22 APR,2024 | MEDC
India has a vision to become a developed economy by 2047 – if not earlier. For this to occur, we will need to set clear priorities regarding our policy objectives. Topmost on the list will have to be human development, particularly in the areas of education, healthcare and technological innovation. Education and healthcare matter not just for growth, but they are also seen today as an integral part of the goals of socioeconomic development, including the citizens’ quality of life. All of the world’s fastest developing countries, without exception, have set clear benchmarks regarding their human development objectives, and ensured that they have been implemented to the extent possible. That is a path that we will also need to follow.
Human development is a necessary prerequisite for long-term sustainable growth. All countries must first attain a certain level of human development before future growth becomes viable. While changes in human capital and labour quality matter most for endogenous growth, it is the level of human development that is the key determinant of a nation’s sustainable growth trajectory. Nations stuck in vicious cycles of low human development poverty traps may need targeted policy interventions to meet the fixed costs of investments leading to subsequent economic growth. These fixed cost investments include schools, hospitals and the necessary technological innovations to effectively implement development projects.
Physical capital accumulation alone is not enough to lift an economy out of poverty in a sustained manner. Investments in human capital and fertility reduction also have to be high on the policy agenda. Apart from enhancing productivity, education and health investments facilitate the escape from fertility-induced poverty traps. Poorer countries tend to have higher youth dependency rates than richer ones. Supporting the basic needs of a relatively large child population imposes a substantial burden on national resources, necessitating their diversion from other productive avenues and, thus, ultimately impeding economic growth. This is a luxury that a poor country like ours cannot afford. But, in the long run, determining which interventions will best promote economic growth remains highly contextual.
We should remember that the old-fashioned view of grow first and worry about human development later, is not supported by modern evidence. Improving levels of education, healthcare and technological innovation should take precedence in the policy agenda to directly enhance economic growth. In India, a substantial emphasis on education and healthcare advancement will necessitate a strong involvement by the state government as the underlying reasons for the prevalence of sub-optimal outcomes vary by region. Thus, the Central Government should allow federalism to function more effectively if it wishes to push human development at the grassroots level at a pace consistent with attaining India’s long-term socioeconomic development objectives. In that regard, the creation of harmonious centre-state relationships may need to be consciously nurtured. Human development is too important to be left to chance. A suitably enabling environment for it has to take root throughout the country.
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