tapism and delivering on this decade-long promise to enhance ‘ease of doing business’ must not stall.
3.Building on the High End Manufacturing Sector:
There are plenty of avenues for using our surplus labour power in High end manufacturing and creating an ecosystem where there is scope for adapting to the changing needs of the market.
4. Skill Development and employment creation:
Increased female labour participation in the workforce can significantly help the country in achieving the envisaged targets.The IMF data suggests that aligning India’s female labour force participation rate with that of men could boost India’s GDP by 27%.
5. Utilising the Working age Population:
India’s population is approximately 1.4 billion, and is expected to reach its peak of 1.64 billion by 2048 before decreasing to 1.45 billion by 2100. Which shows the declining and demographic dividend.
To unlock the potential of India’s working-age population before it’s too late.
There is a need for low-skilled, employment-intensive manufacturing sector jobs similar to the strategies used by the ‘Asian Tigers’ like South Korea and Vietnam.
6.Investment in infrastructure:
The need of the hour is to invest in state of art technologies,plug-and-play infrastructure and building ancillary ecosystems for education, health care and entertainment.Which would attract both employers and workers.
7. Openness of Economy:
Openness is needed for growth, as it was for India as between 1990 and 2013, exports as a percentage of India’s GDP grew from 7% in 1990 to 25% in 2013.
As India tries to capitalise on the China+1 moment to attract global manufacturers and their supply chains, and further augment its exports, we must resist the temptation of putting up huge tariff walls for imports.
Conclusion:
There is a phrase often repeated in policy circles about India that “It’s a country with mouth-watering opportunities and eye watering challenges.”
So making the aspirations of India becoming the “ Vishwaguru” true, it is the need of the hour to work in a direction where we can turn the obstacles into opportunities.
Following a balanced approach India can soon realise her potential and aspirations.
Source:
https://epaper.thehindu.com/ccidist-ws/th/th_delhi/issues/94122/OPS/GJCD5NR9Q.1+GT1D5PGEV.1.html