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Examine economic growth policies to make necessary adjustments

By 2047, India hopes to have grown into a high-income nation known as Viksit Bharat. In order to achieve this entire vision plan, the economy must exert extraordinary force in order to accelerate GDP growth and reach the summit in 23 years, rising from the present nominal GDP of $3.73 trillion to an astounding $30 trillion.

 

Practically speaking, the fifth-largest economy in the world has to develop at an astounding rate of $1.14 trillion per year to reach a peak of $26.14 trillion in 20 years. In the last year (2023–24), the GDP increased from Rs 38.78 lakh crore to Rs 41.74 lakh crore when the growth rate of 7.6% was taken into account. Against the required amount of Rs 81 lakh crore, the increase is barely Rs 2.96 lakh crore.

This is insufficient to achieve the status of “developed country” by 2047; instead, more than double the GDP growth rate, at 15% a year, is needed. With regard to GDP, the United States has $26.95 trillion, China has $17.78 trillion, Germany has $4.43 trillion, Japan has $4.23 trillion, and India has $3.73 trillion. The approximate amounts of their per capita GDPs are $2,610, $52,820, $12,540, $33,950, and $80,410, respectively. India now belongs to the category of nations with lower incomes. In order to attain different phases of low income, medium income, and high income in 23 years, a lengthy road must be traveled. For India to qualify as a “high-income country,” its GDP per person must surpass $12,055 by the year 2047.

The contributions of the industrial, service, and agricultural sectors to the gross domestic product are the main forces behind economic development. With a 53.34 percent share, the services sector led the economy in 2023.

The industrial and agricultural sectors contributed 28.25 percent and 18.42 percent, respectively, to the GDP. Nonetheless, the industrial and service sectors together account for 95–98% of the GDP basket of the world’s leading economies—the US, China, Japan, and Germany, for example—while agriculture accounts for only 1%, with the exception of 6.9% in China. 82 percent of India’s GDP comes from these two industries. The sluggish expansion of the industrial and agricultural sectors is one of the obstacles to India’s economic objectives. The fact that a developed economy exports more products and services than it imports is another characteristic that sets it apart. India’s economy is one of the largest in the world, but its primary drawback is its excessive reliance on imports, even if it is one of the fastest expanding.

Up to two percent of GDP is being held in deficit by the current account. Conversely, the US, China, Japan, and Germany have current account surpluses of 5–10% of their GDP. The debt has risen to $625 billion (18.61 percent of GDP) since FDI inflows have sharply decreased in recent years. These macroeconomic data unequivocally demonstrate that, in order for India’s economy to fulfill its lofty goals, it must increase export performance, decrease imports, draw significant foreign direct investment into strategic areas, and expand its industrial sector.

India’s economy is expanding without producing enough employment for the young, which has made wealth and income disparity worse. In recent years, it has resulted in a fast destruction of the ecosystem and natural resources. The unemployment rate for youth in the 20–24 age group is 44.49%, while for youth in the 25–29 age group, it is 14.33%. In 2022–2023, the wealthiest 1% of the population had increases in their income and wealth share, reaching 22.6% and 40.1%, respectively. Water availability per person has dropped significantly to 1,486 cubic meters.

With a population of 1.42 billion, India surpassed China to become the most populous nation in the world. This indicates that just 2.4% of the world’s territory is occupied by 17.5% of its inhabitants. India’s chances for economic progress have been hampered by these rapid changes in the socioeconomic and environmental spheres. Moreover, companies and financial institutions have benefited from the fundamental changes in labor laws and economic policies.

In marketplaces for competitive jobs, there are inequalities between the impoverished and the young. India’s global rankings and indexes pertaining to the environment and human welfare are declining. In terms of productivity and output, the nation’s industrial and agricultural sectors are not competitive on a worldwide scale.

The government has put up a six-point plan to advance India’s transition to a developed country: structural transformation, increased competitiveness, financial and social inclusion, governance reforms, the technology-driven Green Revolution 2.0, and labor market reforms. These policies aim to increase productivity across sectors and increase resource efficiency in order to speed economic development, which will lower poverty and create employment.

But India’s objective begs a number of important basic issues. Does the policy represent the goals, culture, and morals of the Indian populace? Are GDP growth and per capita income the sole measures that, by 2047, will declare India a developed nation? Given the depletion of natural resources, is the rapid growth rate environmentally sustainable? Does the strong growth pattern fairly divide money throughout the population? These all raise the issue of whose cost and at what cost progress occurs.

Many observers note that given India’s varied demographic, social, economic, and environmental factors, the country has to choose a separate developmental route rather than slavishly adhering to the one adopted by Western countries or by China. Therefore, in order for the country to achieve the position of “developed country” by 2047, it must acknowledge its intrinsic macroeconomic strengths and shortcomings. The administration must promptly reassess its growth-oriented policies in order to reverse course and promote inclusive, sustainable development. As the effects of climate change worsen, the globe is battling mightily as a result of shortsighted and harmful economic policies. India seeks growth that is fundamentally based on human nature and sustainability.

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