- The ruling dispensation at the Centre does not let go of any opportunity to remind the Indian public as well as a global audience that the country is the fifth largest economy in the world. It also claims unabashedly that the country will be counted among the three largest economies in the world sooner rather than later. Since the Indian population is counted as increasingly aspirational, aiming to stand beside some of the most developed economies, the Central government makes necessary claims to keep the audience interested in the narrative. Of course, there are genuine reasons to believe our economy is headed in the right direction. However, the GDP growth figures over the last few years have been anything but spectacular to reach the intended target. Let’s delve into this.
PC: PTI Photo
- Indeed, the Indian establishment’s economic policies have ensured we will almost certainly become the third-largest economy in the next few years; pretty much every projection, domestic or international, comes to the same conclusion. One might be reminded of what the PM recently remarked on India’s economic size. He highlighted the most important tool to guarantee India’s well-being and strategic influence: the rate of economic growth and the consequent economic size provides both the citizenry and governments with opportunities to change things for the better. People in the know would acknowledge how the 1980s proved to be an inflection point when decadal economic growth rates increased significantly.
- The resultant outcome is that four decades of brisk growth, by global standards, have pulled millions out of poverty and allowed governments to use the domestic market’s size as a strategic tool. It has worked out so far and will work out in the future too. Undoubtedly, the Modi government has ensured that economic growth continues without compromising macroeconomic stability by avoiding imprudent fiscal policies. This has added a dimension of durability to India’s growth story. But on the other hand, this government or any government should not remain satisfied with a growth rate of around 6%. The Union Government’s annual economic survey said that if reforms are executed, India’s potential GDP growth can rise to 7-8% in the medium term.
PC: iStock
- This should be the target. At that pace, it will take a decade to double the size of the economy. Mind you, China’s economy is already around five times bigger. Settling for a durable economic growth rate of anything less than 8% a year will not help in addressing India’s grave employment challenge. Agriculture, the least productive section of the economy, has seen a relative rise in its contribution to employment. In 2021–22, the GOI’s jobs report showed 45.5% of the workforce was in agriculture, three percentage points higher than in the pre-Covid period. Addressing this problem also requires more imaginative policies to rapidly enhance skill development. In conclusion, Indians should be happy with the growth story, but there’s still a long way to go.
