Vishal Sharma
The current Government at the centre has nearly finished its five- year stint. This Government was sworn to a neo- liberal reformist agenda, whichwas expected to put India on a fast trajectory of growth and prosperity and help the country grow out of its perpetual low ambitions and parochial denominational mindset. But did it succeed? Let’s find out what the numbers tell us.
In 2014, when this Government assumed the office, India’s GDP was around 2 trillion USD. Today, it is around 2.59 trillion USD. There has been only 590 billion USD spike in GDP during the last five years. India has reportedly averaged an annual growth rate of around 7 % during the past five years barring the blip caused by the demonetization. A back of the envelope calculation tells us that an annual growth of around 7% should have led to an increase of around 700 million USD in the Indian GDP over the past five years. An increase of 590 billion USD, thus, broadly corresponds to this figure.
But should that suffice? Shouldn’t India have sought to double the GDP size? Consider China’s GDP growth from the period from 2009 to 2014. In 2009, China’ GDP was around 5.12 trillion USD and within only five years, that is, 2014, this figure shot up to around 10.53 trillion USD. In the same period, India could add only around 740 billion USD to its GDP. No figure will perhaps ever better point out where India has gone wrong and where the Chinese are getting it all right.
India has no doubt got a few things right in the economic sphere. For instance, GST has been a step in the right direction. Similarly, enactment of a bankruptcy code has eased the concerns of the corporates as the capital in the sunk businesses can now be easily salvaged unlike before. Also, there is a general relative ease of doing of business in the country that has been widely appreciated although a few glitches still remain to be ironed out. But there are still a few important policy pieces, which continue to be all over the place and need to be put together for the policy picture to make sense although there is a sense that these pieces will continue to remain scattered for a while. This sense is grounded in the Indians’ love for the incremental approach to course correction. And as if this were not enough, a new strand has been added to the Indian developmental discourse- stigmatized capitalism, a phrase coined by India’s former chief economic advisor to explain the poor light in which the free enterprise is presently seen or portrayed in India.
This stigmatized capitalism has stopped India from dealing with the issues of land and labour. The present government was expected to make the access of the land to the free enterprise easy by tweaking the existing land law in the country. It tried but developed cold feet at the first sight of the opposition and the potential loss of political capital. Such was its chastening that it refrained from even harbouring the thoughts of reconsidering it. Similarly, private sector has long longed for freedom of hiring and firing of labour for obvious efficiency gains. But the trade unionist mindset of the entrenched lobbies in the socialist power corridors have not allowed the adequate redressal of the labour law rigidities for decades now. Even this Government has failed on labour law front. Labour and land regulations are not the low hanging fruits in the policy paradigm for they have too much of political capital riding on them, but this government was not expected to pluck only the low hanging fruits.
Apart from the structural reforms, the competitiveness of the Indian economy in the long range is contingent upon the quality of its human resource capital. China has invested significantly on its human resource. This human capital development project has been very well mapped out by the Chinese over the last few decades; making it a centerpiece of their future strategic objective of overall domination of the global affairs. Such is the rush of the state backed Chinese students in US presently that it has caused concerns even amongst the US lawmakers for they fear that these potential Chinese educational leaders on their return may help China outclass US companies and varsities in the areas of frontier technologies like artificial intelligence, robotics etc. in future.
India, however, is just muddling along with no explicit road map on how it aims to seize the initiative in artificial intelligence and other cutting- edge technologies in next 10 -15 years which will decide whether it will still be on the road or left by the wayside. NITI Aygog’s India @ 75 paper on technology does not do justice with what India can do in this sector based on its past record on IT and ITE services and needs to be more ambitious in scope. In about five years, India will have a working age population of around 869 million people and contribute around 28% of the world’s work force.
While China’s demographic bonus has tapered off, India’s begun and is expected to run its course until 2040. Add to this another statistic: the average working age in India during this period would be 28 years while that in China and US would be around 37 and that in western Europe around 45 years. This all seems exciting! But what use is this demographic dividend of when majority of this working population would only be literate and not educated and lack the modern- day employable skills?
It’s about time people in India stopped talking about India and China in the same breath. There is simply no comparison. It’s like chalk and cheese. China is powering ahead with a massive GDP of more than 12 trillion USD and within an earshot distance of surpassing US as the largest economy in 2030.
Made in China- 2025 program, which China has put together is designed to break its reliance on foreign technology and bring its hi-tech industries to western levels with a special focus on artificial intelligence and other cutting-edge technologies and is expected to put it in direct competition with the US. Commentators in US are already in awe of the Chinese meteoric growth and have reconciled to China being the largest economy in the world in 2030. India, on the other hand, has been seen as a biggest disappointment particularly as it had raised expectations in certain quarters in the US that its size and the vast young population may help it grow like the Chinese in the region and thus act as a geostrategic stabiliser. But it now appears that in this frenetic race to new age prosperity, China and India are running in the different planes altogether.
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