| Introduction: Give a brief view of the situation. Body: What challenges are faced by India and how can it achieve growth for the next 25 years? Conclusion: Way forward. |
The twin shocks of COVID-19 and the Russia-Ukraine War have posed challenges and opportunities for India which are crucial to chalk out a future growth roadmap for the next 25 years. This growth strategy can enable people to have a higher standard of living, raise their per capita income and eliminate poverty.
What are the challenges India may face in its growth strategy?
- Consistent growth: RBI reports have suggested that India needs a continuous growth of 7 percent for the next 25 years to become a developed nation. India’s per capita income is currently estimated at $2,500, while it must be more than $21,664 by 2047, as per World Bank standards, to be classified as a high-income country.
- Investment: India will require a Gross Fixed Capital Formation rate in the range of 30-32 percent of GDP. It is important to emphasize that public investment has increased post-COVID and Russia Ukraine war but there is a lack of investment from the private sector. The nature of investment should also be channelled into sectors that involve growth and are labour-intensive.
- Supply chain disruptions: India needs to plan its strategy for securing supply of critical imports whether in the form of pharma, semiconductor chips, or oil supply. The supply chain was adversely affected during the pandemic and Russia Russia-Ukrainian crisis.
- Global Trade Rules: The policy of protectionism followed by some developed nations has raised concerns regarding the future of free trade and the relevance of WTO.
How can India achieve growth for the next 25 years?
- Multi-dimensional strategy: Since India did not follow the export-led growth strategy which was followed by East Asian nations, India needs to adopt a diverse strategy that caters to agriculture and manufacturing, implementing Atmanirbhar Bharat and policies like PLI schemes.
- Digitalization: Progress in digitalization efforts would reap benefits in fields of governance, and financial inclusion and help private players in creating new products & services.
- Entrepreneurship: The speedy growth in start-ups in India has enabled India to be the third largest ecosystem for startups. These startups can fuel growth in sectors like FMCG, agriculture, Fintech, and health.
- Universal Basic Income: The idea behind UBI is to ensure that everyone has a minimum level of income to meet their basic needs, such as food, shelter, and healthcare. The concept of UBI should be complemented with efforts to minimize the subsidy burden.
Conclusion:
India must rebalance its economy by bolstering its manufacturing sector, which has significant backward and forward linkages, to sustain growth over the next 25 years. A larger industrial sector would enable India to satisfy rising domestic demand from the expanding population in addition to creating job opportunities.
