12 SEP,2022 | MEDC
India has now overtaken the UK to become the fifth largest economy in the world. This is an occasion for celebration, but also for introspection. Powered by an advantageous demographic dividend and an increasingly sophisticated digital ecosystem, India is almost certain to witness impressive growth in the coming years. According to some experts, India could even become the world's third-largest economy by the end of this decade. Our policymakers handled the Covid pandemic well, and softened the impact of the Ukraine crisis on our economy. But the real challenge facing us all is to ensure that the benefits of socioeconomic growth percolateto the bottom of the pyramid.
India has resisted the temptation to run up high fiscal deficits, despite pressure to emulate the West's overgenerous stimulus packages. On the energy front, the government should be complemented for its efforts to boost the use of electric vehicles all over the country. On the flip side, there are still some demand and supply mismatches in the provision of cost-effective solar power in India. Developers of solar power projects are facing uncertainties as the supply of solar photovoltaic (PV) modules have fallen far behind the demand. This should be sorted out at the earliest. Some out-of-the-box thinking – especially pertaining to our strategic alliancesin the changing geopolitical scenarios– is needed to ensure that India attains energy security.
India's continuing low GDP per capita and the ongoing Covid relief package providing free food grain to 800 million people could be indicative of poor individual productivity. This implies that the impressive macro picture painted by the GDP numbers could be displaying only a partial truth. India's success in lifting millions out of abject poverty is praiseworthy. But the next step, replicating East Asian economies who relied on manufacturing to take the masses out of primary sector activities, is equally important in our nation-building strategies.
There is much to be proud about. 75 years ago, India's share of world GDP was a paltry 3%. Making allowances for base year and the size of the informal economy, it has now more than tripled. We have recently launched an indigenously-built aircraft carrier, the INS Vikrant, which brought together over 500 Indian companies in a national endeavour. Many Indian politicians today have a global outlook, but strong local moorings. That is commendable and it will help to deliver justice to the innate potential of Indian enterprise.
The unending search for economic growth strategies offering opportunities and protection to all Indians continues. Covid has led to risingregional inequalities in several different dimensions. These dangerous divergences must be tackled. And it is one thing to build a new road, but quite another to put in place fool-proof systems all along it providing socioeconomic security to millions of vulnerable travelers.
The government plays a pivotal role in the lives of the poor. Instead of alluring them with populist candies, a better policy approach would be to devise new schemes – or improvise existing ones – that enhance human capital, primarily through education and skill development initiatives. More and better economic reforms are urgently needed. All parties in the government – at both the state and central levels – must realize that they need to remain perpetually in reform mode. That is the only way the elusive fruits of inclusive growth will genuinely percolate to the masses.