“Growth with Indian Characteristics” is an intriguing and multifaceted concept that embodies the unique economic and social dynamics of India. In this editorial analysis, we delve into the complex interplay of factors that define India’s path to growth, shedding light on the distinctive features and challenges that characterize its development trajectory. With a rapidly evolving economy, a diverse population, and a rich cultural heritage, India’s growth story is marked by its own set of attributes, making it a compelling subject for a critical examination. This analysis aims to unravel the nuances of “Growth with Indian Characteristics,” offering insights into the opportunities and obstacles that shape the nation’s development agenda.
Tag: GS Paper-3: Monetary Policy; Fiscal Policy.
Exam View:
Status of the Indian Economy; People’s welfare and their quality of life; Raising per capita incomes.
Context:
India has registered the highest growth rate amongst G20 countries, surpassing China’s for two successive years. The real challenge for the government is to raise per capita incomes and for politics to jettison competitive populism.
Decoding the editorial: Status of the Indian Economy
- India has ascended from being the 10th largest economy in the world in 2014 to the 5th largest in 2023.
- As per the International Monetary Fund (IMF), India is currently the fifth largest economy with a GDP of $3.7 trillion
- The IMF also projects that India will be the third-largest economy by 2027.
- By 2027, India’s GDP is likely to be $5.2 trillion, while the US will be at $31.1 trillion and China at $25.7 trillion.
- IMF’s historical data shows that India took six decades (1947 to 2007) to cross the one trillion-dollar GDP mark in 2007 ($1.2 trillion).
- But thereafter, it took India just seven years to become a $2 trillion economy in 2014.
- It added another $1.2 trillion by 2021.
- If India hits the IMF’s projected figure of $5.2 trillion by 2027, it would be adding a whopping $2 trillion in just six years.
- India has registered the highest growth rate amongst G20 countries, surpassing China’s for two successive years.
- Measuring GDP on a PPP basis shows that India already has the third highest with a GDP of $13 trillion (PPP), with China at the top and the US is second.
People’s welfare and their quality of life
- It can be inferred from the per capita GDP in PPP terms.
- PPP conversion ratios can vary widely across countries, as price levels of goods and services could differ significantly.
- India’s conversion ratio from dollar to PPP is 3.5, which is almost twice that of China at 1.7.
- For example: If a US dollar can buy a burger in its home country, the currency can buy 3.5 burgers in India and 1.7 burgers in China.
- India’s per capita income is the lowest in G20 countries in both dollar ($2,601) and PPP terms ($9,073).
- China’s one-child family policy from 1981 to 2016 has given our neighbour the dividend of raising per capita GDP to $23,382 PPP, while the US sits at the top with a per capita GDP of $80,035.
Raising per capita incomes
- People have to move from low-productivity jobs to high-productivity jobs.
- India needs to raise agri-productivity and give farmers access to the best agri-markets.
- This would help raise their incomes and help fulfil the vision of doubling farmers’ incomes.
- This would require doubling investments in agri-R&D, irrigation, rural infrastructure, and liberalising agri-markets, both domestic and foreign.
- The resources to do all this can be generated by rationalising various subsidies, especially food and fertiliser subsidies at the central level, and power subsidy at the state level.
- India needs to invest heavily in the education and skill development of rural people to build new cities and undertake massive construction activities like homes, hotels, hospitals and schools.
- Urbanisation experts remind us that almost 75 percent of New India is yet to be built.
- It will require new skills and millions of people will have to move from rural areas to build New India.
- It will be accompanied by high-productivity jobs in manufacturing and services.
- China followed this developmental pathway. If India has to grow on a sustainable basis, it may have to follow a similar path with Indian characteristics.
The only visible challenge to this seems to be our competitive populism in politics in the run-up to elections. The promised freebies are nothing short of a “bribe for votes”. The Supreme Court and/or Election Commission need to check these freebie promises to ensure meaningful democracy.
Source: Indian Express
Frequently Asked Questions(FAQs)
1: What does “Growth with Indian Characteristics” mean?
Answer: “Growth with Indian Characteristics” refers to India’s unique approach to economic and social development. It signifies that India’s growth trajectory is shaped by its distinct historical, cultural, and socio-economic factors, which differentiate it from other nations.
2: What are some key features of “Growth with Indian Characteristics”?
Answer: Key features include a large and diverse population, a mixed economy with elements of socialism and capitalism, emphasis on inclusive growth, a dynamic and evolving political landscape, and a rich cultural heritage that influences economic choices.
3: How does India’s demographic diversity contribute to “Growth with Indian Characteristics”?
Answer: India’s diverse population, with a significant youth demographic, has both advantages and challenges. It can be a source of a large labor force and consumer base, but also a potential burden on resources and infrastructure. Managing this diversity is integral to India’s growth.
4: What are some challenges associated with “Growth with Indian Characteristics”?
Answer: Challenges include income inequality, regional disparities, bureaucratic hurdles, and environmental sustainability concerns. Additionally, the coexistence of traditional values with modernization creates unique socio-cultural challenges.
5: How can India leverage “Growth with Indian Characteristics” for sustainable development?
Answer: To leverage this growth model effectively, India can focus on investing in education and skill development, promoting innovation and entrepreneurship, decentralizing governance, and implementing policies that address social and economic disparities while preserving its cultural heritage. Balancing these aspects is crucial for India’s sustainable development.
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