In recent years, India has undergone a paradigm shift in its economic landscape with fundamental changes taking place in economic and social relationships, between rural and urban, between agriculture and industry, and even within sectors.
From a state-led socialist-era rhetoric of redistribution and license-raj we are steadily transforming to semi-capitalist model that embraces neoliberal policies of economic regulation and globalization to spur growth and development. However, this shift in rhetoric has often not translated into effective implementation, and, as in the past, the lower economic strata of society continues to suffer the most.
Nevertheless, the Indian economy remains one of the brighter pictures on the global stage. Data from the World Bank shows that India became the sixth largest economy in 2017, narrowly nudging France to seventh position.
Latest figures from global consultancy firm PwC also reiterate the country’s steady growth, with India expected to surpass the United Kingdom to claim the title of the world’s fifth largest economy rankings in 2019.
The Global Economy Watch report by PwC projects the real GDP growth in 2019 will be around 1.6 percent for the UK, 1.7 percent for France and 7.6 percent for India. In 2017, the GDP of France stood at $2.58 trillion, that of India’s was 2.59 trillion and the UK economy had a GDP of $2.62 billion.
This ranking could see a change in 2018 and through 2019, Encumbered by Brexit blues, the UK could find itself relegated to seventh position in global ranking this year by France, especially given the strength of the euro.
However, India obviously has some more climbing to challenge current fourth place holder Germany with a GDP in 2017 of 3.67 trillion or Japan in third position with a GDP of $4.87 trillion.
The climb to the pole position would require India to surpass the $12.23 trillion economy of China and overtake the $19.39 trillion GDP of the United States to make to take on fourth position. The PwC report noted that India, which is the fastest growing large economy in the world, has an enormous population, favorable demographics and high catch-up potential due to low initial GDP per head.
India should return to a healthy growth rate in 2019-20, provided there are no major headwinds in the global economy such as from renewed trade tensions or a jump in oil prices.
The Indian growth story, fueled in large measure by domestic consumption and investment, is expected to be further bolstered by the realization of efficiency gains from the recently adopted Goods and Services Tax (GST), bank refinancing and other measures, as well as the expected first-year momentum by whoever forms the government after the General Election in May.
Despite being home to the largest number of people living below the International Poverty line, poor infrastructure and daunting red-tape, India’s firm economic growth and enormous demographic scale, has made the country an attractive destination for international investment.
Also, with two-thirds of the 1.3 billion population below the age of 35, the country is one of the largest consumer markets in the world and has made it a venue of choice for multinationals.
This Has made India the destination of choice for discerning multinationals. In a boost to the government, India jumped 23 points in the World Bank’s Ease of Doing Business index in 2018 to rank 77th globally. In the last two years, India has risen 53 notches in global rankings and come a long way from the dismal 142nd position it occupied in 2014.
In recognizing that India was one of the top improvers in 2018, the World Bank especially lauded the country’s six reforms introduced last year: in starting a business, getting electricity, dealing with construction permits, getting credit, paying taxes, and trading across borders.
In reforms to obtaining construction permits, the country introduced an online single-window scheme, launched deemed approvals, and reduced the cost in getting the permits, thereby permitting the country to jump in the World Bank index for this sector from its earlier 129th spot to 52nd.
To inspire more rapid change, India is now applying the World Bank’s country criteria to its own states and ranks them, in order to promote interstate competition. In early 2018, the government also decided to raise the Foreign Direct Investment (FDI) to 100 percent in various sectors and activities under the automatic route, and necessitating government approval for only a few select sectors. The country is also aiming to bring manufacturing’s share of the GDP from its 15 percent to 25 percent, with the ‘Make in India’ scheme.
The authorities also shortlisted 100 cities that would receive disbursements to develop them into ‘Smart Cities’ with substantial infrastructure upgrades. Implementation of the Real Estate Regulation (and Development) Act (RERA) of 2016 has also helped to boost investments and bring much-needed transparency to the real- estate sector, while also providing assurances to consumers.
However, India’s growth story is also riddled with potholes. Corruption continues to be endemic with the country lagging at 81st position in the Transparency International’s Global Corruption Perception index in 2018. In addition, while the country’s demographic dividend has been touted by various studies, it could just as easily turn into a demographic deficit. Also, while India has over 500 million people in the workforce, more than two-thirds of companies are struggling to find employable workers.
This dearth in skill sets can be attributed to fact that only 2.3 percent of the labor-pool has received any formal skills training. This is a paltry figure, especially when considering that it is 52 percent in the US, 68 percent in the UK, and 75 percent in Germany.
Nevertheless, market analysts note that with growth in China slowing and various barriers to investments, and Europe stagnating, there are very few places in the world that provide the opportunities that India does. India with its 1.3 billion people and a US$2.6 trillion economy has come a long way since becoming a sovereign republic with the coming into force of the Indian Constitution on 26 January, 1950.
Since its promulgation, the Indian Constitution has been a bastion of strength and a beacon of hope to the billion plus citizens who call this land home. The annual Republic Day celebrations are an apt occasion to reflect and retrospect on our accomplishments and shortcomings over the years, both as a nation and as its people.
The economic prosperity that we achieved as a country, and the materialistic successes we gained as people, are not the only triumphs of the last 70 years. More importantly, the country and, the values and principles enshrined in its Constitution, have provided us with the foundation and framework needed to blossom and flourish to our full potential in all domains.
It is these constitutional guarantees that impart greater depth and breadth to our growth and progress Highlighting our accomplishments in various domains provides us with a sense of pride, but it is also equally important that we examine in- depth where and how we can improve and do better in the years ahead. No doubt, the diversity of the country and its population, the multiplicity of races, religions, cultures and languages, make this land a gargantuan challenge to administer and navigate.
However, the collective and positive acknowledging and addressing our limitations, as well as adhering to both the rights and responsibilities conferred on us by the Constitution, could determine how we move forward into the future.