Sunday, April 29, 2012

INDIAN GROWTH STORY: A REALISTIC PICTURE

Everybody on this globe recognises the opportunity provided by the global economic situation and outlook, Indian demography, Indian economy size, availability of large competent technical and managerial human resource along with  technical and engineering competence to catapult Indian nation to the status of a global economic superpower.The Indian GDP stands at 1.7 million million dollars which is about 1/9th of US GDP whereas per capita is about 1360 dollars which is a dismal 3% of the US per capita. Even if India manages to  grow to an economy as big as that of present USA, per capita wise it will only be comparable to today's per capita of East European countries. 
Growth rate vs GDP increase: Indian GDP can become 9 times its present value if it keeps on growing continuously at 10% for the next 23 years. The same period increases to 32 years with a drop of 3% in the annual growth rate. 
In the light of these facts, the following need to be understood and addressed by India's planners and polity otherwise the Indian dream of becoming a world leader will perish sooner than later.

  • Will this opportunity window be available to the country for such a long a period.
  • Will developed nations continue to pass on low level manufacturing hubs to India as they did for Singapore, Taiwan, Malaysia, South Korea and lately China or their experiences with a big economy with potential to become an economic superpower will make them hesitant to make use of cheaper manufacturing base of India with potential similar to that of China. After all developed countries also wish to grow richer rather than stagnating at present levels of prosperity.
  • Will India grow rich before getting old or grow old before getting rich.
  • Does India expect that it will be offered status of an economic superpower on a platter.The offerings will come only in areas which give value addition to the earnings of the developed world in short term as well as help maintain their technology leadership in the longer run.
Indian polity and planners have to work seriously to extend this opportunity window much beyond the realms of global economic situation and outlook through policy action on administrative, judicial, electoral and economic reforms to mitigate corruption, doing away with subsidies, provide good governance and some out of the box thinking for avoiding getting old before getting rich, become technology leaders in renewable energy fields rather than live on bought and borrowed technologies as and when they are offered at whatever prices along with attached strings.Simultaneously Indian polity and planners should aim to increase the tooth to tail ratio of annual budgets ( Ratio of  funds devoted to GDP growth to funds devoted to all government expenditure ) at all levels in states and centre within the applicable constraints of fiscal deficit and inflation.