|
|
|
|
|
indian economy in 2020
|
|
|
Economy After more than five decades of Independence, India stands at the cross-roads of history in the initial years of the new millennium. During the last five decades we have achieved self-sufficiency in food, created a strong and diversified industrial base and developed a high degree of resilience that could effectively withstand the onslaught of the East Asian crisis in 1997 & 1998, the Kargil War in 1999 and the oil shocks in 1999 & 2000. None of these could push India into an economic crisis of the kind we faced in 1991. However, there are major weaknesses that still persist as we prepare ourselves for entering the new millennium. More than a quarter of India’s population lives in abject poverty, around 50% of the urban population lives in slums in unhygienic conditions and just under half of our vast population is illiterate. At this rate, by the year 2010 we may perhaps earn the dubious distinction of having half of the whole world’s illiterate population, which shows that India is a country of spectacular paradoxes. We are the largest global supplier of highly skilled manpower and still we could be the reservoir of the world’s largest mass of illiterates. The vision for Indian economy in the year 2020 needs to be viewed in this context. My vision for Indian economy is that India emerges as a formidable global economic power with every Indian enjoying a decent living standard by 2020 while maintaining the broad federal democratic structure of the nation as it has evolved over the last five decades. This vision sounds very ambitious but it is attainable if we can put our act together and pursue the goal relentlessly through well-coordinated hard work, total commitment and complete dedication. Basic ingredients of this broad vision would include demographic, economic and social aspects of national development strategy over the next two decades. Population Growth One of the main reasons why India has still remained a less-developed country with very low levels of per capita income in spite of being quite large in the global context in terms of physical volumes of output in both agriculture as well as industry is our failure to control the rapid growth of population during the last five decades. Today, the absolute size of GDP is large enough to make India the 12th largest economy in the world However, our rank in termsof per capita living standards is way below at 162 out of 206 economies and even if we consider per capita GNP at purchasing power parity, India’s rank in 1999 turns out to be 153 (World Bank, 2001). Among the 20 largest economies in the world, India’s growth rate of population has been the highest and if this trend continues over the next two decades, it could spell disaster for any ambitious vision that the nation may try to evolve. Hence, it is necessary that we have an explicit demographic vision of attaining less than half per cent annual growth rate of population by the end of the next decade. The social dimension of this vision would involve significant upgradation of the status of women in the society and attainment of almost 100% literacy among adult females. Any vision of a fast developing progressive nation cannot be complete without involving the vision of cent per cent literacy level. If during the last five decades India’s population growth rate had been half of what it actually turned out to be, even with much lower growth rates of GDP during the pre-liberalisation period, India’s per capita income today would have been 62% higher than what we actually have and our rank in terms of living standards in the global context would have been 143 and still higher at PPP. Our national vision must necessarily focus on ensuring that this part of history does not repeat over the next two decades. If the current growth rate of population continues, India’s population would reach 1470 million by 2020. But if we can reduce the growth rate of population in a phased manner to 0.5% by 2010 and maintain it at that level thereafter, India’s population would not exceed 1170 million by 2020, i.e., the country would succeed in avoiding a further addition of 300 million to our population over the next two decades. This by itself would increase the per capita living standard of the remaining population by 26%. Moreover, the scarce national resources required to bring up 300 million additional people could then be deployed productively to further enhance the living standards of the rest. We must recognize that the past trend by itself does not represent destiny. Conscious and persistent efforts could always reverse the past trends. What is required for evolving a people-centered population control programme is a fierce determination to succeed through a complete paradigm shift in our approach to managing population growth. The mind-set of not giving sufficient importance to the issue of population control needs to be radically changed. We must also recognise that population control is one of the most powerful means of reducing the incidence of poverty. Vision of GDP Growth The national vision of becoming a major global economic power by 2020 can be accomplished only if we achieve a real GDP growth rate of more than 8% per annum consistently over the next two decades. Achieving further acceleration in economic growth and sustaining the accelerated growth performance over a fairly long time horizon are the main elements of this vision. Sustaining the high growth rate of more than 8% over two decades is a Herculean task but it is definitely well within our potential. Real GDP growth of around 8.5% per annum will enable us to emerge as the tenth largest economy in the world by the year 2020 with a more than seven-fold increase in our GNP, which would translate into a per capita income of around 2500 US dollars. It should be remembered, however, that our ranking in terms of average living standards would still remain significantly lower. But the per capita income in excess of around 2500 US dollars, which would imply more than 7000 US dollars in terms of purchasing power parity would have enabled us to effectively and comprehensively remove mass poverty. Visions of sectoral growth commensurate with the overall vision of 8.5% growth rate involve growth rates of 5% for agriculture, 9% for industry and 9.5% to 10% for services. In relation to the average growth rates observed during the last 15 years, the growth rates envisaged in the above vision of India’s GDP growth over the next two decades imply an acceleration in the growth rates by 1.8 percentage points in agriculture, 2.5 percentage points in industry, 2 percentage points in services and 2.55 percentage points for the economy as a whole. A detailed projection of the sources of future growth of Indian economy based on my analysis of the sources of accelerated growth during the post-1985 period reveals the possibility of augmenting the contribution of total factor input by 0.65 percentage points over the next two decades. A significant part of the higher growth of total factor input would be contributed by a faster growth of capital input resulting from an increase in the domestic saving rate from the current level of 23.5% to around 28.5% by 2020. While the decline in the growth rate of population envisaged in the demographic vision would lead to some reduction in the growth of labour input measured in terms of man-years especially after 2015, such a decline is likely to be more than off-set by a significant improvement in the quality of labour resulting from major changes in the skill composition of working force. Thus, the vision of 8.5% GDP growth over the next two decades requires acceleration in the TFP growth by 1.9 percentage points. Since improvement in capacity utilisation and structural change are not likely to contribute more than 0.2 percentage points to the accelerated TFP growth, the residual factor, which is a surrogate for technical progress indicating the improvement in the overall efficiency of resource utilisation in the economy, will have to increase significantly from the level of 2.5 percentage points during 1985-2000 to around 4.2 percentage points during the next two decades. Achieving such a massive increase in the overall efficiency of factor inputs is a formidable task and it would require a highly focussed strategy and a large scale effort in every sector of the economy. Let me make an attempt to highlight some aspects of the sectoral strategies required for accelerating the growth of agriculture and industry. Vision of Indian Agriculture in 2020 Higher growth of agricultural sector can be achieved only through a significant increase in the productivity levels through modernisation of the agricultural sector. Despite our low productivity levels, we have a distinct competitive advantage in several agricultural commodities. We are among the top three producers in the world for several agricultural commodities, but our share of world exports in agricultural commodities is barely 1%. Traditionally the basic mission of India’s agricultural development has been to achieve self-sufficiency in foodgrains and also in major non-food crops.
|
|
|
|
Still Can't Find What Your Looking For? Then Try a Essay Search!
|
