To Be Developed

Source: The post is based on the article “To be developed” published in The Times of India on 16^th August 2022.

Syllabus: GS 3 Indian Economy and issues relating to planning, Mobilization of Resources, Growth, Development, and Employment.

Relevance: Economic Growth

News:  The Prime Minister of India’s 75^th Year Independence Day speech has set an ambitious target that India must become a developed country by 2047.

Criterions for a country to become developed: (1) income, and per capita income, and (2) non-farm employment must be far more than farm employment.

Linkages between two criteria; If the share of people in farming goes down and manufacturing and services jobs multiply, it leads to a rise in incomes. For example, the British saw an increase in income during the Industrial Revolution when the share of employment in agriculture begin to come down in around 1760. In fact, in every country that has become rich, farm employment has radically shrunk.

Where does India stand today?

In 2018-19, around 41% of the labor force was engaged in agriculture, and 12.1% were employed in manufacturing. Most of those who came out of farms are absorbed in low-paid and insecure jobs in services and real estate.

Challenges in giving a boost to the manufacturing sector

The tariff rate has increased by 4. 5 percentage points over the last five years to 18. 3%.

The government has embarked upon protectionism. The PLI schemes have an overemphasis on protection. This protectionism will undermine opportunities offered by the world, to India, in the Global Value Chains.

Lack of speedy dispute redressal process: Indian courts’ performance in contract enforcement is among the worst in the world. NCLT. There are vacancies and huge backlogs in the entire judicial system that dilute the efficacy of most reforms

What should be done?

In order to become a developed country, the Indian economy requires people to move out of farms much faster. For this, the Indian farming sector needs to be reformed and manufacturing should flourish.

To boost the manufacturing sector: (1) the Centre-state should make a joint effort to clear projects fast, and (2) the Centre should stop hiking import duties and reduce the which can be low-hanging fruit for the government.